March 23, 2018  BY E‐MAIL  Ms. Kristin Baldwin  Presiding Official, Pipeline Safety Law Division  Department of Transportation   Pipeline and Hazardous Materials Safety Administration   1200 New Jersey Avenue, SE  Washington, DC  20590  Re:  Submission of Hearing Transcript Containing Critical Energy/Electric Infrastructure  Information, Confidential Business Information, and Confidential Information  In the Matter of Sabine Pass Liquefaction, LLC  CPF No. 4‐2018‐3001H  Dear Ms. Baldwin:  Please find enclosed a transcript of the March 21, 2018 hearing on the above referenced Corrective  Action  Order.  The  enclosed  transcript  is  unredacted  and  contains  Critical  Energy/Electric  Infrastructure  Information,  Confidential  Business  Information,  and  confidential  information.    Per  49 C.F.R.  §190.343(a),  Sabine  Pass  Liquefaction,  LLC  formally  requests  the  protection  of  this  information.  Each page of the document is marked “confidential.”  49 C.F.R. § 190.343(a)(3) requires an operator to explain the basis for treating submitted information  as confidential. The enclosed transcript contains Critical Energy/Electric Infrastructure Information,  Confidential  Business  Information,  and  confidential  information  because  it  transcribes  hearing  discussion related to detailed design schematics, proprietary analysis and procedures, and specific  vulnerabilities related to critical infrastructure.  Accordingly, Sabine Pass requests that PHMSA treat  this  information  as  confidential  as  described  in  §  190.343(b),  including  following  the  consultation  procedures  set  out  in  the  Departmental  FOIA  regulations,  49  CFR  §  7.29,  and  providing  written  notification  at  least  five  business  days  before  the  intended  disclosure  date  if  PHMSA  decides  to  disclose the information over our objections.  Kevin M. Voelkel  Associate   T: +1.202.828.1713            F: +1.800.404.3970  2001 M Street NW, Suite 900, Washington, DC 20036‐3310  kevin.voelkel@bracewell.com            bracewell.com  AUSTIN  CONNECTICUT  DALLAS  DUBAI  HOUSTON  LONDON  NEW YORK  SAN ANTONIO  SEATTLE  WASHINGTON, DC  Redactions Made by Cheniere Pending Review by PHMSA   Ms. Kristin Baldwin  March 23, 2018  Page 2  Section 190.343(a)(2) requests the submission of a second, redacted copy of the transcript.  Due to  the expedited turnaround time for this transcript, the redacted version has not yet been prepared.  We will prepare a redacted version and will submit that to you early next week.    Very truly yours,  Kevin M. Voelkel  Counsel for Cheniere Energy, Inc.     Enclosure    AUSTIN  CONNECTICUT  DALLAS  DUBAI  HOUSTON  LONDON  NEW YORK  SAN ANTONIO  SEATTLE  WASHINGTON, DC  Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 3 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION 4 OFFICE OF PIPELINE SAFETY 5 ____________________________ 6 In the Matter of 7 SABINE PASS LIQUEFACTION, LLC ____________________________ 8 ) ) ) ) CPF NO. 4-2018-3001H 9 10 11 12 13 14 TRANSCRIPT OF CORRECTIVE ACTION ORDER HEARING MARCH 21, 2018 15 16 17 18 19 BE IT KNOWN THAT the above-entitled matter came on 20 for hearing at 9:05 a.m. on the 21st day of March, 2018, 21 at the PHMSA Southwest Region Office, 8701 South Gessner 22 Road, Sixth Floor, Houston, Texas, before the Presiding 23 Official Kristin Baldwin, and the following proceedings 24 were reported by Diana Ramos, a Certified Shorthand 25 Reporter in and for the State of Texas. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 1 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 A P P E A R A N C E S 2 3 4 5 6 7 PRESIDING OFFICIAL: Ms. Kristin Baldwin OFFICE OF CHIEF COUNSEL U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue, SE Washington, DC 20590 Tel: (202) 366-3169 kristin.baldwin@dot.gov 8 9 10 11 12 13 COUNSEL FOR PHMSA: Mr. Adam Phillips Ms. Melanie Stevens OFFICE OF CHIEF COUNSEL U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration 1200 New Jersey Avenue, SE Washington, DC 20590 Tel: (202) 366-4400 adam.phillips@dot.gov 14 15 Ms. Linda Daugherty, Deputy Associate Administrator for Pipeline Safety, PHMSA 16 Ms. Mary McDaniel, Southwest Region Director, PHMSA 17 Mr. Peter J. Katchmar, Director, Accident Investigation Division, PHMSA 18 19 20 Mr. Darren Lemmerman, Investigator, Accident Investigation Division, PHMSA Mr. James M. Prothro, II, Community Liaison, Outreach and Engagement Division, PHMSA 21 22 23 Ms. Julie Halliday, Senior Accident Investigator, Accident Investigation Division, PHMSA (VIA TELEPHONE) Ms. Sentho White, Engineer & Research Division, PHMSA (VIA TELEPHONE) 24 25 Mr. Joe Sieve, Engineer & Research Division, PHMSA (VIA TELEPHONE) CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 2 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 3 4 5 COUNSEL FOR SABINE PASS LIQUEFACTION, LLC: Mr. Kevin A. Ewing Mr. Kevin M. Voelkel BRACEWELL LLP 2001 M Street NW, Suite 900 Washington, DC 20036-3310 Tel: (202) 828-5800 kevin.ewing@bracewell.com kevin.voelkel@bracewell.com 6 7 8 9 Ms. Bryn S. Karaus VAN NESS FELDMAN, LLP 1050 Thomas Jefferson Street NW, Seventh Floor Washington, DC 20007 Tel: (202) 298-1800 bsk@vnf.com 10 11 12 13 Mr. Michael Weller, Senior Counsel Mr. Sean N. Markowitz, Secretary/General Counsel CHENIERE 700 Milam Street, Suite 1900 Houston, Texas 77002 Tel: (713) 375-5000 michael.weller@cheniere.com 14 15 Mr. Doug Shanda, Senior Vice President of Operations, Cheniere 16 17 18 Mr. Sean Markowitz, General Counsel and Corporate Secretary, Cheniere Mr. Paul Nielson, Manager, Regulatory Affairs, Cheniere 19 20 21 Mr. Maas Hinz, Maintenance Manager, Sabine Pass Facility Mr. Layne Boudreaux, Production Superintendent, Sabine Pass Facility 22 23 24 Mr. Joseph Hoptay, Plate and Concrete Structures Engineering Supervisor, Matrix Engineering Mr. Paul Sullivan, Consultant and Tank Code Expert, Paul Sullivan, Ing. 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 3 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 3 Mr. Terry A. Gallagher, Commissioning Manager, Low Temperature & Cryogenic Storage Structures, Steel Plate Structures, Chicago Bridge & Iron Company Mr. Mark J. Bartel, PE, Staff Metallurgist, Stress Engineering Services, Inc. 4 5 Ms. Nishita Singh, Manager, Systems, Processes & Operational Assurance, Cheniere 6 7 U.S. COAST GUARD: Commander Loan O'Brien Lieutenant Commander Dallas Smith 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 4 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 P R O C E E D I N G S 2 3 (9:05 a.m.) 4 (Open to public) 5 MS. BALDWIN: Let's go ahead and get 6 started. 7 My name is Kristin Baldwin, and I will be the presiding 8 official in the matter before us today. It is 10:05 (sic). 9 So good morning, everyone. This is a hearing in the matter of Sabine 10 Pass Liquefaction. 11 4-2018-3001H. 12 Hazardous Materials Administration issued a corrective 13 action order to Sabine Pass Liquefaction, LLC. 14 The CPF number for this case is On February 8th, 2018, the Pipeline and Sabine Pass made a timely request for a 15 hearing on February 16th, 2018. 16 agreed to hold a hearing on March 21st, 2018. 17 hearing is authorized by 49 CFR Part 190 and will be 18 conducted informally without strict adherence to rules 19 of evidence. 20 The parties jointly This As the presiding official, I will regulate 21 the course of the hearing and afford each party an 22 opportunity to offer facts, statements, and witnesses or 23 any other evidence that is relevant to the issues under 24 consideration here. 25 their own behalf and examine the evidence and witnesses The parties may call witnesses on CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 5 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 6 presented by the other party. 2 After the evidence in this case has been 3 presented, I will permit a reasonable discussion of the 4 issues under consideration. 5 speak at a time, both in order to promote civil 6 discourse and also to allow our court reporter to record 7 everything. 8 us know and we'll calm things down. 9 I ask that only one person So if you are having difficulty, please let Because of the number of people here 10 today, I will ask that if you're not at the table and 11 speaking that you either come to the table or stand up 12 and identify yourself before speaking. 13 I will be taking notes during the hearing. 14 These are for my personal use only and will not be made 15 part of the record. 16 as I've noted, so please take care to speak clearly. 17 other recordings here are permissible either by phone, 18 video, however. 19 This hearing is being transcribed, No At the conclusion of the hearing, I will 20 set a timeframe for post-hearing submissions. 21 case file is complete, as you know, I will prepare a 22 recommended decision, which is then forwarded to the 23 associate administrator for issuance. 24 CAO hearing, my decision will be submitted to the AA 25 within five business days following -- at the conclusion After the Because this is a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 of this hearing. 2 We'll discuss post-hearing submissions afterwards and 3 how we'll handle that with respect to the timeframes 4 here. 5 You can refer to 190.233(c) for that. I would be remiss if I did not acknowledge 6 the presence of the public in this room. 7 to a request from the media to attend this hearing, 8 PHMSA has decided, for purposes of this hearing, to open 9 the hearing to the press and to members of the public, So in response 10 so I would like to discuss the parameters of the 11 public's attendance here today. 12 As the presiding official under 49 CFR 13 Part 192.12, I have brought authority both to ensure a 14 fair and impartial hearing as well as to take any action 15 necessary to avoid a delay in the disposition of this 16 hearing and maintain order. 17 The only people allowed to speak in the 18 hearing today are myself, Cheniere and its 19 representatives, and OPS staff. 20 any motions from the public or provide any documents or 21 other materials. 22 from Cheniere in the normal course of business, and I 23 will be happy to provide those details following the 24 hearing. 25 I will not entertain Those may be requested from PHMSA or PHMSA treats certain information CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 7 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 confidentially, namely confidential commercial 2 information, also sometimes called confidential business 3 information. 4 presented here today that raise security concerns. 5 Accordingly, there may be portions of the hearing that 6 will be closed to the public. 7 from Cheniere or OPS to close the hearing on that basis, 8 I will ask all members of the public to adjourn to a 9 dedicated space until such time that it becomes In addition, there may be some information If I receive a request 10 appropriate to reopen the proceedings. 11 is appropriate and confidential or sensitive information 12 is not discussed, I will reopen the proceedings. 13 If and when it So I would like to emphasize that the 14 purpose of this hearing is to have a full and fair 15 vetting of the issues in this case. 16 in Part 190 to regulate the conduct of this hearing, I 17 will ultimately conduct this hearing so as to avoid 18 delay in the disposition of the hearing and maintain 19 order. Given my authority 20 I know everyone signed in already coming 21 into the room, and there has also been a -- we have an 22 idea of who's in the room now, but I would like anyone 23 that has not signed in to do so on this. 24 we could just get you to pass it to -- 25 MR. PHILLIPS: This pad, if Ms. Baldwin -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 8 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. PHILLIPS: 3 have Julie on the phone. Yes. MS. BALDWIN: 5 MR. PHILLIPS: 7 8 9 -- just for the record, we We're down -- 4 6 9 Okay. We're still trying to get her on the line but -MS. BALDWIN: So that is Julie Halliday. She is also with DOT. I anticipate that we'll take a short break 10 from 10:45 to 11:00 o'clock. 11 proceed until 12:00 or 12:30, sort of depending on the 12 pace of the hearing, and then I'll allot one hour for 13 lunch and we'll assume thereafter. 14 to minimize going in and out of the room so that 15 everybody is familiar with who is actually here. 16 would schedule in breaks to allow for people's needs to 17 move in and out of the room. 18 After that, we will I would like for us So I thank everyone in advance for their 19 cooperation here today. 20 Daugherty to give us some safety instructions. 21 So I And I'll now turn to Linda MS. DAUGHERTY: Good morning, everybody. 22 So at the beginning of every meeting, we cover basic 23 safety provisions. 24 you're familiar with it. 25 This is just a standard. I'm sure So first point of order -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 (Phone beeping) 2 MS. DAUGHERTY: 10 First point of order. 3 Restrooms are out the door where you came in, so it's 4 back through this rear door immediately to your left 5 out. 6 left. Men is the first left and women's on the second That's the restrooms. 7 If you have to come in, to get back in, 8 you're going to have to have someone from PHMSA allow 9 you in with a code. 10 And I believe that -- James, will you serve as an escort -- 11 MR. PROTHRO: 12 MS. DAUGHERTY: 13 -- if people need to get out and in? 14 MR. PROTHRO: 15 MS. DAUGHERTY: 16 Yes, ma'am. see who he is. 17 Okay. Yes, ma'am. So James, everybody can So that's restrooms. For a rally point, if we should have an 18 emergency in the building, we will exit through this 19 door. 20 immediate left, and you will then take another immediate 21 left down the stairs. 22 floor and go to the right to the end of the street. 23 rally point's at the end of the street. 24 25 You'll go through our office door, which is an You will go down to the first Our Okay? So we have an AED in our breakroom, which is through -- it's through the office building CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 around the -- how would you describe, the best way? 2 3 MS. McDANIEL: the left. 4 5 Down around the corner to MS. DAUGHERTY: Okay. Anybody in here certified to use an AED? 6 Okay. So I'm going to -- I'm going to 7 ask, James, if we have a need of the AED, will you -- 8 will you obtain it and assist? 9 MR. PROTHRO: 10 11 12 Yes. MS. DAUGHERTY: Anybody here certified in CPR? Okay. I'm going to ask the gentleman in 13 the back that raised your hand, would you take the lead 14 on any CPR that is needed? 15 16 Also, I need someone to dial 9-1-1 in the case of emergency. I want a designated individual. 17 MS. McDANIEL: 18 MS. DAUGHERTY: 19 20 I'll do it. Mary. Well, I guess you should, shouldn't you? Okay. In the case of a active shooter in 21 the building, remember that you run, hide, fight. 22 There's provisions here. 23 door, stay in the locked area, and follow the general -- 24 the general rules. 25 everyone in here has had that training, so we're good Obviously we would lock the I think you all are -- probably CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 11 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 12 for that. 2 The other thing I will mention, I am here 3 in more of an observer status. 4 team -- PHMSA is here to represent the actual position 5 of the program in the course of the discussion. 6 appeals or discussions should be directed to the hearing 7 official, Mary or Adam. 8 MS. STEVENS: 9 MS. DAUGHERTY: I am not here -- the So any Sorry about that. Oh, one last item, break 10 time. 11 may want some. 12 shop down on the first floor. 13 hallway, you can go down there at a break and grab 14 something to drink, a beverage. I already have my caffeine, but I suspect others There is a gift store, a little tiny As you walk through that 15 Do they have coffee down there, Mary? 16 MS. McDANIEL: 17 MS. DAUGHERTY: 18 or convenience? No. 22 MS. BALDWIN: 23 MS. McDANIEL: 25 So that is where Any questions related to safety, security 21 24 Okay. your vantage point will be. 19 20 Yes, there's coffee. Okay. Great. Okay. Back to you. So -- Here's the official sign-in. MS. BALDWIN: Thank you. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 13 So we'll begin with a round of 2 introductions just at the table so the parties can 3 familiarize themselves with each other. 4 include your name and your title just for everyone's 5 reference. 6 So just please For Sabine Pass, any witnesses that you 7 anticipate actually speaking, it will probably be a good 8 idea for you to introduce them now, too. 9 10 So I will start. MS. DAUGHERTY: MS. McDANIEL: I'm Mary McDaniel, the MR. PHILLIPS: Adam Phillips, Southwest Region attorney, Office of the Chief Counsel for PHMSA. 17 18 I'm the Southwest Region director. 15 16 Linda Daugherty. deputy associate administrator for PHMSA for pipeline. 13 14 MS. STEVENS: Melanie Stevens, attorney with Office of Chief Counsel, Pipeline Safety. 19 MR. KATCHMAR: Peter Katchmar, the 20 director of the Accident Investigation Division of 21 PHMSA. 22 23 I am the presiding official today. 11 12 I'm Kristin Baldwin. MR. LEMMERMAN: Darren Lemmerman, AID investigator. 24 MS. SINGH: 25 MS. KARAUS: Nishita Singh, Cheniere. I'm Bryn Karaus, associate CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 with Van Ness Feldman, outside counsel to Cheniere. 2 3 MR. VOELKEL: with Bracewell, counsel for Cheniere. 4 MR. EWING: 5 Ewing. 6 Pass, Cheniere. Good morning. I'm Kevin I'm with Bracewell, and I'm counsel for Sabine 7 8 Kevin Voelkel, associate MR. MARKOWITZ: Sean Markowitz. I'm the general counsel and corporate secretary of Cheniere. 9 MR. SHANDA: 10 Shanda. 11 Cheniere. I'm Doug I'm senior vice president of operations with 12 MR. WELLER: 13 senior counsel, Cheniere. 14 Good morning. MR. EWING: Good morning. Mike Weller, And if you'd like the 15 witnesses who I anticipate will speak, I'd be happy to 16 introduce them now -- 17 MS. BALDWIN: 18 MR. EWING: 19 That would be nice. -- and then more fully with their background later. 20 MS. BALDWIN: 21 MR. EWING: 22 MS. BALDWIN: 23 MR. EWING: 24 worry. 25 related to safety. I appreciate that. Can we do that? Yes. I'm looking at you, but don't So Paul Sullivan, expert on a variety of matters As I said, a more full description CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 14 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 later. 2 This is Paul Nielson. 3 with Cheniere. 4 the other members of the group here. 5 And I'm going to ask Paul to introduce MR. NIELSON: 6 Nielson. 7 Cheniere. Paul Nielson is Good morning. I'm Paul I'm manager for regulatory affairs at 8 MS. BALDWIN: Okay. 9 MR. NIELSON: I'll start with Layne 10 Boudreaux, who is production superintendent, Sabine Pass 11 facility. 12 of the Sabine Pass facility. 13 who is one of our tank experts. 14 from Matrix Engineering, who is another tank expert. 15 Mr. Maas Hinz, who is the maintenance manager Terry Gallagher, from CBI, We've got Joe Hoptay We've got Mark Bartel, from Stress 16 Engineering, who's an expert in metallurgy. 17 Paul Sullivan, who is another tank expert and 18 consultant. And I have 19 MR. SULLIVAN: 20 MR. NIELSON: Yes, that's again. 21 MR. PHILLIPS: Doubly important. 22 MS. BALDWIN: 23 from CTI? Doubly introduced. Okay. So you said what individuals Was it CTI? 24 MR. WELLER: 25 MS. BALDWIN: CBI. CDI. That -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 15 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MS. BALDWIN: 3 MR. GALLAGHER: 4 MS. BALDWIN: 16 CB&I. CD&I. And that is? Chicago Bridge & Iron. Okay. So routinely I turn 5 to the Region first for a presentation of the case, and 6 then I will turn to Cheniere to begin its case in chief. 7 So I'm going to just turn to Mary McDaniel at this time. 8 9 MS. McDANIEL: Good morning, everybody. wanted to give a little background on the date of the 10 incident we had on January 22nd, and as a result PHMSA 11 staff conducted an incident investigation. 12 from our Accident Investigation Division in Oklahoma 13 City sent representatives to investigate and the 14 Southwest Region had one person attend with them to 15 investigate the incident. 16 So members Based off the findings of the events that 17 were taking place, the Accident Investigation Division 18 recommended that a corrective action order be issued on 19 this case regarding their initial findings. 20 February 8th, the CAO was issued from PHMSA staff, the 21 Region director here. 22 So on So at the time -- I started with PHMSA at 23 the -- February the 20th of this year, so I am 24 responsible now for the findings and the implementation 25 of the CAO. And so our staff is doing that in CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA I CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 conjunction with the Accident Investigation Division. 2 But, as Kristin mentioned, a request for hearing was 3 issued -- was requested on February 16th within the 4 10-day timeframe, which has led us to this point. 5 PHMSA generally issues corrective action 6 orders without hearing for those that we felt that there 7 was an imminent threat. 8 investigation, our Accident Investigation Division, 9 along with the Southwest Region, felt that a CAO was 10 Based off the initial warranted, and so it was issued on February 8th. 11 So I guess that's a little background on 12 the issuance of the CAO. 13 believe Adam will talk a little bit about some of the 14 information in the preparation of the CAO. 15 And so based off that, I MR. PHILLIPS: 16 kid you. 17 here for -- Yeah. And don't let Mary She restarted with PHMSA. She's been 18 MS. McDANIEL: Yes. 19 MR. PHILLIPS: And I'm sure you know that. 20 Just to check, Julie, are you on the line? 21 I'm sorry. Is that you who just came on? 22 MS. HALLIDAY: Yes, Adam, I am. 23 MR. PHILLIPS: Okay. 24 25 I -- wanted to confirm that. MR. EWING: Great. I just Okay. Will we -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 17 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. PHILLIPS: 2 MR. EWING: 3 who's on the line? Sorry. Sorry. Will we introduce Is that possible? 4 MS. BALDWIN: 5 MR. PHILLIPS: 6 MS. BALDWIN: 7 MR. EWING: 8 MR. PHILLIPS: 9 MS. BALDWIN: Oh, I am -Yeah. My apologies. I apologize, Adam. No problem. Can we -- Julie, now that 10 you have -- we already know that Joe Sieve and Sentho 11 White are on the line, but can you introduce yourself, 12 please, and just give us your title? 13 MS. HALLIDAY: Sure. I'm senior accident 14 investigator with the Accident Investigation Division 15 from -- out of Oklahoma City. 16 MS. BALDWIN: So there are just three 17 people on the line, is that correct, you, Sentho and 18 Joe? 19 MS. HALLIDAY: 20 MS. WHITE: 21 MS. BALDWIN: 22 MR. PHILLIPS: Great. 23 MS. McDANIEL: And Julie was one of the 24 25 That I'm aware of, yes. Yes. Okay. Thank you. incident investigators on site. MR. PHILLIPS: Right, yeah. I wanted to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 18 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 19 1 make sure Julie was on, because we'll talk to Julie in a 2 little while. 3 Appreciate, you know, the opportunity to sort of discuss 4 the CAO -- this specific CAO. 5 But thank you all for the time. We -- you know, obviously what we put out 6 into the record on February the 8th is out there. 7 just wanted to give a little bit of background: 8 the question of, you know, what this hearing is going to 9 be about based on sort of how PHMSA typically approaches I One, on 10 hearings and CAO's where there hasn't been notice; two, 11 a little bit about the background of LNG because, you 12 know, obviously the Sabine Pass facility is -- it's 13 not -- it's a facility that's unique in some ways and we 14 think is -- you know, when we approached this facility 15 specifically with any kind of interaction, I mean, 16 typically we've had great interactions with Sabine and 17 will continue to, I assume, but it is a unique facility, 18 so there are some specific issues related to LNG that 19 obviously come into play here. 20 a little bit, you know, about the -- the specific CAO we 21 have on hand. 22 And then I want to talk So the standard for review in this case in 23 the matter of Chaparral Energy -- I'll give this to the 24 record as well so that we all have a copy of this. 25 just going to -- I'm just going to be sort of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA I'm CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 20 1 referencing it at this point, but I will put it in the 2 record. 3 It's a 2015 case, standards for review of 4 issuance of a corrective action order of specifically 5 this type, but we put out a CAO without notice. 6 wanted to read a little bit. 7 hearing following issuance of a -- 8 9 10 11 MS. BALDWIN: I just Primary purpose of a Sorry. Can you read the CPF number, please? MR. PHILLIPS: Let me see here. I absolutely can. Yeah. 4-2015-5017H -- 5017H. 12 MS. BALDWIN: 13 MR. PHILLIPS: Thank you. Okay. Now, this case 14 specifically is dated October 8th, 2015. 15 post-hearing decision specifically coming from PHMSA. 16 So our purpose -- primary purpose of the hearing 17 following the issuance of a CAO without prior notice is 18 to determine whether the CAO should remain in effect or 19 be terminated or amended. 20 It's a So obviously, you know, what we have to 21 decide in the room today is from January the 22nd until 22 the issuance of the CAO, were -- was our action of 23 issuing the CAO on February the 8th justified? 24 do that, you know, there's a question -- obviously 25 that's sort of the question of termination. Once we Then CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 obviously the amendment issue can come in -- into play 2 as well, but there's this threshold -- the threshold 3 issue has to be addressed. 4 Whenever we look at CAO's -- whenever we 5 look at issuing a CAO, there's factors that we have to 6 consider. 7 there's also some that are standard that we -- that we 8 deal with. 9 other equipment used in the pipeline facility. Some are specific to the facility, but One, characteristics of the pipe and any So the 10 specific -- essentially the implements that we're 11 dealing with. 12 cryogenic steel, whatever it is, we look at that. 13 That's a factor that goes into play. 14 Obviously the pipes, the steel, the That's going to include age, manufacturer, 15 physical properties, of course, method of manufacture, 16 construction or assembly. 17 into play. All those things will come 18 So that's one -- sort of our first standard. Number two, nature of the materials 19 transported. 20 why we are -- that's why we'll end up -- I will end up 21 addressing a little bit about the specific way that 22 PHMSA approaches LNG specifically, because that's one of 23 the key factors we have to look at whenever we issue or 24 whenever a CAO that we issue is being -- is being 25 evaluated. Obviously in this case it's LNG. That's CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 21 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Number three, the characteristics of the 2 geographical areas in which the pipeline facility is 3 located. 4 This can include soil characteristics, population 5 density, population growth, all that stuff. This can be climate. This can be geology. 6 And then four is a bit of a catch-all. 7 says, "Any other factors the associate administrator 8 considers appropriate." 9 that -- that's not something that is just wide open. It And that's not something 10 obviously have to justify why we consider that 11 appropriate and certainly would -- will do so in any 12 circumstance and have tried to do so here. 13 22 We So for -- to address specifically really 14 the LNG issue, LNG is called out -- as you all well 15 know, LNG is called out from our -- in our regulations. 16 We have 193 specifically addressing LNG. 17 we believe certainly that LNG can be -- is a valuable -- 18 certainly a valuable commodity that we want to make sure 19 continues to operate. 20 had good relationships with Cheniere at Sabine Pass. 21 is called out specifically, though, because of some of 22 the properties of LNG itself. 23 And, you know, And obviously, you know, we've It Now, this is not something that is -- you 24 know, this won't be news to Cheniere, but just to 25 reiterate, for the sake of the record, LNG obviously CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 being -- well, and let me -- let me actually let you 2 know what I'm looking at. 3 the legislative history of our regulation, so this is 4 language that we have essentially adopted as the 5 regulator. 6 what justifies what we've done to regulate LNG 7 facilities." 8 9 What I'm looking at here is And we've said, you know, "This language is So, again, it's not Adam telling you this. It's not -- it's not Mary telling you this. It's PHMSA 10 saying, "This is -- these are the reasons why we 11 specifically pay attention to LNG in a way -- again, we 12 realize it can be done safely. 13 be done safely, but we pay attention to it in a way that 14 is specific and can be particular." 15 We -- we're glad it can So a couple of things we've called out in 16 the legislative language here for LNG for enacting the 17 final rule. 18 degrees Fahrenheit, that's unique. 19 that's unique about LNG obviously is it can interact 20 with materials -- typical materials that other gases 21 can't, so minus 260 degrees Fahrenheit is a unique 22 property. 23 so the potential for dispersion and expansion is unique 24 again within LNG. 25 Obviously, methane gas cooled to minus 260 One of the things It occupies 1/600th of its original volume, And so you know, and I'm sure you know CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 23 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 24 1 this by now, I'm a lawyer. 2 where I say things -- where I start to say things that 3 sound like I'm an engineer, I will quickly pivot to 4 people who know a lot more than me, but hopefully I can 5 read from our enacting rules and still do it accurately. 6 I'm not an engineer. So We talk here also about the fact that LNG 7 can be hazardous because of its -- the specifically cold 8 temperature, obviously we talked about, flammability, 9 dispersion characteristics upon release. So, again, 10 having to do with the occupation of 1/600th of its 11 original volume. 12 For the purposes of -- and, Julie, I want 13 you to correct me if I'm wrong here -- if I get this 14 wrong. 15 a Coke can, say, or a soda can of LNG, that essentially 16 could expand in terms of volume for a typical gas to a 17 55-gallon drum. For the purposes of sort of a visual, if there's Is that right? 18 MS. HALLIDAY: That's correct, Adam. 19 MR. PHILLIPS: Okay. Great. So in terms 20 of just dispersion of volume, obviously that's one of 21 the unique characteristics of LNG that comes into play 22 whenever we have to interact with an LNG facility. 23 We -- that's -- we have to consider that as a unique 24 characteristic. 25 specifically for this, that goes into the second factor, Again, that goes into -- and CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 25 the nature of the gas or the product being transported. 2 So, obviously, you know, upon -- one of 3 the other factors we bring in here when it comes to, you 4 know, supplementary information that we sort of consider 5 and did consider when we called LNG out from the code 6 specifically is that when LNG vaporizes, it can 7 rapidly -- and we use these words. 8 Adam's words -- can vaporize rapidly and the vapor may 9 remain close to the ground, disperse into the atmosphere 10 Again, these aren't in the form of a cloud. 11 Obviously, that could be a problem. That 12 could be an asphyxiation problem and a flammability 13 problem. 14 explosive limit will also and did also come into play in 15 this -- in this circumstance. And some of the issues related to lower 16 So, you know, there can be -- CAO's are 17 always -- the reason PHMSA puts out CAO's is because of, 18 like Mary said, the imminent hazard. 19 we don't look at LNG as a particularly dangerous 20 product, we do look at it as a particular product. 21 its particular characteristics did come into play here 22 for the CAO. 23 We don't -- while And So let's talk about -- let me run 24 through -- I'm going to run through a timeline, a tick 25 tock, of essentially how this CAO came about and some of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 26 1 the circumstances or some of the details surrounding the 2 events that led to the issuance of the CAO and try to 3 give a sense of the timeline here. 4 be referencing during this -- and just to give them a 5 heads up partially -- Julie, you on the phone and, 6 Darren, I'm going to ask you as well, you know, a couple 7 of things probably along the way. 8 9 So two people I will So January the 22nd, Cheniere filed an NRC I think it was 1202595 -- I think that's right, 10 yeah -- reporting an LNG storage tank had experienced a 11 leak, resulting in a spill into containment. 12 that's basically the afternoon on the 22nd. 13 Okay. So On the morning of the 23rd, again, the 14 very next day, Julie, I believe you made the first call 15 and you talked to James McKeever -- was James McKeever 16 in the room? 17 who provided that it appeared there was a leak in the 18 top fill line of Tank S-103. 19 dealing with was S-103. 20 I'm not sure, but we'll get to all that -- At this point all we were That next day, again, within that hour -- 21 not the next day. 22 hour, essentially AID, PHMSA's Accident Investigation 23 Division, as well as the Southwest Region, like Mary 24 mentioned, launched the investigation and decided to 25 really engage on the issue. I'm sorry. That same day, within the Again, later that day, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Julie met with Paul Nielson and a few other people from 2 Cheniere in Houston, I believe it was. 3 Is that right, Julie? 4 MS. HALLIDAY: 5 That's correct, at the Cheniere Houston office. 6 MR. PHILLIPS: 7 And that there was a question of an alarm Okay. Great. Thank you. 8 on Tank S-103. 9 or not the alarm was triggered or accidentally There was some discrepancy as to whether 10 triggered, I believe, but that a technician did report 11 that LNG was escaping from secondary containment and 12 that there were visible tracks and cracks on the outer 13 tank, ice at the top of the tank and some paint had 14 spalled on the outer tank. 15 Now, Darren, can you talk a little bit 16 about what your concern would be initially finding 17 out -- might be initially finding out that there might 18 be cracks on an outer tank of LNG? 19 MR. LEMMERMAN: Well, the initial concern 20 is the outer tank of an LNG tank's made out of carbon 21 steel. 22 260 degree Fahrenheit LNG. 23 caused by the chilling and cooling at such a fast rate 24 will cause cracks in unknown locations. 25 of those cracks are fully unknown at -- you know, up It's not designed to be in contact with negative So the severe stresses And the extent CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 27 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 front and right away. 2 MR. PHILLIPS: And in terms of -- in terms 3 of sort of initial action, what did you think -- you 4 weren't involved at the time. 5 weren't -- you were sort of involved in the initial 6 push. 7 of -- any sort of tank, much less an LNG tank, like 8 having outer cracks, what would you do typically? I know that you But in terms of how PHMSA would approach any sort 9 MR. LEMMERMAN: What we would typically 10 do, obviously make the area safe, evacuate the areas to 11 safe zones, probably start reducing product inside the 12 tank as much as we can. 13 unknown. 14 first priority. You know, it's a lot of 15 It's hard to know what to do, so safety is the MR. PHILLIPS: Gotcha. Okay. Great. 16 Thank you. 17 conversations that Cheniere did initiate some actions to 18 isolate specifically Tank S-103. 19 de-inventorying of the tank. 20 right, de-inventorying of the tank. 21 So -- and it is -- it is clear from those There was some I think I'm saying that At that point it sounded like to us, at 22 least to our -- you know, what Julie was learning 23 from Cheniere folks, that there was no plan to bring in 24 outside experts. 25 kind of keep it inside. There was still a plan at the time to And there was some reticence to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 28 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 share what Cheniere's sense of what might have gone 2 wrong. 3 It seemed to us -- again, you know, this 4 is -- this is sort of our initial investigation -- that 5 there may be some idea -- Cheniere may have some idea 6 what had gone wrong but didn't want to necessarily share 7 that up front or completely up front. 8 Tank S-103 was roped off and their sort of emergency 9 brigade, again, it sounded to us like it posted -- or it There was -- 10 essentially separated people from the area, took the 11 actions that we would obviously, you know, take 12 ourselves and would suggest people taking. 13 good. 14 So that was It did sound like also at the time that 15 the lower explosive limit did reach about 15 feet from 16 the tank. 17 its lower explosive limit approximately 15 feet from the 18 tank. 19 So essentially the cloud of LNG had reached PHMSA, again, on that next day or that -- 20 the day following the incident started making data 21 requests. 22 obviously some pictures that passed back and forth. 23 Cheniere did its 48-hour update of the NRC report and 24 more information, again, pushed out. 25 The following day, the 24th, there were The 25th, the following day, FERC visit CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 29 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 the site -- visited the site, performed some interviews, 2 took some pictures, collected some data. 3 be on site. 4 FERC began to Julie, on that 25th, it also sounded like 5 we -- you spoke with Paul Nielson. 6 question of finding something out about Tanks S-101 as 7 well as S-102 as well on the 25th? 8 9 MS. HALLIDAY: Right. Was there some So I initially asked when we were on site if there were other alarms 10 that had gone off during the incident, and there wasn't 11 a certainty about it. 12 That was one of our data requests, so they 13 came back. 14 things that were happening, it's at that point that we 15 become aware that they had previously had some -- this 16 Matrix report. 17 Tanks 101, 102 and 103. 18 learned that the problem is not just with Tank 103. 19 But as we were talking about different So previous excursions had happened on This is the first time that we MR. PHILLIPS: Okay. Great. And at the 20 time, on the 25th, did you actually have the Matrix 21 report? 22 23 24 25 MS. HALLIDAY: We made the request for that report and then we received it on the 27th. MR. PHILLIPS: Okay. Great. And, again, during this time, again, no -- well, we know that as CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 30 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 31 1 well as -- sort of as we're finding things out, we also 2 knew that Cheniere was taking actions and taking steps 3 that -- I don't think there was any question -- and, 4 Julie, correct me if I'm wrong, but I don't think there 5 was any question that the things we did know about that 6 Cheniere was doing were problematic at all to us at this 7 point. Is that right? 8 MS. HALLIDAY: Correct. 9 MR. PHILLIPS: Okay. Great. So on the 10 27th -- again, now fast forward a few days after 11 requesting it on the 25th -- we finally did receive a 12 copy of that Matrix report and, you know, for the first 13 time essentially had the chance to review it. 14 The 29th, two days after that, at this 15 point Tanks 101 as well as 102 seemed like they were 16 still in normal operation even though, again, on the 17 25th we had started to hear there might be some issue 18 with Tanks S-101 -- or some potential issues. 19 I don't want to -- I don't want to 20 characterize it meaning that anybody necessarily knew 21 exactly what was going on, but there might be some 22 issues on Tanks S-101 and 102 a few days before. 23 the 29th, it seemed like they were still in normal 24 operation. 25 There were some cold spots that were But on CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 32 1 identified, I believe, on Tank S-102 on that same day, 2 and then there was a report of some vapor seepage from 3 Tank S-101 from an annular space out of the bottom of 4 Tank S-101, again, on the 29th. 5 This is as it evolves. On the 30th, Tank S-101 was found to be 6 below design temperature, minus 40 versus minus 20. 7 believe that's right. 8 full of LNG. 9 I It continued to be about half MS. BALDWIN: 10 MR. PHILLIPS: 11 MS. BALDWIN: 12 MR. PHILLIPS: This is Tank 101? This is Tank 101, yes. Okay. And it's at this point 13 where it seemed like there might be -- again, there was 14 maybe an inkling a few days before this that there might 15 be an issue, but then there started to be maybe a more 16 serious question here from our folks after having found 17 this out. 18 the 30th that vapors were emitting at 14 locations along 19 the base of the tank between the bottom plate and the 20 pile cap. 21 22 23 24 25 That there -- it was also clear on, again, There was -MS. BALDWIN: This is, again, just on Tank 101? MR. PHILLIPS: for clarifying. Yes. I'm sorry. Thank you Yes. We also asked about a contingency plan. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 33 1 Julie, I believe it was you who asked about a 2 contingency plan requiring Cheniere to isolate the tank 3 when outside of design temperature. 4 something that we did not -- were not able to get from 5 Cheniere. 6 And that was On the 31st, we learned that Tank S-101 7 had been as low as -- and, Julie, correct me if I'm 8 wrong on this -- minus 250 degrees. Is that right? 9 MS. HALLIDAY: That's correct. 10 MR. PHILLIPS: Okay. 11 And it had remained below design conditions for over a week? 12 MS. HALLIDAY: That's correct. 13 MR. PHILLIPS: Okay. And Cheniere at this 14 point was still planning on bringing CB&I, as we 15 mentioned before, but CB&I was not yet on site. 16 this is on the 31st. 17 And By the 2nd, February the 2nd, Southwest 18 had also visited the site again with a separate group, 19 and there was a -- there was some sense that Cheniere 20 might submit or did submit and may have later retracted 21 a, you know, report on S-101. 22 clear that we had an issue -- a specific issue on S-101 23 that needed to be addressed as well. 24 temporary repair plan for Tank S-103 and a temporary 25 heal plan for Tank S-101. So it started to become There was also a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 By the 6th, a few days after that -- just 2 a few days after that, it was -- I think both sides by 3 that time knew that there was going to be a CAO issued, 4 and Cheniere did start to take steps to seal up 5 Tank S-101. 6 that they thought as well -- they provided to us a sense 7 that the bottom plank -- plates of both Tanks S-101 and 8 S-103 may have been compromised. 9 was February the 6th. 10 They did also -- we also did hear from them So obviously -- that And by that time, you know, two days afterwards, we did issue the CAO. 11 So, you know, for PHMSA, again, this was 12 not -- this was not a decision that we ever come to 13 lightly. 14 do a CAO, our whole purpose is really to -- 15 understanding the four factors that we have to deal 16 with. 17 to safety. It was not meant to be a -- you know, when we We want to make sure that we are -- we're getting 18 That's our number one job. So as the -- as the circumstances of our 19 interactions with Cheniere continue from January the 20 22nd all the way to -- through February 8th -- just 21 prior to February the 8th really, you know, we felt, as 22 the information kept revealing itself, we needed to do 23 something. 24 on February the 8th. 25 So that's why we issued the CAO that we did So if it -- it was helpful for me visually CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 34 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 to see some of the -- to really understand from our 2 engineer some of what we're talking about here that 3 might be the problems, but let me talk through a little 4 bit about what we did on our CAO specifically and let -- 5 here we go, and make it clear kind of, again, why we 6 came to this determination. 7 So, you know, on the February 8th CAO, 8 there were preliminary findings. 9 this is something, you know, we always want people to Now, of note -- and 10 know. 11 recognize their importance and we also recognize that 12 they have a certain -- they have a specific type, so 13 that's why we name our findings preliminary findings. 14 CAO's are instruments that we -- you know, we You know, we are not -- we're not waiting 15 to do something here because of the question of imminent 16 hazard. 17 but we also recognize we took a step early and so we put 18 things like preliminary findings. 19 So we took a step because of imminent hazard, So, again, this interaction with -- our 20 interaction with Cheniere from January the 22nd through 21 February the 8th, as well as what we put in our February 22 the 8th CAO preliminary findings, we are always happy to 23 be corrected on anything that is wrong or off or won't 24 get us to safety, because that's our job one. 25 we're not here to do anything else but get to safety. You know, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 35 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 So I just wanted to point that out in terms of the 2 instrument that we did bring. 36 3 But in terms of our determination for 4 necessity, on Page 4 of our CAO, there's a couple of 5 factors here. 6 contractors on site. 7 protecting life and having safety on site is very 8 important. 9 for you all. The presence of the Sabine employees and You know, for us, obviously We recognize that that's absolutely the same And, you know, we want to make sure that 10 part of the reason why, if not the first reason why, we 11 take any of these steps is to protect that life. 12 that is an essential part of our determination here, and 13 we want to make sure that that is called out. 14 So Secondly, potential for disruption to 15 major transportation modes, including highways and 16 waterways. 17 facility itself but the nature of the product 18 transported, this is a unique facility. 19 a unique and special facility. 20 what we do with you all, and we want to make sure that 21 we recognize that as well in this determination. 22 In terms of, you know, not only this Sabine Pass is So obviously it matters The hazardous nature of the product being 23 stored, we talked about this in terms of some of the 24 specific issues related to LNG itself. 25 unpredictability of a brittle failure and possible The CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 ignition sources. And, Darren, I wanted to ask you a little 3 bit about that. 4 there was -- there were cracks as opposed to maybe bends 5 or potential for bends? 6 Can you talk about why it matters that MR. LEMMERMAN: Yes. The outside of the 7 tank is carbon steel and has a design criteria of minus 8 20 degrees Fahrenheit. 9 it's -- it reaches a transition temperature. So if it gets below that point, And at 10 that transition temperature, carbon steel basically 11 turns extremely brittle. 12 additional extreme cold temperatures basically causes 13 pull and tension and just causes it to fracture like 14 glass at those temperatures. 15 unlike carbon steel does at normal temperatures. 16 And that brittle state and MR. PHILLIPS: So it can behave very So we're talking about the 17 difference between an inner tank that can take the 18 temperatures and an outer tank that really can't deal 19 with the temperatures of the LNG. 20 effects on that outer tank. 21 MR. LEMMERMAN: 22 MR. PHILLIPS: And we saw some Is that right? Absolutely correct, yeah. Okay. And our concern -- 23 and we believe it's Cheniere and Sabine Pass's concern 24 as well -- is that if that material that's very 25 particular and very specific gets to that outer tank, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 37 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 38 1 the outer tank really can't -- it can't be counted on to 2 fully contain it? 3 4 MR. LEMMERMAN: contain LNG. 5 Right. It will not It will fail. MR. PHILLIPS: Right. Okay. And, Julie, 6 can you -- can you talk a little bit specifically about 7 the relationship that we saw and the potential for the 8 relationship that we saw in the issues that were present 9 on Tank 3, meaning the outer cracks, and then sort of 10 the -- what seemed to be sort of the building issues on 11 Tank 1 where we may have been seeing -- or how did it 12 look to us? 13 Could that be transitional? Was that 14 something that we could sort of -- we could pass over, 15 or how did we look at that? 16 MS. HALLIDAY: Yeah. So at this point 17 we're, you know, obviously working with other subject 18 matter experts at PHMSA and -- as well as our 19 consultants, and one of them being a structural 20 geotechnical engineer. 21 And what was uncertain then is, well, 22 could these cracks continue to propagate so that you're 23 getting greater failures of the tank, because it's still 24 under conditions that are below design temperature? 25 at this point, he's suggesting that what needs to be CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA And CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 done is certain engineering analysis, and we've conveyed 2 this to Cheniere. 3 And, again, they're bringing on board 4 additional subject matter expertise, but it's not, I 5 guess, happening quite as quickly as one would expect 6 when you're having a situation that they're 7 experiencing. 8 still this uncertainty of how can these materials 9 continue to be subjected to these cryogenic 10 temperatures? 11 So we recognize that, you know, there's How are they going to respond? And, additionally, I guess there were a 12 couple of things that weren't mentioned, but we see that 13 there's other issues, one being the potential design 14 flaws within the tank of the fill lines and how those 15 fill lines could have spilled the LNG into this annular 16 space. 17 been put forward. 18 So there's certain hypotheses that are -- have We're also learning that they've had some 19 issues with the instrument airlines freezing up and that 20 they had to use different valves than they usually use 21 and that one of those valves that they thought was 22 closed had inexplicably opened. 23 this point go and physically disconnect the instrument 24 error so that that can't happen again. 25 to all the tanks, but we're still not certain why did it And, you know, they at And they do that CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 39 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 happen. 2 So there just continues to be a lot of 3 additional questions as to is this problem contained, is 4 it contained within Tank 103, or is it going to 5 potentially be a problem in the other tanks as well? 6 MR. PHILLIPS: And two things, Julie. 7 Thank you for mentioning the question of design and 8 manufacture. 9 from our understanding of all of the tanks, were they 10 For the purposes of the record, were -- all designed similarly? 11 MS. HALLIDAY: Tanks 1 through 3 are of 12 identical design and also all manufactured by Matrix. 13 And Tanks 4 and 5 -- I'm sorry. 14 by Mitsubishi Industry -- Heavy Industries. 15 constructed Tanks 1 through 3 and Mitsubishi Heavy 16 Industries constructed 4 and 5. 17 similar. 18 the most part a similar design. 19 They were all designed And Matrix 4 and 5 are almost There are a few slight differences but are for MR. PHILLIPS: Okay. Great. Thank you. 20 And, secondly, you know, explain this to the lawyer in 21 the room who, you know, couldn't do the math to be an 22 engineer. 23 evaluating fully the issues on any of these tanks, are 24 there particular problems that make them difficult 25 and more -- and that stretch out really the ability to When it comes to actually finishing or CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 40 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 do this assessment? 2 MS. HALLIDAY: Well, because you can't 3 visually assess. 4 tank as it's emitting vapors. 5 that before you can start doing some actual visual 6 examination or thermal scans. 7 Right? You can't get close to the You have to first stop So just the not knowing. You don't know what's behind that wall. 8 9 Right? MR. PHILLIPS: Right. So in the context of -- so what we're looking at as these facts continue 10 to develop and we get closer and closer to what seems 11 like potentially a problem that may exist in more than 12 one of these tanks, it's not easy for us to assess or 13 for Cheniere to assess? 14 MS. HALLIDAY: That's correct. 15 MR. PHILLIPS: Okay. Great. Thank you. 16 So unpredictability, brittle failure issues, we talked 17 about that. 18 One of the other things we also -- we also 19 found out with this Matrix report was that there were -- 20 there was some past history and some question of similar 21 problems that had -- that had occurred before. 22 again, this was new information that we got with the 23 Matrix report. 24 or our issue of imminent risk or imminent hazard was a 25 key part of this. And, And incorporating that into our question CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 41 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 42 There were also -- and this goes back to 2 what Julie was just talking about. 3 uncertainty about exactly what may be the cause of the 4 incident itself. 5 this is a difficult environment to work in. 6 There's still This is -- obviously, you all know And in order to make any sort of 7 assessment, we recognize that it's going to cost time 8 and money in ways that were just hard to do and 9 impossible to do, I should say, really within January 10 the 22nd to February the 8th, and it's difficult. 11 and we certainly want to acknowledge that subsequent to 12 that and really even before that that we knew you all 13 have been taking steps that have been helpful. 14 know, I do -- I want to make sure that's in the record 15 as well. 16 So -- So, you And then, you know, maybe finally as 17 our -- in terms of our determination, the ongoing -- the 18 investigation to finding out what was -- actually 19 happened at the site continues to happen. 20 long time. 21 It takes a It continues to happen. It's including -- it sounds like CB&I is 22 on board and other, you know, outside experts have been 23 brought on board in order to really supplement, you 24 know, the staff that's there as well and as well as to 25 kind of supplement what we've, you know, been able to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 try to add to the site. 2 So adding all of this up, you know, really 3 PHMSA took the February 8th action, you know, and, 4 again, an imminent -- a CAO was taken with the question 5 of imminence in mind in order to really more fully 6 understand and to help really all of us more fully 7 understand what was happening at the site. 8 those reasons that we ended up taking -- we ended up 9 issuing the CAO on February the 8th. 10 So what did I leave out, Mary? 11 MS. McDANIEL: And it's for Nothing. I guess the only 12 thing that I would add is that following an incident or 13 accident when there are those conditions that Adam 14 talked about, where we are unsure of the cause or the 15 extent of the damage that might have been -- that 16 occurred on the facilities, that's when a CAO would be 17 issued because the continued operation of that facility 18 is -- comes into question. 19 reason that this CAO was issued. 20 MS. BALDWIN: So that further supports the I have a couple of 21 questions. 22 this. 23 does that liaison occur between investigators of that 24 team and Southwest Region personnel who would normally 25 investigate such incidents? Maybe Mr. Katchmar can talk -- can speak to The -- PHMSA's accident investigation team, how CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 43 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. KATCHMAR: So we received an NRC 2 report from the U.S. Coast Guard, and I immediately saw 3 LNG pulled into the dike area outside of the tank, which 4 never happens, cracks in the tank. 5 That perked my ears. I immediately called Julie, because she's 6 our LNG expert on the team. 7 experienced person with her, because Julie was brand new 8 to our team and this other person had been on board for 9 almost a year. I sent another less And we immediately called down to the 10 Southwest Region here and said, you know, "We have 11 something going on out at Cheniere and we would like for 12 you to be a part of it." 13 So we got one engineer from here to meet 14 up with Julie and our other engineer, and they, I think, 15 went to Cheniere offices here in Houston first to get 16 the lay of the land, do a little bit of background 17 investigation, find out really what was going on and if 18 it would be safe to even go to the facility. 19 think either later that day or the next morning they 20 went out. 21 MS. HALLIDAY: And I You know, Peter, just to 22 provide a little more insight, because we were flying in 23 we didn't get there until later in the -- pretty late in 24 the afternoon. 25 Houston offices. So we flew into Houston, met in the And then, because it's a bit of a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 44 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 45 1 drive out to the facility, we drove out after that 2 meeting and then in the morning we attended the site. 3 4 MS. BALDWIN: So this is the morning of the 23rd or the 24th? 5 MS. McDANIEL: 24th. 6 MS. HALLIDAY: The morning of the 24th. 7 Let's see. The accident's on the 22nd. 8 MR. KATCHMAR: Yeah. 9 MS. HALLIDAY: Yeah. We -- right. We met 10 in Cheniere's office the evening of the 23rd and then 11 were on site on the 24th. 12 13 MS. BALDWIN: Okay. Who was the Southwest Region inspector? 14 MS. McDANIEL: 15 MS. BALDWIN: 16 MR. KATCHMAR: Gene Roberson. Gene Roberson. So just as a little bit of 17 a background, the accidents -- up until about a year 18 ago, the accidents were all performed by the region in 19 which they occurred. 20 And to provide a little more consistency, 21 PHMSA started up this Accident Investigation Division 22 down in Oklahoma City. 23 the response to all the NRC reports. 24 through and review them pretty much immediately upon 25 submission. And so our division took over And so we go CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 And if there's something big that happens 2 in a region, we will call the region and -- well, we'll 3 make a decision whether we are going to deploy or not. 4 And we will call the region and let them know that 5 something big is going on in their region and they're 6 welcome to join us. 7 the Region has the knowledge of the specific pipelines 8 that could be involved. 9 And predominantly that is because We have a general knowledge of all the 10 pipelines in the country but not the specific knowledge 11 maybe for that operator or that, you know, specific 12 situation. 13 are familiar with that operator and that pipeline, 14 involved early on. 15 So we like to get the Region personnel, who MS. BALDWIN: So can you give me an idea 16 of -- I know that you said you made a site visit and 17 that's when you determined that you would deploy a team 18 to investigate? 19 MR. KATCHMAR: 20 MS. BALDWIN: 21 MR. KATCHMAR: 22 MS. BALDWIN: 23 MR. KATCHMAR: 24 25 No. I -- we -- You just saw pictures? I received the NRC report. Okay. Okay. And from what the -- or the statements in that NRC report -MS. BALDWIN: Gotcha. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 46 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. KATCHMAR: -- that LNG had gotten into the dike area outside of a tank was. 3 MS. BALDWIN: 4 MR. KATCHMAR: 5 MS. BALDWIN: 6 MR. KATCHMAR: 7 MS. BALDWIN: Significant. -- significant to me -Okay. -- critical. And so, Ms. Halliday, can 8 you give me -- since you actually made a site visit, can 9 you give me just a more detailed description of what you 10 observed when you visited the tank and which tanks you 11 personally observed? 12 MS. HALLIDAY: Right. So the -- we were 13 down on the morning of the 24th. 14 accident investigator, and Gene Roberson from Southwest 15 Region and I were escorted to Tank 3. 16 And Alex, another So as you walk on the dike wall, they have 17 their EMT brigade positioned on the top of the dike to 18 make sure that nobody's going into the affected area. 19 And so we went down into the diked area so that we could 20 get fairly close, obviously within some safe distance, 21 to be able to view the cracks. 22 see the ice had formed where the natural gas emissions 23 from the -- from inside the annular space are being 24 emitted and cooling that tank. 25 that are affected. And, you know, you can So you can see the areas CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 47 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 48 You can also see on the tank where the 2 Perlite inside the tank has come out through those 3 cracks and you can see Perlite, the insulation that's in 4 that annular space that has come out through the tank 5 cracks and is on the ground within the diked area. 6 can also see the spalling paint where it appears that 7 LNG has hit the outside of the tank and then, you know, 8 comes down the side. 9 You So at that point, after we viewed it, 10 we've asked Cheniere to take photos for us because you 11 have to have an intrinsically safe camera to do that. 12 At that point, you know, we went back to the truck and 13 we took a tour of the liquefaction area and some of the 14 other parts of the facility because I had not been at 15 this particular facility before, so just to get a better 16 understanding of the lay of the land, the distance 17 between different types of facilities within that plant. 18 And then, you know, drove past the brigade to get an 19 understanding of what type of resources they have to 20 respond to emergencies. 21 And at that point, we went back and did a 22 debrief, you know, asked for -- we put together a data 23 request list and confirmed on both sides what that list 24 was. 25 And then we left the facility. I'm sorry. I'm still -- that's why I'm CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 not down there today is I -- when I got back, I ended up 2 catching pneumonia, so I'm just trying to struggle with 3 not coughing while I'm talking to you guys here. 4 MS. BALDWIN: Well, I thank you again for 5 your participation since -- but I did want to know, is 6 that the only time that you were actually physically in 7 the facility or did you return? 8 MS. HALLIDAY: No. 10 MS. BALDWIN: Okay. 11 MS. HALLIDAY: 12 MS. BALDWIN: 9 That was the only time -So -- -- I visited them. So can you just walk through 13 in a little bit more detail -- and Adam briefly 14 mentioned before -- how you became aware of the issues 15 with the other tanks? 16 And I should note that we're sort of 17 variously referring to the numbers of these tanks, like 18 we're talking about Tank 101, 102 and 103. 19 make an executive decision that we refer to them that 20 way going forward just so that we're all clear about 21 what we're talking about. 22 So I'll just But can you give me just a more detailed 23 description of how you became -- how your team or the 24 regional staff became aware of the issues with the other 25 tanks? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 49 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. HALLIDAY: Sure. 50 So, you know, daily 2 Paul Nielson and I, and also FERC, so we're trying to 3 set up some interagency coordination among FERC and 4 their LNG experts as well, so that -- we're trying to 5 not -- we're trying to ease the federal coordination for 6 Cheniere instead of having multiple people ask different 7 data requests and having different phone calls. 8 we're setting up these calls pretty much daily and 9 submitting our data requests. 10 So And the data requests had taken a few 11 days. 12 24th, we start getting some -- those responses on the 13 29th. 14 on the call and then request different reports, the 15 picture's becoming clearer that this isn't just an issue 16 with Tank 103, but it, you know, takes, I guess, a 17 little bit of questioning to get an understanding that 18 the -- Tank 101 and Tank 102 had at some point been 19 operating below design parameters. I guess, you know, our first data request on the And as we kind of wanted a little bit each time 20 Tank 102, we understand, warmed up fairly 21 quickly. 22 away that Tank 101 had stayed for so long below design 23 temperature. 24 because it takes some time before those data requests 25 come back, it just took a while to understand exactly The Tank 101, I guess -- we didn't grasp right You know, we make the data requests, but CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 what situation this tank was in. 2 the Tank 101 continues to be kept in normal operational 3 use. It still has a large amount of LNG in it. 4 5 6 And during this time, So I'm sorry. Is that answering your question? MS. BALDWIN: Yes. So did you -- so at 7 what point was there sort of a sense from an engineering 8 perspective that a CAO was necessary to address the 9 conditions on the ground? 10 MS. HALLIDAY: 11 MS. BALDWIN: 12 MS. HALLIDAY: How did that lead to -Well, really --- issuance of the CAO? You know, really when we 13 understand that it's not just Tank 103, when it comes to 14 the point where it's Tank 101 and 102, but we don't feel 15 like there's affirmative understanding of, well, what 16 happened to tank -- to these tanks. 17 Right? There's still just a hypothesis going on. 18 And part of that Matrix report, when we read it on the 19 29th, says, you know, that there's certain 20 recommendations that the facility not be operated in a 21 certain manner, using the bottom flowlines. 22 know, as it's becoming aware, well, the bottom flowlines 23 were used and they were used because there was some, you 24 know, equipment failure on instrument airlines. 25 And, you And then additionally we find out that a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 51 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 valve that they thought was closed and could not be 2 opened opened uncommanded. 3 now when we're understanding that all of these things 4 had occurred and there's still not an understanding of 5 why it occurred, it just -- and the other part that's 6 not coming on as quickly as I would have liked to have 7 seen is the additional subject matter expertise. 8 9 So it -- you know, the 29th, And recognize -- so the week of the 28th, that next week, is the NFPA 59A meeting, so this is 10 primarily what -- the regulations requirements for LNG 11 facilities in the U.S. 12 headquarters, as they're hosting the group of LNG 13 subject matter experts in the U.S., to work on the 14 revision of the technical standard. 15 Cheniere's headquarters office starting on the 29th, so 16 we're there the week after the event occurred. 17 We are down at Cheniere's So we're at And we met with Cheniere while we were 18 down at their headquarters as well. 19 there was some difficulty because we do like 20 videoconferencing to be able to understand exactly where 21 emissions are coming from and there's just some struggle 22 to get, I guess, information timely and in enough 23 detail. 24 25 MR. PHILLIPS: And, you know, Julie, is it -- do you mind if I ask her a question as well? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 52 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. PHILLIPS: 3 Julie, is it fair to say that after we -- 4 after we got the Matrix report and there was a question 5 of vapor seepage with Tank S-101 and then subsequent to 6 that a team from Southwest went out there as well and 7 there were continued issues on S-101, that that's really 8 when we sort of tipped over in terms of thinking that 9 this was -- this was a CAO and we needed to really kind 10 MS. HALLIDAY: MS. BALDWIN: 14 MS. McDANIEL: 17 MS. BALDWIN: 20 Yeah. Okay. I think I have an understanding. Mr. Phillips, is there anything else you'd like to present? 21 MR. PHILLIPS: 22 MR. EWING: 23 The Southwest Region staff went out on February the 2nd? MR. PHILLIPS: 19 I think that's a Okay. 16 18 Yeah. good summary of it, Adam. 13 15 Is that okay? of try to get a handle on the situation? 11 12 Yes. Can I have one minute? Ms. Baldwin, while they're conferring, may I ask you a personal favor? 24 MS. BALDWIN: 25 MR. EWING: Sure. We're -- You have such a soft and CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 53 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 lovely voice, but I -- 2 3 MS. BALDWIN: I'll attempt -- I am also fighting a cold, but I will attempt to project -- 4 MR. EWING: 5 MS. BALDWIN: 6 MR. EWING: 7 MS. DAUGHERTY: 8 9 10 11 12 that. Thanks. -- past. Appreciate it. I wish I'd have known I would have sat over there. MS. BALDWIN: It's much less temperate in Washington, DC, than it is here. MR. EWING: Well, I hear it's much more pleasant here than in Washington. 13 MS. BALDWIN: Yes, it definitely is. 14 MR. PHILLIPS: Oh, one other thing. 15 16 54 I wanted to ask one more question. So, Darren, you know, we term -- we talked 17 about cracking before and brittle failures. 18 know, it's such a unique condition and one where LNG 19 being the specific product it was or that it is, you 20 know, we were having to deal with. 21 As a -- you In terms of sort of cracks in the outer 22 tank, not only just spreading maybe potentially 23 unpredictably, were there any other concerns related to 24 cracking that caused us to really consider we might 25 need, you know, an instrument here that we needed to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 kind of help to get a handle on? 2 MR. LEMMERMAN: Yeah. I mean, we really 3 didn't understand the extent of the cracking that's 4 occurring. 5 a lot of stresses are taking place, those things are 6 warming and still chilling, there was actually a lot of 7 water appurtenance that was about 50 percent all the way 8 around through the weld that was cracked and it's 9 possible that other cracks could interconnect and then And being in a cryogenic state could -- and 10 actually could cause a chunk of it that could crack, 11 circle back to it basically and fall out of the side of 12 the tank. 13 how long those cracks would continue growing. 14 It didn't occur that way, but we had no idea MR. PHILLIPS: So, again, continuing 15 with -- or dealing with unpredictable brittle failures, 16 the potential for them to interconnect, that was 17 something we were also concerned about? 18 MR. LEMMERMAN: Right. So if they were to 19 interconnect and with internal tank pressures 20 that could -- between a half a pound to a pound could 21 push that chunk of metal out of -- out of the side of 22 the tank, which would cause the Perlite to fall out. 23 And it's hard to say what would happen 24 after that point, because now the -- now the internal 25 tank is exposed to basically atmosphere temperatures CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 55 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 going back in there so... 2 MR. PHILLIPS: So the unique system that's 3 essentially at stasis typically but is held at stasis by 4 particular circumstances, including this insulation, we 5 were concerned that that stasis might break -- or could 6 break down -- 7 MR. LEMMERMAN: 8 MR. PHILLIPS: 9 -- maybe not might break down but -- 10 11 There's -- MR. LEMMERMAN: There was potential for that. 12 MR. PHILLIPS: 13 MS. BALDWIN: 14 And now we'll turn back to the Region -- 15 MR. PHILLIPS: 16 MS. BALDWIN: Right. Okay. Thank you. So is there anything else? Yes. -- if there's additional 17 testimony, but I just wanted to see if -- we've gone 18 beyond our break time. 19 MR. PHILLIPS: 20 MS. BALDWIN: 21 MR. PHILLIPS: 22 MS. BALDWIN: 23 I think that's it, yes. Okay. I appreciate it. So it's 11:07. Let's come back at -- 24 MS. McDANIEL: 25 MS. BALDWIN: No. You're one hour -- It's 10:07, so we're CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 56 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 actually not -- we're ahead of time. 2 MR. PHILLIPS: 3 MS. BALDWIN: 4 MR. PHILLIPS: 5 MR. EWING: 6 In Washington it's 11:00. We're ahead of time so... We're in Central time. Time flies when you're having fun. 7 8 57 MS. BALDWIN: Time flies when you're having fun. 9 Okay. So I can turn to Cheniere now for 10 its case in chief. 11 an opportunity to present additional information and ask 12 questions later, but I just wanted to get a full -- some 13 overview of what the Region was presenting. 14 And the Region obviously will have MR. EWING: Thank you. Good morning. 15 is really good to be with you. 16 opportunity. 17 everyone who's participated not just today but in 18 leading up to today. 19 talk. 20 share understanding all throughout the room. 21 that's what we're here for as much as anything. 22 takes time and effort on everyone's part. 23 It I'm glad for this Cheniere, Sabine Pass really thanks It's an important opportunity to It's an important opportunity to understand and I think And it What -- we have much to say, honestly. 24 And I think we start maybe with the simple proposition 25 that we requested to be heard today because there is not CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 and has not been an imminent safety threat to the public 2 that would justify a CAO. 3 explain why that's the case. 4 And what we'd like to do is I think that tracks the central feature of 5 what PHMSA is also interested in, which is safety and 6 getting to safety. 7 why the kind of safety threat that precipitated the CAO 8 was not, in fact, in evidence. 9 So we're here to explain our view of Now, to do that, we've already made some 10 introductions. 11 a little bit deeper introductions when I call on people. 12 I think that will would be most efficient and orderly. 13 If at any time you have questions or would like to -- 14 just let me know. 15 little bit about a road map for how we would intend to 16 talk about all of these issues. 17 And what I would suggest is that I make Maybe it's helpful also to talk a It might help to start with only a couple 18 of basics about the facility so that we have a visual, 19 for example. 20 something to think about, because you're hearing about 21 references to Tanks 1 and 3 and so forth. 22 MR. PHILLIPS: 23 We can explain where is what, so you have Kevin, can I interrupt you briefly? 24 MR. EWING: 25 MR. PHILLIPS: Yeah. I'm sorry. Somebody on the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 58 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 phone -- Julie is having trouble hearing. 2 MS. McDANIEL: Can you move -- 3 MR. PHILLIPS: Can I climb over and -- 4 (Brief discussion off the record.) 5 MR. EWING: So in a moment I would suggest 6 briefly just giving you a sense of what the facility is. 7 I just think that that helps. 8 MS. BALDWIN: 9 MR. EWING: Sure. Also a little bit of 10 background on some of what Adam covered relating to the 11 timeline, not to impede it but to just push a couple of 12 things and verify certain things. 13 really get to the meat of the matter, which really 14 relates to hazard and our understanding of threats and 15 hazards and how they played out in this particular 16 circumstance. 17 and they build on one another. 18 And then I think we And that has several different components I am very, very well aware that we have 19 wonderful expertise in the room, including yours. 20 Nevertheless, I think it will be helpful if we build 21 toward an understanding. 22 lot of time with preliminaries, but it will be important 23 to do that. 24 25 And I'm not going to waste a So with that in mind, maybe, Maas, if you can come up. Can we show -- thank you. Why don't you CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 59 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 come up here and you can point to things and so forth? 2 This is a simple aerial photograph, 3 obviously nothing special. We got it from Google Earth, 4 but it shows the facility. It's oriented correctly with 5 north at the top so you have a sense. 6 waterway and then there's that sort of light area, which 7 is the facility itself. There's a 8 And, Maas, introduce us to the facility -- 9 MR. HINZ: 10 11 MR. EWING: MR. HINZ: Okay. MS. DAUGHERTY: MR. EWING: 17 MS. DAUGHERTY: 18 MR. EWING: 19 MS. DAUGHERTY: MR. EWING: 25 -- so that people -- -- no, no. -- in the back of the room No. We would like not to do that, and that was discussed earlier. 23 24 No, no. can also see it. 21 22 We're going to turn on the other projector -- 16 20 My name's Maas Hinz. I'm the maintenance manager at the facility. 14 15 -- and remind us, please, of your title and function at the facility. 12 13 Okay. MS. DAUGHERTY: Well, we're going to have people -MR. EWING: This is the -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 60 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. DAUGHERTY: 2 MR. EWING: -- crowding that. -- participants and it's 3 important. 4 appropriate to share, and so to forestall a lot of 5 flipping of machinery back and forth, which is what it 6 takes to turn that on -- We will shortly get to material that is not 7 MS. DAUGHERTY: 8 MR. EWING: 9 10 Not -- that isn't my concern, but it's going to be disruptive to constantly flip this on and off. 11 MS. DAUGHERTY: 12 MR. EWING: 13 Thank you. MS. BALDWIN: Google Earth again? MR. EWING: 17 MS. BALDWIN: Yeah. I think that we can share this with -- 19 MR. EWING: 20 MS. BALDWIN: 21 MR. EWING: 22 Then -Or at the -Let's have a technical person come up and flip it -- 23 MS. BALDWIN: 24 MR. EWING: 25 I think she is the I think that -- this is from 16 18 Defer to Kristin. presiding officer. 14 15 To show this? It's just a little short --- because it's your equipment, so we'll need that. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 61 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MS. McDANIEL: Let me just make sure I've got the right -- 3 MR. EWING: I do think it's very important 4 as a participant who is an observer that we make sure 5 that the presiding officer has an opportunity to reach 6 those issues. 7 MS. DAUGHERTY: 8 MR. EWING: 9 MS. McDANIEL: 10 I understand. Thank you. MS. BALDWIN: Is it on? So just, again, for the -- 11 for the people that are on the phone, we're just looking 12 at a Google Earth map of the Cheniere facility right 13 now. 14 MS. McDANIEL: 15 MR. EWING: Is that good? Okay. Fundamentally our view, as you 16 laid out, is that this is an opportunity to adjudicate a 17 matter in hearing among the participants. 18 really is to present to the participants. 19 MS. BALDWIN: 20 MR. EWING: 21 MR. HINZ: And my goal Uh-huh. So Maas... Okay. So Sabine Pass facility 22 is located on approximately a thousand acres of land 23 located between the Sabine-Neches Waterway on the 24 Louisiana side. 25 MS. BALDWIN: Could you point to the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 62 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 waterway, just so that -- 2 MR. HINZ: 3 MS. BALDWIN: 4 MR. HINZ: The waterway is this here -Okay. Uh-huh. -- between the Sabine-Neches 5 Waterway and Highway 82. 6 the Sabine-Neches Waterway. 7 five LNG storage tanks that are 160,000 cubic meters of 8 capacity, approximately 265 feet in diameter. 9 This is the Louisiana side of The facility itself has On the liquefaction side, we have four 10 essentially identical liquefaction trains at 4.5 million 11 tons nominal each. 12 we are in construction of a fifth train, which is 13 located there. 14 They are currently in operation and The export terminal is via -- and 15 originally import terminal is via the two jetties where 16 we have two -- on each jetty, we have four 16-inch 17 loading -- marine loading arms. 18 facility description. 19 20 MS. BALDWIN: So you have a waterway to the left here? 21 MR. HINZ: 22 MS. BALDWIN: 23 That's essentially the Correct. And then there's a highway that is in yellow? 24 MR. HINZ: 25 MS. BALDWIN: That's correct. Here. Okay. And some of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 63 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 these other like depressions, what are -- what are 2 those? 3 away from -- 4 5 MR. HINZ: So if you were to go to the -- MR. BOUDREAUX: MR. HINZ: 9 THE REPORTER: 10 10 miles? MS. BALDWIN: MR. HINZ: If you were to go to the north -MR. BOUDREAUX: 15 MR. HINZ: Port Arthur. -- Port Arthur, which is I think 10 miles. 17 18 Johnson Bayou, I think he Johnson Bayou. 14 16 I didn't get -- said. 12 13 Population-wise, it's closer to ten, where the population really -- 8 11 How far is it to the east, Johnson Bayou is about eight miles. 6 7 How isolated is this facility? MR. BOUDREAUX: As the crow flies, it would be probably six, eight. 19 MR. HINZ: Yeah, that's right. Yes, well 20 done. 21 Sabine-Neches River is Sabine Pass itself, which -- That's correct. And then across the 22 MR. BOUDREAUX: 23 MR. HINZ: 24 MS. BALDWIN: 25 Maybe one mile. Maybe one mile. Can you just identify yourself again, sir, for the -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 64 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BOUDREAUX: 2 MS. BALDWIN: 3 MR. BOUDREAUX: 4 Layne Boudreaux. 5 the site, one of them. Yes. -- court reporter? I'm sorry. My name is I'm the production superintendent at 6 MS. BALDWIN: 7 MR. BOUDREAUX: Gotcha. Just kind of helping Maas 8 out because I am familiar with the area. 9 Sabine Pass would probably be more to the south and 10 west. 11 the facility across the waterway. It's approximately a mile, mile and a half from 12 MR. HINZ: 13 MR. BOUDREAUX: 14 So that would be over this way. Bottom corner. Bottom corner. 15 MR. HINZ: 16 MR. BOUDREAUX: 17 So as he said, Yeah, yeah. Do you mind if I point this out to help him out? 18 MS. BALDWIN: 19 MR. BOUDREAUX: Please. Okay. So the Sabine Pass 20 area would be located in here. 21 of off picture here. 22 this direction. 23 to eight miles in that direction. 24 community is approximately 10 miles to the east. 25 It's more -- it's kind The Port Arthur area is off in It's, as the crow flies, probably six MS. BALDWIN: And the Johnson Bayou And the import terminals are CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 65 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 at the bottom? 2 3 MR. BOUDREAUX: MS. BALDWIN: 5 MR. BOUDREAUX: Yeah. -- berths, yes. MR. KATCHMAR: And our Can you -- will you tell us 8 which is Tank 1, 2, 3, 4, 5? 9 MR. BOUDREAUX: Yes. Tank S-101 is located here, 102, 103, 104 and 105. 11 MR. EWING: 12 Thanks, Maas. 13 sense of things. 14 Gotcha. tanks and, as he said, the -- 7 10 This is -- this is the location of our -- 4 6 66 Thank you, Layne. Thanks, Layne. Good. It's helpful to get a You don't really have scale here, but 15 hopefully you've heard this is not nestled tightly in, 16 and, in fact, that -- because there's so much space 17 available, that ultimately also addresses and begins to 18 explain particular tank design that was used for all of 19 the tanks at the facility. 20 Now I want to talk really a little bit 21 about that to set the stage for what will come. 22 doing that, maybe we can -- no. 23 don't you flip to that, please? 24 25 Before I'll do that now. Why Well, just let people look at that for a moment just to absorb it. There's nothing much to say. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 You see the tanks. The orientation is -- you know, 2 north is that way. So there's a lot of foreshortening 3 obviously, but you get a sense of the scale. 4 little bitty things are cars. These 5 Close, please. Okay. 6 MR. LEMMERMAN: Is that Port Arthur in the 7 background then on the horizon? 8 9 MR. EWING: closely. Well, I would have to look Probably. 10 Okay. Can you show us the schematic of 11 the -- what I'd like to do is somewhat sanitize, but 12 fundamentally it's useful to capture an important set of 13 points. 14 emphasized is the same thing that we do. 15 "getting to safety," and that is absolutely what this is 16 about for us. 17 recognized, which I think is important. You know, one of the things that PHMSA 18 So we share that. The words were And I think that was Another aspect of what was said is, is 19 this problem contained? 20 important framework in thinking about hazard and risk, 21 public threat. 22 And that ends up being a very We also heard a moment ago a reference to 23 learning that the LNG had escaped secondary containment. 24 And that's erroneous. 25 phrasing, but it ends up being absolutely essential to And I'm not picking on that CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 67 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 understanding threat and absence of threat. 2 spend time with that. 3 68 And we'll The last thing I want to foreshadow is I 4 think we heard a lot concerning uncertainty, 5 uncertainties that drove, as we heard, a decision to 6 issue a CAO. 7 about is whether a CAO is the way and the tool to be 8 used to address uncertainties or is the tool to address 9 public threats of an imminent kind, because there are And one of the things we can then talk 10 other tools available with other standards to meet other 11 purposes. 12 So the design philosophy of a single 13 containment tank, which is the kind of tank used here, 14 is specific. 15 full containment tank design. 16 the only one that's relevant to us here. 17 important features that are enumerated. 18 tanks are of that variety. 19 It's different from second -- of, say, It's very specific. It's There's some All of our In a single containment tank, that inner 20 tank -- I'm going to come behind you, if I may. 21 inner tank -- or what I'm referring to as the inner tank 22 here is made with a special metal with special 23 metallurgical properties that are sufficient to maintain 24 ductility -- observe -- ductility when in contact with 25 cryogenic temperatures, in this case cryogenic liquid. That CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 And you see there the outer tank, which 2 really is the outer gray there, is made of different 3 material and has a different purpose. 4 purpose, hence its cryogenic capabilities, is to contain 5 this material. 6 earlier by our colleagues at PHMSA, this outer tank has 7 different chemical -- metallurgical properties and it's 8 designed to hold up this structure. 9 That inner tank's And as noted but not quite amplified It's designed to hold in the insulating 10 material in the annulus, which is the space between the 11 inner and the outer wall. 12 maintain vapor pressure, which is to say this tank here 13 is not closed. 14 And it is designed to That's a suspended deck. Suspended deck 15 is not the roof itself, but the deck sits roughly on top 16 of that tank but allows vapor to boil off, as it's 17 called, and exit. 18 boil-off gas is a natural -- the boiling off of gas or 19 vapor is a natural phenomena and one removes that in 20 order to maintain the cryogenic temperature of the 21 liquid. 22 It's designed to do that. The You want to keep it cold. So functionally you have a significant 23 difference between the purposes of that inner tank and 24 the purposes of the outer tank, and that ends up being 25 very instructive about threat. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 69 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 So the secondary containment for the 2 cryogenic liquid is not exhibited there. 3 containment is not the outer tank. 4 if LNG and any secondary containment tank design leaves 5 the tank, it goes into secondary containment not at the 6 outer tank wall but in the secondary containment in the 7 containment basin. 8 to be the secondary containment. 9 The secondary And so when LNG -- That is by design. That is intended What is significant about that is that 10 since that is the design philosophy of the tank and the 11 tank system, having LNG in the diked area is an 12 operational upset, but that does not mean that you are 13 outside the designed parameters of the tank system from 14 a safety standpoint. 15 In fact, in this case, we never came close 16 to exceeding the safety standards associated with the 17 design capacity of the system. 18 important to understand. 19 unpack that and make that clear. 20 That's very, very We have experts who will help I think from our standpoint, it helps to 21 understand the scale also of the containment area around 22 the tank. 23 that scale. 24 of 180,000 cubic meters. 25 over a -- the full contents of an LNG tank if all of it That isn't big enough for me to demonstrate It's very, very large. It is on the order It is sufficient to hold well CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 70 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 71 came out and it had been filled to the brim. 2 So it is designed with specific features 3 in mind, including volume, to handle LNG coming out of 4 the inner tank. 5 of the outer tank from a safety standpoint unless there 6 are a whole bunch of other factors that contribute. 7 we'll talk through that. 8 9 It is not meaningful that it comes out And I think what's important to understand basically, though, is that we have to look at the design 10 philosophy of this tank system in the context of the 11 specific facts of January 22nd in order to understand 12 whether or not the determination of necessity was well 13 founded. 14 That is based on an imminent likelihood of 15 serious harm to the public. 16 standard. 17 that standard basis, you're telling the public that you 18 think there's a likelihood of serious harm to them. 19 that is a very important bridge that was crossed by 20 PHMSA, and it was not warranted. That is a very important And when you issue a CAO, as this one was, on 21 That's why we're here. So what I'd ask is maybe, Layne, if you 22 could come up. 23 things relating to the timeline. 24 over here -- 25 And I just want to talk about a couple of MR. BOUDREAUX: And why don't you go Sure. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 We won't go through all of it. 3 -- so people will hear you. know that Adam would do that. 4 I didn't I appreciate that. What fundamentally was happening before 5 the 23rd? 6 operationally, what was going on with the tank? 7 we -- Were we filling? 8 9 MR. BOUDREAUX: Were we not filling? Just Were We were filling the tank at the time. 10 11 72 MR. EWING: Okay. So you were filling the tank? 12 MS. BALDWIN: 13 MR. BOUDREAUX: 14 MR. EWING: 15 MS. BALDWIN: 16 MR. EWING: May I ask, this is 101? Tank 3. This is Tank 3. Tank 3. Okay. The release of LNG from the 17 inner tank into the designed containment space was on 18 Tank 3. 19 MS. BALDWIN: 20 MR. EWING: 21 Okay. There -- it is technically called S stroke 103. 22 MS. BALDWIN: 23 MR. EWING: 24 25 Or 103. Okay. I think for the sake of brevity, if you'll allow me just to say Tank 3. MS. BALDWIN: Yeah, that's fine. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MS. BALDWIN: We do. Let's just refer to it 3 throughout the proceedings as Tank 3, okay, just for my 4 own sanity. Okay. 5 6 MR. EWING: Yeah. numbered that way, 101, 102, 103, 104, 105. 7 MS. BALDWIN: 8 MR. EWING: 9 That -- they're just Gotcha. Even we at the company tend to say 3, 4, 5. 10 Okay. So it was filling. And just tell 11 us a little bit, when and how was a release first 12 observed? 13 MR. BOUDREAUX: We had an operator that 14 was in the area. 15 had an issue with the tank in terms of vapor. He had a visual observation that we 16 MR. EWING: 17 MR. BOUDREAUX: Okay. What did he see? He saw -- at the time he 18 observed vapor coming out of the tank. 19 made a call to the control room. 20 21 MR. EWING: 24 25 So what time is that that he's discovering that, roughly? 22 23 Immediately he MR. BOUDREAUX: That was 21:20 approximately. MR. EWING: So military time. Normal time, that's -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 73 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BOUDREAUX: 2 MR. EWING: 3 MR. HOPTAY: 4 MR. BOUDREAUX: 5 And -- 10:20? 9:20. 21:20 is 9:20. Is that correct? 6 MR. EWING: 7 MR. BOUDREAUX: 8 MR. EWING: 9 MR. KATCHMAR: 21:20? MR. EWING: 11 MR. BOUDREAUX: 12 MR. EWING: immediate action? 14 Yes. Okay. 10 13 9:20. The date. The 22nd. The 22nd, January 22nd. And you said he took an What was that? MR. BOUDREAUX: Immediate action was he 15 notified the control room, and which the notification to 16 the control room -- excuse me. 17 rack valves, which stopped rundown to the tank. 18 MR. EWING: They closed the finger Okay. So to translate that 19 into my terms, finger rack valve rundown, is what you're 20 saying they took the mechanical measures to stop filling 21 the tank? 22 MR. BOUDREAUX: Yes. They closed the 23 valves mechanically to stop any LNG production to that 24 tank. 25 MR. EWING: And that happened in a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 74 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 timeframe of minutes? 2 MR. BOUDREAUX: 3 MR. EWING: 4 Okay. MR. BOUDREAUX: 6 MR. EWING: timeframe. 10 Yes. -- going off as well from that Is that right? 8 9 And there was a gas detection alarm -- 5 7 Minutes. MR. BOUDREAUX: We did have a gas detection alarm approximately eight minutes after that notification came in. 11 MR. EWING: 12 MR. BOUDREAUX: 13 MR. EWING: 14 of things then ensued. 15 team as well. 16 contacted and mobilized? 17 So 21 -28. -- 28ish. Okay. And a number We have an emergency response You've heard about PHMSA's. MR. BOUDREAUX: Yes. Was that They are -- the 18 emergency response team was contacted approximately 19 21:35. 20 Yes, they were activated and they were to basically 21 secure the area, make sure no personnel could get into 22 the area. Let me refer to my notes just to make sure. 23 MR. EWING: 24 at the site? 25 they -- And what happened to personnel Did they go about their business or did CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 75 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BOUDREAUX: 2 MR. EWING: 3 MR. BOUDREAUX: 76 So -- -- muster up? Yeah. A plant emergency 4 address system was used that alerted all personnel in 5 the facility to muster. 6 management team was activated and -- 7 MR. EWING: From that point, our emergency So you have a response team 8 and you have an emergency management team? 9 MR. BOUDREAUX: 10 MR. EWING: 11 MR. BOUDREAUX: 12 Got it. And soon after the muster was issued, then everybody was accounted for. 13 14 Yes. MR. EWING: Okay. How many people were there? 15 MR. BOUDREAUX: 16 have the exact number. 17 have that in my notes. A hundred and -- I don't 117, I believe. 18 MR. EWING: 19 MR. BOUDREAUX: 20 MR. EWING: Let me see if I Slightly over a hundred? Slightly over a hundred. The count number was. And the 21 observation of material coming out of the tank, was it 22 all the way around the tank? 23 area? 24 25 MR. BOUDREAUX: Was it within a specific No. It was -- it was in a specific area approximately -- approximate area of 50 by CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 77 50 roughly so -- 2 MR. EWING: 3 MR. BOUDREAUX: Is that feet? Feet. Excuse me. Feet. 4 Where ice and vaporization was observed along with some 5 Perlite. 6 how much LNG. 7 could just make an observation. 8 to be about 39 cubic meters -- 9 It's just real difficult to determine exactly It wasn't like a liquid pool that you MR. EWING: And that was estimated Okay. 10 MR. BOUDREAUX: 11 MR. EWING: 12 Why don't I ask Paul to come up and we can -- of LNG. Thank you. 13 talk a little bit about the interactions with PHMSA 14 and -- 15 MR. SULLIVAN: 16 MR. EWING: 17 MR. SULLIVAN: 18 MR. EWING: 19 MS. KARAUS: 20 MR. EWING: Which Paul? Paul Nielson. Oh, sorry, Paul. We've got too many Pauls. He's ready. Thanks. We're trying to 21 condense this a little bit since you've heard some of 22 it. 23 function at the -- at the facility, the company. 24 25 But, Paul, remind us of your background and MR. NIELSON: regulatory affairs. So I'm the manager for I worked for 28 years in the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 nuclear industry over on the operations side and ran 2 oversight. 3 4 MR. EWING: So you probably need to step closer to a mic -- 5 MR. NIELSON: 6 MR. EWING: 7 Sure. -- is my guess. report was made from Sabine that night, the 22nd? 8 MR. NIELSON: 9 MR. EWING: 10 11 That's correct. MR. NIELSON: When? Approximately one hour after the event was discovered, as Layne just talked about. 12 MR. EWING: 13 MR. NIELSON: 14 15 16 And this was -National Response Center was informed via telephone. MR. EWING: Okay. MR. NIELSON: 18 MR. EWING: 19 MR. NIELSON: 20 MR. EWING: 22 And the NRC is the one that distributes that knowledge -- 17 21 And so a That's correct. That's -- -- centrally. That's correct. And when did you first have contact with PHMSA specifically or the company? MR. NIELSON: So PHMSA, we were 23 contacted -- or we spoke with PHMSA the next morning, as 24 relayed earlier. 25 with Julie Halliday and also exchanged an update email Archie McKeever had a conversation CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 78 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 79 with Julie Halliday the morning of the 23rd. 2 MR. EWING: And when did you first 3 visit -- when did you have a chance for Cheniere and 4 Sabine Pass to be in person visiting with PHMSA? 5 MR. NIELSON: So we visited first on the 6 evening of the 23rd, as was discussed previously. 7 came to the Houston offices. 8 MR. EWING: 9 MR. NIELSON: PHMSA All right. And we had both a 10 teleconference with FERC that evening, and we also had 11 three PHMSA personnel in our office to share information 12 on the evening of the 23rd. 13 14 15 MR. EWING: And then I think there was a site visit? MR. NIELSON: That is correct. On the 16 24th, the next day, there was a site visit, which 17 started in the morning. 18 we had a tour, exchanged information, answered questions 19 and concluded in the afternoon. 20 And, as was discussed earlier, MR. EWING: So that site visit involved 21 PHMSA personnel as well as Sabine personnel within a 22 couple of days walking the site? 23 MR. NIELSON: 24 MR. EWING: 25 MR. NIELSON: That's correct. Going to the tank area? That's correct. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. NIELSON: 3 MR. EWING: 80 Did they enter the dike area? Yes, we did. You entered the dike area. So 4 this would suggest that this is an investigative purpose 5 as opposed to part of an emergency response to a call? 6 7 MR. NIELSON: yes. 8 9 That was my understanding, MR. EWING: Would one otherwise have people in a containment dike? 10 MR. NIELSON: I would not go in a 11 containment dike unless it was for investigative 12 purposes. 13 14 MR. EWING: Right. the dialogue with PHMSA ensuing after the visit? 15 MR. NIELSON: 16 MR. EWING: 17 So -Was there further exchange of information? 18 MR. NIELSON: 19 information. 20 us questions. 21 were. 22 through the week. 23 And what happened in There was an exchange of As Julie discussed previously, PHMSA gave We agreed on what those initial questions That list progressed as our interactions went on We had several phone calls, almost daily 24 phone calls with numerous personnel on both sides, FERC 25 and PHMSA, throughout that first week. And then we had CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 an additional site visit by the Southwest Region 2 personnel on the following Friday. 3 4 MR. EWING: 81 And are questions coming in from the PHMSA folks? 5 MR. NIELSON: 6 would be we would have a teleconference. 7 discuss information, it would generate questions. 8 would then work on answering those questions and forward 9 that information on to PHMSA and FERC. 10 MR. EWING: Yes. Typically the cycle As we would And how was that done? We Was 11 that managed through tracking documents and other ways 12 to maintain order in the Q and A? 13 MR. NIELSON: Yes, it was. We -- PHMSA 14 captured all the questions in a spreadsheet and would 15 forward that to us. 16 questions, but for the most part they were -- they were 17 tracked. 18 had the information available. 19 There was some redundancy in the And then we responded to those questions as we MR. EWING: And the group that is 20 assisting in responding to those questions includes lots 21 of folks? 22 MR. NIELSON: Lots of folks. We actually 23 stood up a technical team at the site, which consisted 24 of our on-site experts and also many of the -- of our 25 persons you see in the room today, Mark Bartel, Joe CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Hoptay, Terry Gallagher. 2 And so we have teams of people working on 3 gathering and vetting the information, making sure it 4 was correct, that we were going to -- that information 5 we were giving to PHMSA was correct that was asked for, 6 and then getting that to PHMSA. 7 8 MR. EWING: Was there a regular briefing that occurred or a pattern of briefing? 9 MR. NIELSON: So there was -- we had a -- 10 we went to a weekly meeting. 11 briefings. 12 status of the tanks. We were also sending daily reports on the 13 14 MR. EWING: overall flow? 15 We were doing weekly How would you characterize the It sounds pretty dynamic. MR. NIELSON: Very dynamic. The questions 16 were numerous and they varied. 17 understand the questions and provide the answers 18 requested. 19 MR. EWING: And we did our best to Thank you. And did the -- did 20 further site visits occur after that initial site visit 21 within a couple of days? 22 23 MR. NIELSON: So we had the initial site visit on Wednesday following the -- following the event. 24 MR. EWING: 25 MR. NIELSON: So the event was on a Monday? The event was on a Monday. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 82 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 We had the initial site visit on Wednesday. 2 FERC visit on a Thursday. 3 Friday, which I believe would have been the 2nd of 4 February, we had an additional site visit from PHMSA and 5 Southwest Region personnel. 6 7 There was a MR. EWING: And then the following And so the 2nd of February. The date of the CAO is the 8th of February, so -- 8 MR. NIELSON: 9 MR. EWING: 10 Correct. -- a few days later. Did you have communicated to you at any 11 time from PHMSA -- were you aware of anyone hearing from 12 PHMSA that they felt, for example, their lives were in 13 jeopardy while they were on our site? 14 MR. NIELSON: 15 MR. EWING: 16 No, I did not. Did you yourself have that concern? 17 MR. NIELSON: 18 MR. EWING: 19 On the 8th, the CAO issues -- and as we've 20 talked about, the standard for issuing that is not based 21 on uncertainty. 22 especially for a no notice CAO such as this one, 23 requires that there's an imminence and immediacy that 24 disallows even having a hearing to talk. 25 to be a probability, a likelihood of serious harm to the I didn't. Okay. Thank you. It is based on threat. And a finding, And there has CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 83 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 public. 2 understanding what the mechanism would be and why that 3 threat exists at that time. And so it needs to be founded on a factual 4 There are other important tools that PHMSA 5 has to deal with the exploration of uncertainties that 6 are not based on immediate likelihood of public harm. 7 And those tools are often more appropriate when one does 8 not have that threat, as we didn't here. 9 So we have four main contentions about 10 that CAO. 11 hearing. 12 way -- and I think I have -- of consolidating them into 13 four buckets, covering them, I think, in an efficient 14 way. We identified eight issues in our request for 15 But time being tight, we've tried to find a The first one is the most important. 16 Thank you. 17 that the CAO wasn't warranted because the incident did 18 not substantially or imminently endanger public safety, 19 did not meet that standard, given the nature as well as 20 the scope of the incident, as well as the effectiveness 21 of the design involved in the incident, the tank design, 22 and given the responsive measures that were taken as 23 well, and that this was well understood and 24 understandable before the decision to issue a CAO was 25 made. The first and I think foundational one is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 84 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 The second contention is that the CAO 2 treats Tank 1 and Tank 3 as though they present the same 3 concern. 4 distinctions between them that did not justify requiring 5 the same actions in the CAO to be attributed to both of 6 them. They do not. There are very important 7 The third is that there are key safety 8 determinations -- safety-related determinations that 9 underlie the CAO that rest on material errors, 10 misunderstandings, whatever you want to call it, 11 incorrect findings and assumptions basically, about what 12 the status of the tanks and the facility was at the time 13 it was issued. 14 go through it, these errors are errors in the very 15 factors and considerations they enumerated that led them 16 to find the hazard that they reached. 17 are material to the determination that was made. 18 And in this way, one can see, and we'll So these errors And the last issue is that the information 19 request, which is embedded in the CAO, is frankly 20 impracticable, and that's a different kind of issue than 21 the other three contentions. 22 opportunity to explore all aspects of the CAO that are 23 significant, that's one we need to address. 24 most of our time on the first one, because this is about 25 safety as much as anything else. But since this is our We'll spend CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 85 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 86 So with that in mind, why don't we just 2 dive into that first chapter, if you will, which is 3 whether or not there was a public safety threat 4 sufficient to issue a CAO. 5 I'd like to flip up on Slide 13, this is grabbed and 6 paraphrased closely from the regs. 7 familiar with it, but just to cast it before us. 8 9 The legal standard, which You'll be very Essentially there are two determinations that are necessary for this type of CAO, because it was 10 issued without notice. 11 One of the critical differences between them or useful 12 differences is that one of those standards really 13 relates to the severity of the threat, and the other 14 really relates to the imminence of it as well as, if you 15 will, imminence and scale of threat combined. 16 temporal element of imminence is important to the no 17 notice aspect of the CAO. 18 these standards were not, in fact, met here. 19 And I've stated it a few times. That And so our contention is that It is illuminating, I think, to understand 20 that the events occurred on the 22nd of January. 21 are on site within a couple of days, learning about 22 what's going on, which is not consistent with believing 23 there is an imminent likelihood of significant threat. 24 And it takes 17 days to reach a conclusion that they're 25 going to issue that CAO. There is not in the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA People CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 intervening period a deterioration of the condition of 2 those tanks. 3 of any aspect of the incident that started and stopped 4 on the 22nd of January. 5 There is not in that period an escalation So we want to explore that. 6 I'm going to ask Joe to join us. 7 outside experts. 8 here, introduce yourself a little bit? 9 10 To do that, Joe is one of our And if you would, when you get up MR. HOPTAY: I'm Joe Hoptay. I work for Matrix PDM Engineering. 11 MR. EWING: 12 MR. HOPTAY: There's the mic. Okay. I've been doing this 13 for 39 years. 14 and concrete structures for Matrix PDM. 15 Thanks. And I'm the manager in plate structures MR. EWING: So I want to ask a real expert 16 as opposed to me to talk a little bit about that design 17 philosophy to get it toward flat, which is what we need 18 to do. 19 to threat? 20 We need to connect the two dots here. Do we get So remind us again in your own words as an 21 expert, what is the design philosophy that's relevant 22 here to a zero containment tank like Tank 3? 23 MS. BALDWIN: And just before you get 24 there, I'd just like to understand. 25 as part of the investigation into this incident or you So were you engaged CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 87 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 88 1 were involved with Cheniere's design philosophy of these 2 tanks before? 3 MR. HOPTAY: 4 Cheniere after the event. 5 MS. BALDWIN: 6 MR. HOPTAY: No. 7 8 9 10 I was engaged by After the event. I got on site the 29th of January. MS. BALDWIN: Gotcha. So he's test -- he's familiarized himself with the design of these tanks and is testifying to that? 11 MR. EWING: 12 MS. BALDWIN: 13 MR. EWING: 14 I will note, by the way, that to the He's very familiar with it. Gotcha. That's right. Thank you. 15 extent there was a concern about expertise, we have an 16 enormous amount in the company, but we also have good 17 reach to others, and that was in play very quickly. 18 19 20 21 22 So I know the slide isn't relevant to you so ignore that. MR. HOPTAY: I was going to ask if you could put up the slide that was up. MR. EWING: Sure. Let's do that. Can you 23 put up the design slide from -- that I put out earlier? 24 It's probably 2 or 3. 25 MR. HOPTAY: That one, yes, please. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. HOPTAY: Thanks. So the first thing that you 3 have to recognize, and it was brought out earlier, is 4 that there's really two structures there. 5 inner tank, which is the primary container, and the 6 outer tank, which is not the container. 7 the -- it's just the pressure boundary. 8 9 There's the It's just The inner tank is supported on load-bearing insulation. Some of this I'm repeating, 10 but it -- it's worth mentioning. 11 inner tank is passed through that load-bearing 12 insulation directly to the outer tank or to the 13 foundation. 14 to take the liquid flow to the foundation. The load from the So there's no dependence on the outer tank 15 The outer tank is a pressure barrier and 16 an insulation jacket barrier that keeps the moisture 17 from contaminating the insulation and also prevent vapor 18 from coming out. 19 dome roof and a suspended deck. 20 self-supporting dome roof and the deck is nothing more 21 than a ceiling. 22 It's a -- the outer tank is -- has a That's a Okay? The outer tank, annular space about three 23 feet. 24 the inner tank and then Perlite in the rest of the 25 annular space. There's fiberglass insulation on the outside of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 89 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 90 Could I just ask a question? 2 What is the -- what is sort of the characteristic of 3 Perlite insulation? 4 obviously. 5 6 I know what fiberglass is, MR. HOPTAY: MS. BALDWIN: 8 MR. HOPTAY: very well as an insulator. 11 MS. BALDWIN: attached. And when it -- when that It's inorganic. So is it -- it's not It's just sort of -- 13 MR. HOPTAY: 14 MS. BALDWIN: 15 MR. HOPTAY: 16 MS. BALDWIN: 17 Okay. pops, it creates a lot of interstitial spaces that work 10 12 It's volcanic ore that's popped in a hot oven. 7 9 It's granular. No. It's a powder. -- loose fill -Right. -- that is in the annular space? 18 MR. HOPTAY: In fact, when they -- when 19 you fill it, there is -- the Perlite is filled towards 20 here. 21 vibrate the tank -- You put vibration -- basically magnets that 22 MS. BALDWIN: 23 MR. HOPTAY: 24 25 Uh-huh. -- and help it settle. So it's like hitting the side of a sugar bowl. MS. BALDWIN: So is it mixed in with the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 fiberglass or you do the fiberglass -- 2 MR. HOPTAY: 3 MS. BALDWIN: 4 No. -- first and then you have the Perlite insulation outside? 5 MR. HOPTAY: The fiber -- the fiberglass 6 is against the tank and then Perlite the rest of the 7 way. And it's actually wrapped to the tank with cables. 8 9 MS. BALDWIN: you said it's wrapped to the tank. 10 MR. HOPTAY: 11 MS. BALDWIN: 12 So it's not necessarily -Okay. It's hung from the very top. That does make sense. Gotcha. 13 MR. HOPTAY: It's bound together, hung 14 from the top. 15 stretch a cable from the top to the bottom. 16 around, it pushes against the tank. 17 18 MS. BALDWIN: 21 22 23 As it comes So it's not ultra compressed? 19 20 And then to keep it against the tank, you MR. HOPTAY: No. You don't want it ultra compressed. MS. BALDWIN: Because there's space there for some overflow of material? MR. HOPTAY: Right. It -- the -- it's 24 much easier for things to flow -- the gas to flow 25 through the Per -- through the fiberglass than the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 91 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Perlite. 2 MS. BALDWIN: 3 MR. HOPTAY: 4 Okay. Perlite is much more of a tortuous path. 5 MS. BALDWIN: 6 MR. KATCHMAR: 7 Gotcha. Thank you. The cable holds the fiberglass only. 8 MR. HOPTAY: 9 MS. BALDWIN: 10 Gotcha. Right. The cable holds the -- yeah, uh-huh. 11 MR. KATCHMAR: The fiberglass is right 12 against the inside tank and then the annular space has 13 the Perlite. 14 MS. BALDWIN: 15 MR. HOPTAY: Gotcha. Right. So the plank gets put 16 on first, wrapped. 17 ports, the Perlite is poured in or actually injected in 18 so... And then through the Perlite fill 19 MS. BALDWIN: 20 MR. EWING: 21 MR. HOPTAY: 22 MR. EWING: That's helpful. So, Joe -Yes. -- continue to tell us a 23 little about what the containment philosophy is for this 24 kind of a design. 25 MR. HOPTAY: Right. For this kind of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 92 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 design, because the outer tank, as was mentioned 2 earlier, is not designed to take that -- it's a carbon 3 steel. 4 remote dike. It won't take cryogenic temperatures. 5 There's a Now, the dike is sized for the total 6 capacity times 110 percent. 7 what's -- it's not just where you would normally operate 8 the tank. 9 happened, and then there's 10 percent more than that. 10 So there's -- it's not just It's if it was at its max level and something And it's contained by that remote earthen dike. 11 MS. BALDWIN: 12 MR. EWING: Uh-huh. And this design, we'll talk 13 with Paul Sullivan in a moment about that. 14 a design is set to standards. 15 16 MR. HOPTAY: MR. EWING: Yes. The 110 percent is from Okay. And 59A is the NFPA 59A -- 19 MR. HOPTAY: 20 MR. EWING: 21 Is that correct? 59A. 17 18 This kind of Right. -- which is a National Fire Protection Association code -- 22 MR. HOPTAY: 23 MR. EWING: Yes, for LNG storage. Good. And it's incorporated 24 by reference, the particular edition of it, into the 25 regulations? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 93 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HOPTAY: 2 MR. EWING: 3 94 Yeah. Good. Are there other important things you wanted to contribute on that? 4 MR. HOPTAY: The important thing is that 5 you have two separate structures. 6 container, the LNG tank, has not had any problems. 7 was designed -- it's functioned as it is. 8 operational consideration that caused this problem, not 9 a containment problem of the primary container. 10 MR. EWING: The primary It It's an So I want to explore that one 11 more sec and then maybe ask Paul to come up and expand 12 on that. 13 opposed to -- shall I call it a structural issue -- We're talking about an operational issue as 14 MR. HOPTAY: 15 MR. EWING: 16 17 Yes. -- or an issue as to the integrity of the containment? MR. HOPTAY: Correct. The primary 18 container, the inner tank, shows no evidence of having 19 any problems throughout the period of operation. 20 been not shown to have any concerns. 21 MR. EWING: And the secondary containment 22 would not be that outer tank wall. 23 containment would be the dike? 24 25 MR. HOPTAY: It has Right. That secondary You -- can you pull up the second -- there you go. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 This area right here around each tank is 2 the -- is the dike that is intended to contain the 3 spilled LNG -- 4 MR. EWING: 5 MR. HOPTAY: 6 Okay. And -- -- if there was a catastrophic leak. 7 MR. EWING: Forgive me. Was there any 8 evidence that the secondary containment had any 9 structural or integrity issues? 10 MR. HOPTAY: 11 MR. EWING: 12 95 that some more. Not to my knowledge. All right. And we'll explore Thank you very much. 13 MR. HOPTAY: 14 MR. EWING: You're welcome. I think it would be useful to 15 talk to Paul Sullivan, who is another expert and is 16 going to help us bridge from this design concept and 17 these issues toward hazard and assessment of hazard, 18 because that's the underlying basis for a no action CAO, 19 so -- 20 MR. SULLIVAN: 21 MR. EWING: 22 MR. SULLIVAN: It's really me this time. It is you, Mr. Sullivan. So I'm Paul Sullivan. I'm 23 a consultant to Cheniere, external consult -- I'm an 24 independent consultant, operating in LNG and LNG tank 25 design and construction for the last 30-odd years, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 somewhat similar to Joe but a little bit older. 2 what I've been asked to discuss with you here -- 3 4 MR. EWING: And so Could I pause and just a little bit more introduction -- 5 MR. SULLIVAN: 6 MR. EWING: 7 96 Sure. -- to set the groundwork a little bit, Paul? 8 MR. SULLIVAN: 9 MR. EWING: Sure. Do you work on standard 10 setting organizations in relation to LNG? 11 MR. SULLIVAN: Yeah, which is what I would 12 introduce there. 13 large companies, WorleyParsons, companies of that type, 14 British Gas. 15 code committees in many parts of the world. 16 I've operated internationally for And I happen to have become involved in So the Euronorm, the International 17 Standards Organization, the development of concrete 18 technology for cryogenic tanks and the like. 19 done that over the last 20-odd years. 20 observer frequently at the NFPA 59A proceedings and at 21 the -- at the Canadian Standards Association as well. 22 So, you know, I look at this as being a And I've I have -- was an 23 broad base. 24 in the United States, but the NFPA is used quite 25 frequently internationally as well. Obviously we work exclusively on NFPA here CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 97 So -- but what we find is actually that in 2 an overall sense, in terms of hazard and hazard 3 assessment in terms of dealing with the potential for 4 incidents to happen, you know, the potential for danger 5 to the public, most of the international standards, when 6 you actually work them out back to back, they end up as 7 roughly the same. 8 between them. 9 tanks, particularly of design of incidents involving 10 There's not a huge differential And the issue with the design of LNG the -- involving LNG releases is very similar. 11 What we're looking at in an overall sense 12 is probably from the point of view of any failure of an 13 inner tank, a hypothetical situation, but in terms of 14 other appurtenances and other issues, you know, 15 incidents which have happened in the past. 16 we're looking at is the protection of the personnel on 17 site and the protection of the general public. 18 that point of view, we postulate certain situations 19 occurring, which in actual fact have not really occurred 20 in the historic sense, but they could occur. 21 And what So from Now, what we look at firstly is the 22 vapor escape, the escape of vapor, so either the escape 23 of LNG into a secondary containment system, as we have 24 here, and what happens with that vapor when it goes in 25 there. You know, it comes to ambient temperature. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA It's CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 98 1 a light -- lighter than air gas methane so it will 2 vaporize and it will rise and eventually a cloud will be 3 created. 4 Potentially we then are asked to look 5 at -- by all standards, we're asked to look at the 6 potential that a source of ignition might occur, in 7 which case we will have a fire on the -- on the vapor 8 cloud. 9 It's very, very odd. I mean, it's a very interesting fire to see. 10 It burns like a candle. So your issue is here that we have to make 11 allowances for any of those two occurrences. 12 required by the code. 13 the years in terms of, you know, the movement of vapor 14 clouds or the thermal effect of a vapor cloud, which 15 is -- it reaches an ignition source, is what the effects 16 of that are in relation to external areas which are not 17 controlled by the -- by the project, by the company. 18 That's And what we've determined over And what is determined is that we want to 19 keep that incident and its potential effect on the -- on 20 the external population or external facilities inside 21 the boundaries of the site. 22 is designed. It's a requirement. 23 requirement. It's a PHMSA requirement, obviously. 24 so, therefore, the site has been, you know, well 25 designed in accordance with the appropriate codes. And that is how this site It's a FERC CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA And CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: May I ask you, you were 2 getting right to the issue of exclusion zone and 3 exclusion zone analysis? 4 MR. SULLIVAN: 5 MR. EWING: Yeah. Tell me succinctly for the 6 non-technical, what is an exclusion zone? 7 begin to just tell us about how it doesn't -- an 8 analysis of exclusion zone without doing calculations, 9 but tell us a little -- 10 MR. SULLIVAN: Oh, no. And then I leave the 11 calculations to people brighter than me. 12 always got some great young engineers to do that, you 13 know. 14 know, it was described earlier, I think, by Paul, as, 15 you know, where you would probably go. 16 And I've But -- so the exclusion zone, you know, as, you We have the -- we have the effect that -- 17 under normal operating conditions, we have, you know, 18 certain procedures within the -- within the organization 19 to deal with people's access to certain areas. 20 know, we have -- we have -- if you want to say various, 21 you know, both company and other -- and other issues 22 associated with that. 23 And, you But when we're talking about an 24 incident -- this is really what you're getting at, I 25 think, on exclusion zones. When we're talking about an CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 99 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 incident, we're talking about the effect of a vapor 2 release. 3 potentially a pool of LNG or else methane escaping, as 4 we had here, through the outside -- you know, through 5 the outside tank through the fissures that were created 6 through the cracks that were created. 100 So, therefore, we're looking at, you know, 7 And there are calculations which are 8 developed in relation to the likely distance of that 9 vapor, that vapor cloud, to the source -- the source of 10 methane or to the source of LNG. 11 involved with that are relative -- for the very bright 12 people who do them, are relatively straightforward 13 calculations. 14 were down here. 15 clearly a calculation is carried out by the team, the 16 engineer. 17 sort of deal with the specifics of this -- of this 18 spill. 19 So the calculations And that's what creates the issues that I mean, what I saw here was that And they set these safety barriers back to But if we had, for instance -- nobody has 20 ever explained to me how this could eventually happen 21 and -- but if we eventually had suddenly the incidence 22 of the removal of the inner tank -- I don't know what it 23 is. 24 pull the whole inner tank away. 25 dike. Aliens from space want 9 percent nickel and they It all spills into the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 101 Now we've got a massive, massive, you 2 know, potentially hundred -- you know, if the tanks are 3 full, 160,000 cubic meters of LNG sitting inside that 4 bund. 5 what would happen with that as a vapor cloud. 6 would have clearance distances, which are clearly 7 directed by the code. 8 9 And what has been determined there is, you know, So we If it -- if it found an ignition source, which if we fill the whole dike, it probably would find 10 an ignition source. 11 massive pool fire, which have been well modeled. 12 old -- my old company, BG, we did a lot of that modeling 13 and produced many of the -- of the -- I suppose the 14 standard calculations that go with that. 15 If we did that, then we'd have a My And they -- and what they do is they 16 determine what the heated source is, where it's actually 17 burning off, and then come out in increasing sort of 18 lines of heat flux, which in the U.S. they're sort of 19 Btu's as a parameter for foot squared. 20 the relevant number that we're all looking for to be 21 maintained within the site. 22 Anyway, 1600 is We will have evacuated the site by now, I 23 might add, but -- so what you're looking at is, is there 24 any danger to the public outside the boundary? 25 we look at the 1600 figure, that all is contained within And when CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 102 1 the boundary and the -- you know, the issues are -- 2 these design issues come up always in the permitting 3 phase. 4 I've permitted many items for FERC at 5 times in the U.S., and this is always one of the key -- 6 one of the key factors. 7 MR. EWING: This is -So, Joe (sic), what you're 8 describing in summary is that the exclusions on analysis 9 looks at what you might call a worst case scenario -- 10 MR. SULLIVAN: 11 MR. EWING: 12 MR. SULLIVAN: 13 MR. EWING: A really worst case. -- a full release -Yeah. -- in the specific 14 configuration of the facility, the landscape features, 15 the range of expected weather -- 16 MR. SULLIVAN: 17 MR. EWING: Yeah. -- the wind direction and so 18 forth to assure everyone prior to the construction, much 19 less operation of this, that if the entire dike were 20 actually filled to its design capacity, there would 21 still not be an off-site threat? 22 MR. SULLIVAN: 23 MR. EWING: Correct. All right. I think you've 24 learned a bit about the nature and scale of the release 25 that we're talking about on the 22nd of January. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA Would CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 one have, as part of an exclusion zone analysis, 2 conducted calculations for such a small release? 3 MR. SULLIVAN: You would -- you would 4 after the event inevitably because what you're looking 5 at is to say, you know, are we 40 feet away from it? 6 Are we 50 feet away from it? 7 safety barriers, which is what they eventually did on 8 the site. 9 10 MR. EWING: Where do we erect the And the barriers are on the site? 11 MR. SULLIVAN: Yeah. Oh, well, very much 12 so. 13 capacity of these bunds, right, you go from upwards on 14 200,000 cubic meters of volume and about five -- about 15 five meters deep. 16 potential spill and you see the scale. 17 diminishing the importance of the incident. 18 just stating that is an extremely small leak. 19 I mean, this is -- I mean, you think about the And you look at the 40 meters of MR. EWING: I'm not I'm merely And I think the linkage is 20 important to hazard. 21 allows, with the exclusion zone analysis and the codes 22 that apply, is a level of confidence and a level of 23 certainty that I want you to express about how to gauge 24 the threat posed by an incident of the nature and 25 magnitude of the 22nd of January. So what this design philosophy CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 103 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. SULLIVAN: It -- I mean, I don't want 2 to diminish the incident, but what I would say is in 3 terms of the safety aspect of the incident, it is a 4 relatively small spill. 5 this before that I've dealt with in my previous career, 6 which had nothing to do with the inside of tanks, but 7 maybe to do with valves on the roof and some escape 8 there in quantities of similar amounts. 9 104 There have been spills like And, in fact, in general, even with a 10 liquids spill on a roof, which is going into a general 11 containment area like that, we hardly ever see liquid on 12 the ground. 13 It sort of vaporizes as it's coming down. I mean, this is -- you know, these 14 quantities and at these -- at these levels of leakage 15 are extremely small. 16 ambient temperature is around and realize that in many 17 cases you're not going to get any spillage on the ground 18 here. 19 initial escape with the Perlite from the site, having 20 seen the pictures. 21 I'm holding my hand up here and saying just looking at 22 pictures. 23 spill. 24 25 And you've got to look at what the You probably got it because of the escape -- the I have not seen the site so I'm -- So it's an extremely small -- extremely small MR. EWING: And so is your conclusion -- what is your conclusion about the threat posed by that CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 105 particular event on the 22nd? 2 MR. SULLIVAN: Well, there's no -- 3 there's absolutely no danger to the public. 4 clearly, you know, competent operators would ensure that 5 there's no danger to their operatives. 6 MR. EWING: 7 Ordinarily we would now turn to the rest 8 of our discussion, but it involves additional details, 9 proprietary information and other restricted information And Thank you. 10 that we would need to discuss with you. 11 hard to sort of keep this general enough that everyone 12 could benefit from it, but we need to get into the 13 details. 14 MS. BALDWIN: 15 questions. 16 individuals on the phone? So I have a couple of Can you make this available to our -- the 17 MR. EWING: 18 MS. BALDWIN: 19 To whom? they can have the benefit of -MR. EWING: 21 MS. BALDWIN: 25 Well --- of this, because I will allow it -- 23 24 I'm sorry. To Julie and to Joe so that 20 22 We've tried MR. EWING: When would you like that to happen? MS. BALDWIN: Well, we're going to come up CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 106 1 here on our break pretty soon, but I did want, before we 2 did our -- we had our break, to see if OPS had any 3 questions of the witnesses that you've presented or 4 any -- anything that you'd like to ask. 5 6 MR. PHILLIPS: You want to do it now -- 7 MS. BALDWIN: 8 MR. PHILLIPS: 9 MS. BALDWIN: 10 Yes, we will. Okay. So it's -- -- or should we try to --- 11:06. Yeah, I think that we have -- we have some time. 11 MR. PHILLIPS: 12 MS. BALDWIN: Okay. So if you have just some 13 general questions on this before we move into the 14 proprietary area. 15 MR. PHILLIPS: 16 MR. EWING: 17 If we could keep it framed MR. PHILLIPS: MR. EWING: 21 MR. PHILLIPS: Yeah, yeah. No, I'd appreciate that. And if so, I mean, essentially I'll try to keep it to Joe and Paul -- 23 MR. EWING: 24 MR. PHILLIPS: 25 Sure. we -- 20 22 Yeah. within the bounds. 18 19 Okay. Yeah. -- so we'll even limit it to them, if that works. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. PHILLIPS: 3 information for Joe. 4 sorry. 5 right? 7 Yeah, that's fine. Okay. Joe, you were engaged -- I'm MR. HOPTAY: the site. MR. PHILLIPS: 9 MS. BALDWIN: Subsequent to the incident? And we're talking -- 10 MR. PHILLIPS: 11 MS. BALDWIN: 12 MR. HOPTAY: 13 MR. EWING: 14 MS. BALDWIN: 15 MR. PHILLIPS: I apologize. We're talking to Joe -Hoptay. Hoptay. There we go. Yes. MR. HOPTAY: 18 MR. PHILLIPS: Sorry. Good. For my purposes, I should say. 20 MR. HOPTAY: 21 MR. PHILLIPS: 22 Thank you. You don't have to -- you don't have to stand up. 17 19 Is that That's when I showed up at 8 16 I think we got this Joe, you were engaged on the 29th. 6 107 Yeah. And, Paul -- I forget your last name, Paul. 23 MR. SULLIVAN: 24 MR. EWING: 25 MR. PHILLIPS: Sullivan. Sullivan. Sullivan. Joe -- Paul, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 108 when were you engaged? 2 MR. SULLIVAN: Last week. 3 MR. PHILLIPS: Last week -- 4 MR. SULLIVAN: Yeah. 5 MR. PHILLIPS: -- for this incident as 6 well, subsequent to the incident? 7 MR. SULLIVAN: 8 should correct that. 9 ago. Yeah. But I -- sorry. I I was approached about two weeks 10 MR. PHILLIPS: Okay. 11 MR. SULLIVAN: And we eventually got there MR. PHILLIPS: Gotcha. 12 13 last week. Absolutely. Paul, 14 I wanted to ask you one question just -- you mentioned 15 you didn't want to minimize the incident? 16 MR. SULLIVAN: Yeah. 17 MR. PHILLIPS: Can I ask you why? 18 19 And I know that's a little open-ended. MR. SULLIVAN: Well, any escape of liquid, 20 any crack -- cracked tank, the escape of liquid or gas 21 is a serious incident and is treated as such, but it's 22 treated as such within the context of -- 23 MR. PHILLIPS: Absolutely. 24 MR. SULLIVAN: -- of the codes. 25 MR. PHILLIPS: Yes, absolutely. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Understood. 2 I appreciate it. 109 Thank you. And, Joe, you made a comment. And maybe I 3 just heard it wrong and I just want to clarify it. 4 mentioned that the inner tank operated as designed -- 5 MR. HOPTAY: 6 MR. PHILLIPS: 7 MR. HOPTAY: 8 MR. PHILLIPS: 9 MR. HOPTAY: 10 You Yes. -- as far as you've seen? The tank, yes. The tank itself. Okay. The container, the physical container. 11 MR. PHILLIPS: Right. Okay. Now, is 12 there -- so there were escapes into the annulus from the 13 inner tanks on what sounds like at least 1, 2 and 3? 14 are the escapes designed -- I mean, are the escapes of 15 LNG designed? 16 MR. HOPTAY: 17 MR. PHILLIPS: Could -And maybe it's a lawyer -- 18 I'm a lawyer. 19 enough math to be an engineer -- So, again, I don't -- I didn't know 20 MR. EWING: 21 MR. PHILLIPS: 22 MR. EWING: 23 MR. PHILLIPS: 24 MR. EWING: 25 So May I --- but -- May I suggest something? Sure. There's a good answer to that that we would like to provide. I don't try to get in CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 the way, but -- 2 MR. PHILLIPS: 3 MR. EWING: 4 Sure. -- it would require the level of detail -- 5 MR. PHILLIPS: 6 MR. EWING: 7 MR. PHILLIPS: 8 MR. EWING: 9 110 The next step? -- that we need to discuss. Okay. So we'd like to answer that question -- 10 MR. PHILLIPS: 11 MR. EWING: 12 MR. PHILLIPS: Understood. -- affirmatively. Okay. But just so I 13 understood, you were saying as far as you -- you know, 14 since you were engaged, as far as you've looked at, 15 everything you've seen about the inner tanks were 16 operating as designed? 17 which they were designed has been consistent, nothing 18 has shifted -- The purpose -- the purpose for 19 MR. HOPTAY: 20 MR. PHILLIPS: 21 Okay. Correct. -- or operated erroneously? All right. And just -- and this is 22 a general question, and I'll prob -- I'll pose it to 23 you, Kevin, and knowing that, you know, you can, of 24 course, farm it out to anybody who you feel it's 25 appropriate to. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Is it the contention, as far as we've seen 2 now without having gone into anything proprietary, that 3 escapes from the outer tank are not safety concerns? 4 MR. EWING: No, that is not the 5 contention. 6 threshold needed to issue a CAO. The contention is in relation to the 7 MR. PHILLIPS: 8 MR. EWING: Uh-huh. As you saw from our own 9 response to the event, this operational upset has 10 consequences, needs to be understood, needs to be 11 isolated and dealt with, all of which was accomplished. 12 And I think you would agree with that. 13 111 So our contention is that the CAO was 14 improperly issued because it rests on two, ultimately, 15 determinations -- you can combine them if you will of 16 necessity -- that are based on a threat and an imminence 17 of likely harm that is not supported by the evidence. 18 MR. PHILLIPS: 19 MR. EWING: 20 MR. PHILLIPS: Okay. So it's -- That is our contention. So it's not a question of 21 the safety concern of the LNG escaping the outer tank, 22 which seemingly would not be within the purpose of its 23 design, understanding that you're saying that the outer 24 tank is not part of -- is not meant to contain LNG? 25 MR. EWING: May I -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. PHILLIPS: 2 MR. EWING: Am I saying that correct? Not quite. So conceptually 3 I'll answer it and we can explain that in more detail 4 after we -- 5 MR. PHILLIPS: 6 MR. EWING: 7 Sure. -- have a further discussion -- 8 MR. PHILLIPS: 9 MR. EWING: 10 Sure. -- on details. MS. BALDWIN: Ms. Halliday, do you have 11 any questions at this point? 12 opportunity later on to speak. 13 MS. HALLIDAY: I'll also give you an Yeah. I guess just to make 14 a couple points. 15 the outer tank, so what he presented was correct, but 16 there's also the structural purpose. 17 the roof and it's also protecting the inner tank. 18 112 When Joe talked about the purpose of It's supporting And that's when -- back on January 31st, 19 we had requested, based on, you know, our structural 20 expert asking that, you know, they do a stress analysis 21 on the tank, that -- you know, we wanted to make sure it 22 wasn't damaged to the point where there could be 23 potential escalating or cascading effects, you know, if 24 those cracks continued to propagate in that there was, 25 you know, some sort of -- the structural integrity of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 113 1 that outer tank was potentially at risk that, you know, 2 what would be then the cascading effects of the failure 3 of that tank, the outer tank, on the inner tank? 4 So, you know, I think there's just more to 5 it than, well, if the LNG all came out, it would be in 6 the tank. 7 he did mention ignition. 8 extremely, extremely hot. 9 full of all the LNG, that fire is going to burn. You also have the potential of -- you know, A pool fire of that sort is And if you have that dike There 10 is really no way to put out, you know, an entire tank 11 of -- or entire dike of LNG. 12 don't know how many days, months. 13 long time. 14 That's going to burn for I It would be a really So -- and you're at the point also where, 15 you know, as Adam mentioned, Tank 1 and Tank 3 have 16 vapors emitting continuously and it's uncontrolled. 17 It's -- you know, you -- the wind blows. 18 blow a different direction. 19 understanding of the rate at which the LNG is emitting. 20 It's going to You -- there was not an So I'm just saying that there was 21 certainly more uncertainty as to how to control the 22 vapors that were being emitted and uncertainty as to 23 understanding what the condition of Tank 103 -- the 24 structural condition of that tank was. 25 MR. PHILLIPS: And, Julie, if I could ask CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 114 1 you a question. 2 mentioned -- Paul Nielson mentioned that when you were 3 on site, you know, you were in the -- I believe it was 4 within the dike. 5 You mentioned before and Paul Did you subsequently learn anything that 6 made you concerned about -- a concern for your safety 7 having been on site that day? 8 9 MS. HALLIDAY: You know, I don't think until I got up to it and saw the size of the cracks 10 that, I guess, comprehended, gosh, what -- you know, 11 what is the situation of this tank right now? 12 cracks continue to propagate? 13 Can those You know, you're at that cryogenic 14 temperature still. 15 don't think that I appreciated it until I was close 16 enough -- because I hadn't seen pictures of it, until I 17 was close enough to see it to realize the extent of the 18 cracking. You have the ice balls forming. 19 MR. PHILLIPS: 20 MR. EWING: Okay. I Thank you. So those are questions I want 21 to be able to answer. 22 some unhappiness, our presentations this morning to make 23 them able to be presented in a public sphere. 24 have now run up against the limitation of that, because 25 we would like to address those questions and frankly And we have had to tailor, with And we CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 115 1 would like to have addressed them freely and comfortably 2 and of our own volition up front. 3 MR. PHILLIPS: We have at least one more 4 question we'd like to try to get an answer to, if 5 that -- 6 7 MS. BALDWIN: Okay. now, so just very, very briefly, because I would like -- 8 MR. PHILLIPS: 9 MS. BALDWIN: 10 Well, we're at 11:15 Yeah. -- everyone to have an opportunity for a morning break. 11 MR. PHILLIPS: 12 MS. STEVENS: Fair. Okay. Okay. So I just had a 13 follow-up question for -- was it Joe and Paul who helped 14 Cheniere make the determination that there was no longer 15 a hazard? 16 MR. EWING: Actually a lot of people are 17 involved in that decision, judgment and assessment. 18 Paul has been engaged -- for example, he's the gentleman 19 right behind me -- has been engaged to try to help us 20 explain at this hearing what the relationship is between 21 the design and the standards and the way one looks at 22 hazard. 23 hearing. That's a purpose that's particular to this 24 Other experts here, some of whom you've 25 heard from, more I hope to be able to present to you, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 have been engaged indeed to help illuminate structural 2 issues, evaluate them, help us understand them, and 3 particularly to help you understand them and now 4 ultimately also the presiding officer, so it varies. 5 MS. STEVENS: I mean, and when did 6 Cheniere make the determination that this wasn't a 7 hazard? 8 9 116 MR. EWING: We would love to able to talk about that -- 10 MS. STEVENS: 11 MR. EWING: 12 MS. STEVENS: Okay. 13 MS. BALDWIN: Okay. Okay. -- in detail. So I'm going to 14 adjourn this matter until 11:30. 15 we'll have a closed portion. 16 will let members of the public have access to. 17 hear what the material is and if it's considered 18 confidential, and then will make a determination as to 19 whether or not and when we can open to -- 20 And when we reconvene, So there is a room that we I only intend to go until 12:30. I will We will 21 have a lunch break from 12:30 to 1:30 and then resume at 22 that time. 23 So I will answer your question after I -MR. KLUMP: It's Edward Klump with 24 E&E News. 25 to object on First Amendment grounds for being asked to I just want to put on the record that I want CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 leave. 2 MS. BALDWIN: 3 MR. KLUMP: 4 I -I just want to put that on the record. 5 MS. BALDWIN: 6 MR. EWING: And would he state his name, MR. KLUMP: Yeah. 10 MR. EWING: Thank you. 11 MS. BALDWIN: 7 I appreciate that. please? 8 9 Edward Klump with E&E News. 12 hearing at this time. 13 at 11:30. So I'm going to adjourn the It's 11:17. We'll be back here 14 (Recess from 11:17 a.m. to 11:47 a.m.) 15 (Closed to public) 16 MS. BALDWIN: 17 117 record. Let's go back on the This -- it's -- 18 MS. DAUGHERTY: 19 MS. BALDWIN: 11:47. It's 11:47. So, again, it's 20 my intention for us to go until 12:30. 21 break until 1:30, and then we'll come back here and pick 22 up where we left off. 23 We'll have a Can we have the people on the phone 24 introduce themselves again? 25 MS. HALLIDAY: Julie Halliday. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 118 1 MS. WHITE: Sentho White. 2 MR. SIEVE: And Joe Sieve with PHMSA. 3 MS. BALDWIN: Okay. So these are all 4 PHMSA parties that are on the phone. 5 esteemed colleagues from the Coast Guard, would you mind 6 introducing yourselves just so we -- 7 And then our LIEUTENANT COMMANDER SMITH: Hi. I'm 8 Lieutenant Commander Dallas Smith. 9 Gas Carrier National Center of Expertise in Port Arthur, 10 I run the Liquefied Texas, for the Coast Guard. 11 COMMANDER O'BRIEN: Good morning. I'm 12 Commander Loan O'Brien. 13 Port Arthur. 14 I oversee the Marine safety both with facility and 15 vessel inspections, as well as do Marine casualty 16 investigations. I'm at the Marine Safety Unit, I am the prevention department head where 17 MS. BALDWIN: 18 So when we closed, I believe, PHMSA, we -- Thank you. I appreciate it. 19 you had -- okay. 20 Cheniere. 21 presentation, then I'll allow some more questions 22 from -- So we're going to turn back again to And then after you've completed your 23 MR. PHILLIPS: 24 MS. BALDWIN: 25 Thank you. But I did ask. Were you able to provide your presentation or any of that to our CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 colleagues on the phone? 2 MR. EWING: 3 MS. BALDWIN: 4 MR. EWING: 5 So we have not done that yet. Okay. All right. Let's discuss that. also know the outcome of this -- 6 MS. BALDWIN: 7 MR. EWING: 8 MS. BALDWIN: 9 MR. EWING: Sure. I understand. -- where we would be. Yes. I also have no means of 10 getting it to them. 11 presumably someone here in the room does. 12 MR. PHILLIPS: 13 I didn't email it to me? I don't have addresses, but If you would -- would you I could forward it to Julie. 14 MR. EWING: Okay. 15 MS. SINGH: I am not connected to the 16 Internet here. 17 MS. BALDWIN: Or you can just -- 18 MR. PROTHRO: I can do a -- 19 MS. BALDWIN: -- give her -- 20 MR. PROTHRO: I can do a thumb drive if 21 you want. 22 MR. EWING: 23 MS. BALDWIN: 24 MR. EWING: 25 Let's not do a thumb drive. I mean, I think -Do we have WiFi in here or some -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 119 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. LEMMERMAN: Internet connection up. MR. EWING: 4 MS. BALDWIN: 5 MR. LEMMERMAN: 6 MR. EWING: Oh, good. Okay. I just need to find it. Good. But you have that, too, right? 8 9 I've got an I can send it. 3 7 Yeah. 120 MR. LEMMERMAN: She doesn't have Internet access. 10 MS. BALDWIN: Do you need a thumb drive? 11 MR. PROTHRO: You want a thumb drive? 12 can get a new one. 13 14 That way there's nothing on it. MS. BALDWIN: And then you can just return -- 15 MR. LEMMERMAN: 16 MS. BALDWIN: 17 Yes, sir. Thank you. -- the thumb drive to her. So, again, we'll send these only to the people -- 18 MR. LEMMERMAN: 19 MS. BALDWIN: 20 MS. SINGH: 21 MS. BALDWIN: 22 Yeah. -- that are on the -- I can -All right. Let's go off for just a second. 23 (Brief discussion off the record.) 24 MS. BALDWIN: 25 I again. We're going to get started We were passing out handouts and trying to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 get electronic copies to our physical staff. 2 appears to have happened now and -- 3 4 MR. EWING: But it only went to Julie to the extent that -- there are two others, I believe. 5 MS. BALDWIN: 6 the same space. 7 with Sentho and Joe. 8 9 I don't know if they're in But, Julie, you can also share them MR. EWING: Yeah. MS. BALDWIN: 11 MS. HALLIDAY: 12 MS. BALDWIN: 13 MR. EWING: 14 MS. BALDWIN: Yes. I'll send it now. Yeah. Thank you very much, Julie. And they can just follow along. 16 17 Maybe she has the emails. 10 15 So that Okay. So it looks like we're settled. All right. 18 Mr. Ewing. 19 MR. EWING: Thank you very much. There 20 were a set of statements and issues and concerns right 21 before we broke for our midmorning, late morning break 22 that I want to take up again so that we can talk about 23 them. 24 At the outset, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 121 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 122 1 6 So let's get some facts out there about 10 that. 11 That's confidential for a number of 12 reasons, which we can elaborate if ever necessary, but 13 very important. 14 that. 15 got the facts at hand. And so I'll ask Layne to go through There are a number of people, but I think he's 16 So, Layne, can you just come up? 17 MR. BOUDREAUX: 18 MR. EWING: Sure. And I think what I'm -- what I 19 think would be most instructive is Tank 3 first, then 20 Tank 1 starting at, say, the 22nd and a few dates 21 thereafter, inventory level. 22 MR. BOUDREAUX: 23 MR. EWING: 24 MR. BOUDREAUX: Okay. On Tank 3 first. Okay. So . On CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA -- CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. EWING: Hold on. Sorry. 123 And that -- that's before -- that's on -- 4 MR. BOUDREAUX: That was an . 6 MR. EWING: 7 MR. BOUDREAUX: 11 MR. EWING: The amount. Okay. Okay. So the ? 13 MR. BOUDREAUX: 14 MR. EWING: Right. And it was, if you will, a 15 ? 18 MR. BOUDREAUX: And -21 MR. EWING: 22 MR. BOUDREAUX: 23 24 25 Okay. -- with some slight fluctuation there. MR. EWING: All right. Thank you. then on Tank 1? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA And CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BOUDREAUX: 2 Okay. I'll start with the . 3 MR. EWING: 4 MR. BOUDREAUX: Excuse me. 5 in that tank. 6 MR. EWING: 7 MR. BOUDREAUX: . 12 On the On the At that point we And quote, 14 15 ? MR. BOUDREAUX: was , we had about Okay. MR. EWING: . So that was -- So it was . On . 18 MR. EWING: 19 MR. BOUDREAUX: 20 22 Comparable to Tank 3? Comparable to Tank 3, and we've held it there since. 21 MR. EWING: Okay. So, in essence, on Tank 3, -25 MR. BOUDREAUX: 124 That's correct. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. BOUDREAUX: 3 MR. EWING: 125 -That's correct. And then on and a 7 8 I think what we wanted to do is make sure that you are Okay? 11 And they were . 15 I think that's all. 16 MR. KATCHMAR: 17 MR. EWING: 18 MR. LEMMERMAN: 19 percentages to feet, please? 20 MR. BOUDREAUX: 21 22 Thanks, Layne. Excuse me. Yeah. Could you change What is Sure. -- I don't have that one right in front of me. MS. KARAUS: Would it be helpful if you've 23 got five minutes to sit down and do those 24 calculations -- 25 ? MR. BOUDREAUX: Give me five minutes just CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 126 to calculate those back for you. 2 MR. KATCHMAR: 3 MR. EWING: Sure. And actually that was my 4 request. 5 would be most meaningful, but yes. I had asked for percentages. 6 MR. PHILLIPS: 7 MS. KARAUS: 8 MR. EWING: I thought it Blame it on the lawyers. Yes. There's also a -- , you do that -- you do not do that 10 You want to do that . You just need to 12 . 15 So the 19 MS. BALDWIN: 20 MR. EWING: 21 Uh-huh. And I don't have that at hand, but I think that's probably well understood. 22 MS. BALDWIN: 24 MR. EWING: 25 So I have trouble hearing you, ma'am. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 3 MR. EWING: 4 MS. BALDWIN: 5 MR. EWING: 6 That is correct. Okay. Good. The other aspect of that and the reason for talking about 12 13 127 That's not in the scope of what the facts on the ground here would have permitted to happen, , right side of the 15 bowtie, but because of the So that -- I want to be clear 17 18 about that. On the record in public, I would also -- 19 if we can get back to that at the appropriate time, I 20 would like to make some general statement to that effect 21 that is explanatory, not argumentative but explanatory, 22 without perhaps the same precision around the numbers. 23 MS. BALDWIN: 24 MR. BOUDREAUX: 25 MR. EWING: Okay. I have them ready when -- Oh, good. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BOUDREAUX: 4 MR. KATCHMAR: 5 MR. BOUDREAUX: Okay. 128 So And then So just -- I was trying 8 to put that in perspective. 9 MR. KATCHMAR: 10 would be -- 11 12 So MR. BOUDREAUX: is about where we're at on that range, and . 14 Tank 4, we were -- 15 MR. KATCHMAR: . 16 MS. BALDWIN: He said Tank 1. 17 MR. BOUDREAUX: 18 I'm sorry. Tank 1. I looked at the 4. 19 MR. KATCHMAR: 20 MR. BOUDREAUX: , isn't it? at -- on the -23 24 25 MR. KATCHMAR: you said . Whoa, whoa. What was that? MS. BALDWIN: So on the -- ? . CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. KATCHMAR: 2 MR. BOUDREAUX: 3 MR. KATCHMAR: 129 ? . And then on you said? 5 MR. BOUDREAUX: 6 MR. KATCHMAR: 8 MR. BOUDREAUX: . And then, again, Is 11 MR. KATCHMAR: 12 MR. BOUDREAUX: 13 MR. KATCHMAR: 14 MR. EWING: 15 Another area of interest and concern that 16 was expressed -- this is a longer discussion -- relates 17 to the issue, Julie, that I didn't feel I could raise 18 earlier because then I wouldn't be able to explain 19 fully, so I'm glad you raised it, and that has to do 20 with the concern that you have about Okay. Does that answer -Thank you, sir. Thanks, Layne. 23 That's my shorthand rendition of what I 24 believe Julie was raising, but let me -- I do want to 25 address that. But I also want to know, Julie, is that a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 130 fair articulation of the concern? 2 MS. HALLIDAY: Right. That was the 3 request we made that, you know, a finite element 4 analysis be performed so that there was an understanding 5 of what the potential -- you know, what were the 6 8 propagate? 9 MR. EWING: Got it. Thank you. I just 10 wanted to be sure that we would be responsive. 11 like to ask Mark to come on up. 12 mic, why don't you introduce yourself briefly. 13 may ask for more, but let's just sort of -- let's get 14 rolling. 15 MR. BARTEL: Sure. So I'd And as you get to the And I My name is Mark 16 Bartel. 17 Engineering. 18 before that, I worked for Industry from 1982 until 2008. 19 I'm a metallurgical consultant with Stress I've been with Stress since 2008. MR. EWING: All right. And Would it be fair 20 to say that the area in which your expertise lies in 21 which you function right now relates to metallurgical 22 integrity structure? 23 MR. BARTEL: 24 MR. EWING: 25 Yes, sir. Very good. So our intention in having Mark here is, in fact, to be able to address CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 131 1 these concerns and perhaps others, but mainly this one. 2 So let me start simple and then we'll get quickly into 3 the meat of it. 4 In broad terms, that we're positing or 6 exploring for a moment, that is to say, we 9 need to remember that ultimately, even if that happened, 10 14 15 And from a safety standpoint or hazard analysis standpoint, it needs to be then looked at 18 19 22 So with that predicate, tell us a little bit about your MR. BARTEL: From a metallurgical 23 perspective only, not a finite element analysis, which 24 is not my area. 25 MR. EWING: Yeah. Thank you. And if you CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 could step closer -- 2 MR. BARTEL: 3 MR. EWING: 4 132 Sure. -- they will probably hear you better, too. 5 MR. BARTEL: Sure. 6 MR. EWING: Thanks. 7 MR. BARTEL: 8 on the 9 for the first time on the I was first communicated with by Cheniere. I visited the site . And at that 10 time I was informed that one of the concerns that was 11 voiced by PHMSA was the 13 My understanding -- the understanding that 14 I had at the time is that there was some amount of LNG 15 that had entered not only Tank 3 but Tanks 2 and 1 and 16 that the tanks had reacted differently to those episodes 17 and that Tank 3 was currently 19 My -- earlier today, actually on both 20 sides of this discussion, it has been mentioned that 21 there have been episodes of LNG entering the annular 22 space and that -- to my knowledge, at this point only 23 Tank 3 has which released LNG into the secondary 25 containment. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 133 As far as catastrophic failure of Tank 3, 2 what we have to keep in mind here is that the tank has 3 already demonstrated its ability -- though it is 4 obviously not designed to withstand the cold 5 temperatures of LNG, the fact that it is refrigerated to 6 LNG temperatures does not necessarily mean that it is 7 going to suffer a catastrophic failure. 8 9 Understand that the location that was refrigerated on these tanks is within the area -- an 10 isolated area on each of the three tanks as evidenced 11 by -- we have not shown the side view of the four zones, 12 but -- 13 14 MR. EWING: to do that now. 15 16 We haven't, but I would like MR. BARTEL: Okay. Because it just helps -- 17 MR. EWING: I completely agree. We did 18 not show it earlier because of some of the features that 19 are -- 20 MR. BARTEL: 21 MR. EWING: Would be --- not appropriate for 22 everyone. There's a larger one perhaps. 23 Terrific. Thank you. 24 25 MR. BARTEL: Well, yeah. So in the -- in the context of -- this is not a global event to where the entirety CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 of the outer tank is exposed to cryogenic liquid. 2 a very isolated location. 3 represent the four cracks which have been discussed 4 previously. It's And these four zones 5 MR. PHILLIPS: 6 MR. EWING: 7 MR. PHILLIPS: 8 134 Can -- Adam? Can I ask just a quick question -- 9 MR. BARTEL: Please. 10 MR. PHILLIPS: 11 Is zone only being used for purpose of -- -- about what zone means? 12 you're talking about the cracked zones essentially? 13 It's not like a predetermined -- 14 MR. BARTEL: 15 MR. EWING: 16 MR. PHILLIPS: 17 18 19 That was Cheniere's -Yes, that's correct. Okay. So it's not -- this is not -MR. BARTEL: Yeah. That's not Stress Engineering's -- 20 MR. PHILLIPS: Right. 21 MR. KATCHMAR: Well, is it from here to 22 23 24 25 Okay. here or is it here, here, here and here? MR. BARTEL: Those are -- those are four distinct locations. MR. KATCHMAR: So I'm good in between 3 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 135 1 and 4 there and I'm good in between 2 and 3 and I'm good 2 in between 1 and 2? 3 MR. BARTEL: 4 MR. PHILLIPS: 5 Okay. Thank you. Sorry to interrupt. 6 MR. BARTEL: 7 MR. EWING: 8 Yes, sir. Oh, no. That graphic, however, is conceptual in the shape and precise dimensions -- 9 MR. PHILLIPS: Right. 10 MR. KATCHMAR: I understand it. 11 MR. BARTEL: 12 MR. KATCHMAR: 13 MR. BARTEL: No. I'm with you. And obviously -That's where the crack is. Obviously there's no visual 14 cue from this distance that there are issues in those 15 areas not only because of ice build-up, because of -- 16 but because of their size relative to the overall size 17 of the tank. 18 So in my business, what you need to 19 understand about a material that has been refrigerated 20 below where it was intended to be designed is, how 21 global is that refrigeration? 22 And back to what the tank has demonstrated 23 for everyone here in this room and on the phone is that 24 it was able to -- even though it was refrigerated, 25 Tank 3 was able to stop those cracks because in brittle CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 136 1 fracture, one of the -- and Stress Engineering was 2 chartered to produce a White Paper, which we did, and 3 was simultaneously sent to both PHMSA and to Cheniere. 4 5 That White Paper concluded that -- you know, that 10 What we see demonstrated on Tank No. 3 11 with those four isolated zones of cracking is that in 12 brittle fracture there has been investigative work that 13 talk about And so just to understand, 17 So in comparison to even a in the 19 types of potential scenarios that have been discussed. 20 21 MR. EWING: So I wanted to put that in my terms for a second. 22 MR. BARTEL: 23 MR. EWING: Sure. You're saying the ? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BARTEL: 2 MR. EWING: 3 MR. BARTEL: 4 MR. EWING: 6 MR. BARTEL: 8 9 The -And then -The -- -- 5 7 137 Yeah. -- because you would be unable to sense from not there to there. MR. EWING: And that then sets up a question, which I think you should be driving toward 10 also in your review here. 11 does, and what's the potential that it would continue to 12 incrementally or otherwise get bigger? 13 MR. BARTEL: Why would it end where it Yes. Once I had arrived at 14 the site, one of the other understandings beyond the LNG 15 events was that no crack growth had occurred over that 16 period of time from the 22nd of January to my arrival at 17 the site on the 18 . The Even though it likely CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 138 1 . 3 MR. EWING: And we may have a picture -- 4 it's a little hard to see it but maybe it's big 5 enough -- where you can see a little -- 6 MR. BARTEL: 7 Zone 4, Nishita. And if you can blow that up once you have that field picture. 8 MR. EWING: 9 MR. BARTEL: 10 This -- this -- MR. EWING: So stage -Pause. Pause for a minute. 11 Let me explain this for a second. 12 out, but it clearly just now occurred to me that it 13 might be useful. 14 this was in my backup. 15 might be informative to you. 16 sent it to you, but we'll figure out a way to do that. 17 I haven't handed this It didn't make my cut originally so But hearing this, I think it And I apologize I haven't So I just wanted to explain to you that 18 this is not in front of you in paper not deliberately, 19 but I think it's informative. 20 21 MR. BARTEL: And you can -- you can blow up the upper corner by where the tape measure is. 22 MS. SINGH: 23 MR. KATCHMAR: 24 25 So thank you, Mark. I can -- I can try -Enlarge that picture, please. MR. BARTEL: Oh. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. DAUGHERTY: 2 MR. BARTEL: 3 We don't use those words. And I'd love a laser pointer, but that doesn't help -- that doesn't help the -- 4 MS. SINGH: A pen? 5 MR. EWING: No. 6 MR. BARTEL: 7 MR. EWING: 8 MR. PHILLIPS: 9 clicking. 10 11 Here. Oh. It doesn't click. It will work. Just keep Just erase it. MR. BARTEL: 139 So for those on the phone, there is -- And I can't read -- I can't read the tape CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 measure. 2 is 5 6 140 It looks like it's -- it was -- its dimension And so the reason for that slide is to show that that is why Stress Engineering surmised that 7 12 13 So understand that this material, we don't know what temperature it was at, 16 17 MR. EWING: Can you elaborate a bit on the further potential -- once you've observed that the 18 It was 20 21 22 . happened That . Can you then help us -- lead us forward. 23 What is the potential for further cracking either along 24 the same lines or elsewhere in subsequent days and weeks 25 or whatever it may be? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. BARTEL: 141 And we would pretty quickly move out of my expertise and so -- 3 MR. EWING: 4 MR. BARTEL: We can talk to -Yes. So in the , we're looking at that evidence. 6 From there, 11 Because there was no indication of I did not have a concern over, let's say 18 MR. EWING: So that gets toward 19 conclusions that you've drawn. 20 No. 19, that at a very basic summary level tries to 21 express that. 22 And there's a slide, Can you give us some degree of confidence 23 level even in subjective terms or whatever terms you 24 wish about this? 25 to in terms of -- well, a difficult decision to come to Was this a difficult decision to come CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 142 1 in assessing the continued structural integrity of the 2 outer tank as opposed to its susceptibility to 3 catastrophic failure that would have a cascading effect? 4 5 MR. BARTEL: question, please? 6 7 Could you simplify that MR. EWING: man. I don't -- I'll do that. Good What conclusion did you reach? 8 MR. BARTEL: 9 of catastrophic failure. 10 MR. EWING: That the tank was not at risk And what is your rough 11 confidence level about that conclusion? 12 MR. BARTEL: 13 highly confident that Tank 3 is stable. 14 MR. EWING: To this day, the same. Thank you. I'm So I would suggest 15 we might have further discussion of questions that might 16 be useful while he's up there. 17 MS. BALDWIN: 18 MR. EWING: 19 MR. PHILLIPS: 20 MR. BARTEL: 21 MR. PHILLIPS: Do you have any? Okay. I would have one question. Sure. Please. Mark, is your determination 22 that Tank 3 is stable contingent essentially on 23 conditions remaining as they are? 24 25 MR. BARTEL: Those being a de-inventoried tank -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. PHILLIPS: 2 MR. BARTEL: 3 Right. -- that -- Kevin, I'm being asked to speculate. 4 MR. PHILLIPS: 5 MR. EWING: 6 MR. BARTEL: 7 It is. Yeah. Understand this. What I understand is that the . 9 MR. PHILLIPS: 10 MR. BARTEL: 11 MR. PHILLIPS: 12 MR. BARTEL: 14 MR. PHILLIPS: 15 MR. BARTEL: 16 MR. PHILLIPS: 17 MR. BARTEL: 18 MR. PHILLIPS: 19 MR. BARTEL: Right. Right. -- Right. -- as we've shown. I understand. At least in Zone 4. Right. And so the answer to your 20 question is really it was in -- from a load standpoint, 21 I would defer to Matrix and Joe Hoptay as to the 22 function of the outer tank. 23 MR. EWING: 24 MR. BARTEL: 25 There's a -I don't really want to -- I don't really want to stray into that, how different the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 143 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 stresses are between a de-inventoried level and a 2 100 percent level. 3 4 That's just outside of -- MR. EWING: So I'll ask Joe up in a second. 5 MR. PHILLIPS: 6 MR. BARTEL: 7 MR. PHILLIPS: 8 No problem. No problem. Is that -I think so. I think -- let me confer with people who are smarter than me. 9 10 144 MS. BALDWIN: Julie, do you guys have any questions on the phone while we wait for the -- 11 MS. HALLIDAY: Yeah. I guess one. I just 12 want to point out to -- we'd requested, you know, this 13 analysis back on February 2nd and I see the report dated 14 February 21st. 15 month that went by before you had the understanding of 16 what the current situation was in Tank 3. 17 18 So there was, I guess, several weeks, a And my guess would be that, you know, those Right? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA I CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 mean, we've -- 2 MR. PHILLIPS: Can you -- 3 MS. HALLIDAY: We still have this Right? You're still working on 10 that root cause analysis as to how all of these things 11 have happened? 12 13 MR. PHILLIPS: And if I could ask that as a question, if you don't mind. 14 15 145 Julie, understanding that we heard from Mark that , are you satisfied that we have 18 enough information to be confident that we essentially 19 could change the conditions of the Tank 3 as they are 20 and still not experience future cracking? 21 sense? 22 23 MR. EWING: Yeah. Did that make I'm so glad that I'm not the only lawyer who can -- 24 MR. PHILLIPS: 25 MR. EWING: Yeah. -- have trouble CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 with questions. 2 3 MR. PHILLIPS: We twist words. Julie, did we lose you? 5 MS. HALLIDAY: MR. PHILLIPS: 8 asking -- so -- okay. 9 you that. 11 12 Nope. I'm here. I'm following you. 7 10 That's what we do. 4 6 Oh, okay. I'm sorry. Oh, I'm I was -- I was asking Are you confident that -MS. HALLIDAY: Oh. Oh, I'm sorry. I thought you were asking them. MR. PHILLIPS: No worries. No worries. 13 Are you confident, having heard what you've heard 14 today -- and, again, this -- we didn't have this. 15 146 Knowing that we didn't have this before 16 the CAO was issued, knowing that we do have it now even, 17 are you still confident that if the conditions were to 18 essentially go back to what they were on Tank 3 that 19 we -- or that there could not be the potential for 20 future cracking? 21 MS. HALLIDAY: I think as long as, you 22 know, they aren't operating that tank and it's just 23 being maintained in the fashion that it is today, it's 24 not going to continue to crack. 25 things that could make it crack. You've removed those CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 147 1 What I haven't seen yet -- and, granted, I 2 haven't gone through all the material since I was out -- 3 is that finite analysis that determines what is the area 4 that will be -- that was impacted on the tank so when -- 5 you now need to understand what part of that tank needs 6 to be removed and replaced per, you know, the standards 7 that say, you know, "This is an area where the steel has 8 not been impacted." 9 yet. I haven't seen that finite analysis 10 MR. PHILLIPS: Okay. Thank you. 11 MR. KATCHMAR: Yeah. I got one other 12 question. 13 with the four zones on it? 14 15 MS. SINGH: Yes. MR. EWING: And I'd love when you're done to just quickly add something to what Julie just said. 18 MR. KATCHMAR: 19 MR. EWING: 20 Go ahead. Go ahead. Well, I didn't mean to interrupt. 21 22 Give me a moment to find the slide number on that one. 16 17 Could you put that slide back up of the tank MR. KATCHMAR: No, no. That's okay. Go ahead. 23 MR. EWING: 24 MR. KATCHMAR: 25 MR. EWING: I can get in the queue here. I can keep my thought. Good. I'll put a marker down CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 148 1 for discussion later so we're not delaying. 2 important element of our contention, and it's very 3 important to us, is there's a difference between tools 4 that are available to the agency. 5 CAO -- one does not need this CAO in order to ensure 6 that, for example, de-inventorying takes place, finite 7 element analysis or RCFA's -- root cause failure 8 analysis is conducted, et cetera. 9 An One does not need a So the absence of this CAO does not mean 10 that those things don't happen. 11 those things wouldn't necessarily happen without a 12 different tool being in place as between the agency and 13 us. 14 It does not mean that This tool, however, required a threat 15 finding and it is that aspect of it, more than the 16 corrective actions, that is our concern. 17 that threat finding is unsupported and was unsupported 18 at the time. 19 We feel that So I just wanted to clarify that. The -- 20 there is -- there should not be a concern that had this 21 CAO not been issued we would be operating Tank 3 and not 22 doing a root cause analysis, any of this sort of thing. 23 That's not our contention, nor would it be our 24 contention that it would have been prudent and wise for 25 us to do that. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 149 Our contention is that this particular 2 mechanism with engaging us has a predicate finding that 3 is less about uncertainty and is entirely about public 4 threat and that's the aspect of it predominantly that is 5 our grave concern. 6 unfounded. We believe that part of it is I want to be clear about that. 7 We can talk about the other tools a little 8 later to help elaborate and illuminate that important 9 difference. So with that said -- 10 MS. STEVENS: Okay. Was -- okay. Julie, 11 was it presented to you at any point during your 12 communications with Cheniere that there was a plan for 13 them to bring Tank 3 back into service before they did 14 this analysis, before this analysis was performed? 15 MS. HALLIDAY: 16 more time. 17 you're asking. Repeat the question one I want to make sure I answer correctly what 18 MR. KATCHMAR: 19 MS. STEVENS: Okay. Pete's going to ask it. 20 It's a little more technical and I can -- 21 MR. KATCHMAR: So -- 22 MS. HALLIDAY: Okay. 23 MR. KATCHMAR: So, Julie, on your 24 timeline, there's a -- 25 an item that discusses the , there is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 -- 2 MS. HALLIDAY: Yeah. 3 MR. KATCHMAR: -- 4 5 6 Can you -- can you elaborate on that a little bit? MS. HALLIDAY: Sure. So from Cheniere, the way I understood it is that And that's going to 11 12 19 150 . But their -- what they were presenting to me is that they So you would need the -- So you're going to be -- you 23 know, what's -- we still haven't done that -- we still 24 don't know those answers as to exactly why that LNG got 25 into the annular space, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 151 . 2 MR. KATCHMAR: Thank you. The question I 3 had was Zone 2 and 3 appear to be fairly close together 4 with Zone 1 being further apart than -- and Zone 4 being 5 further apart. 6 Had we splashed LNG on that area a second 7 time, hypothetically, what -- do we think that perhaps 8 those cracks might have interconnected? 9 MR. EWING: 10 to a different expert -- I think that's best directed 11 MR. KATCHMAR: 12 MR. EWING: 13 MR. KATCHMAR: 14 MR. HINZ: 15 question for Mark. 16 ask the question again? 17 Mark. 18 19 That's fine. -- with those limitations. We're actually -- I do think it might be a So the question -- sorry. Can you I do think it's directed to MS. BALDWIN: So I think he's asking if, as Julie said, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 Could that have exacerbated the cracking that you observed here? 3 4 MR. EWING: That is a hypothetical question -- 5 MR. KATCHMAR: 6 MR. EWING: 7 MR. BARTEL: 8 Do you mind answering it? One more time do I mind MR. EWING: No. MR. BARTEL: 12 MR. EWING: 13 MR. BARTEL: That is a hypothetical. Is that within your -That was -- that's not a question that I was asked to hypothesize on. 15 MR. EWING: 16 MS. BALDWIN: 17 That is a hypothetical question. 11 14 But at the time -- answering it? 9 10 152 Right. Well, I just have -- okay. So I just -- I have just a couple of questions just -- 18 MR. BARTEL: 19 MS. BALDWIN: Sure. -- about your testimony thus 20 far. 21 Tank 3, they're considered to be brittle? So the kinds of cracks that we're seeing on 22 MR. BARTEL: 23 MS. BALDWIN: Brittle fracture. Brittle fractures, meaning 24 that you have sort of a hundred percent confidence that 25 they were caused because the outer tank was in contact CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 with temperatures that were too low? 2 3 MR. BARTEL: MS. BALDWIN: 5 MR. BARTEL: That -- in the context Right. -- and, you know, the fact that 11 12 Okay. of the information I'm getting -- 4 6 MS. BALDWIN: So the part that I'm trying to understand is -- well, you testified before that with 13 14 , you know, well, I guess ultimately what I'm 18 153 trying to understand ? 21 -- 22 MR. BARTEL: 23 MS. BALDWIN: 24 MR. BARTEL: I came in --- or CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: Okay. 154 So you got 2 information from Cheniere that January 22nd is when they 3 observed the material. 4 confines of this argument that this So is it possible sort of in the , or is it the 7 nature of the cracks that they would have had to have 8 occurred sort of instantaneously right when you started 9 seeing the product escape? 10 11 MR. BARTEL: That speaks to a lot of things so -- 12 MR. EWING: 13 MS. BALDWIN: Yeah. I think -- I'm just asking you to sort 14 of expand on the nature of what -- this is testimony not 15 necessarily just within the confines of this accident. 16 I'm just trying to understand from his testimony what 17 the nature of the crack -- like -- 18 19 MR. EWING: Did it originate from the LNG release on the 22nd -- 20 MS. BALDWIN: 21 MR. EWING: 22 previously or something? 23 Correct. -- or could it have been there MS. BALDWIN: Correct. 24 observe this kind of crack. 25 brittle means, you know, it's brittle. How you would I mean, brittle -- to me, A brittle CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 fracture to me is kind of an oxymoron in that it 2 couldn't have occurred over a period of time. 155 3 So I'm just trying to understand if what 4 you're saying is that this happened -- instantaneously 5 the crack happened and it was arrested because the tank 6 warmed up, or is it possible, given the circumstances 7 and the information that you know, that this was a slow 8 crack that just became bad enough to actually breach the 9 space as of January 22nd? 10 11 MR. EWING: Do you have an opinion on that? 12 MR. BARTEL: I do. 13 MR. EWING: Please. 14 MR. BARTEL: 17 MS. BALDWIN: 18 MR. BARTEL: Again, understand that Okay. And -24 MS. BALDWIN: 25 MR. BARTEL: So you were --- cryogenic episodes. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MS. BALDWIN: -MR. BARTEL: 4 MS. BALDWIN: 6 You were made aware that there were 3 5 156 On --- tanks that did not result in cracks? MR. BARTEL: You know, That would have to be handled by Cheniere. 10 But that -- you know, but that 16 And so that gets to, you know, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 157 1 4 MS. BALDWIN: Would that have any effect 5 on your hypothesis that the tank is now stable, that the 6 cracks will not exacerbate over time, that they'll just 7 return to their former elasticity? 8 9 10 MR. BARTEL: You know, that -- you know, metallurgical discussion, it's understood that a material that's been refrigerated -- 11 MS. BALDWIN: 12 MR. BARTEL: Uh-huh. -- has more than one property 13 that changes as it's refrigerated if it is these kinds 14 of materials. 15 MS. BALDWIN: 16 MR. BARTEL: Okay. When it is warmed back to the 17 temperatures that it's designed to be operated at, they 18 recover -- they recover those changes and properties 19 that occurred while they were refrigerated. 20 21 MS. BALDWIN: But do they recover in as stable as a form is what I -- 22 MR. BARTEL: 23 MS. BALDWIN: 24 former stability? 25 totally -- Stable? Do they return to their And this is, you know, just a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BARTEL: 2 MS. BALDWIN: 3 Define --- just a commonsense question. 4 MR. BARTEL: 5 MS. BALDWIN: 6 MR. BARTEL: 7 158 I would -So if you have a -I would ask you to define stability. 8 MS. BALDWIN: 9 MR. BARTEL: 10 Say it was a slow crack. MS. BALDWIN: Okay. Okay? And it happened over 11 a period of time and the tank warmed up and the cracking 12 arrested. 13 have a vulnerability at the site of the former cracks or 14 does it return to its pre-cracked state? 15 vulnerability -- is it more vulnerable to a future 16 event? When you return that tank to service, do you 17 18 MR. EWING: Is it more May I interject one thing and then I'll -- 19 MS. BALDWIN: 20 MR. EWING: Sure. 21 your thought for a second. 22 MS. BALDWIN: 23 MR. EWING: -- ask him to answer, but hold Uh-huh. I just want you to know as you 24 explore your interest, which is important to explore, 25 that the predicate or the premise of your question is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 that there would be no repair work done. 2 that we would -- 3 MS. BALDWIN: 4 really just trying to -- 5 MR. EWING: 6 And I'm -- what I'm -- allow this to come back into operation. 7 8 Well, no. Right? 159 MS. BALDWIN: I'm really just trying to test the -- you know, I'm -- . 11 12 So, I mean, just a commonsense question would be that we -- 17 MR. EWING: 18 MS. BALDWIN: And I think --- the threat. I'm just -- 19 again, I'm just asking questions about the testimony 20 that he gave. 21 MR. EWING: I think that that goes heavily 22 to what is the mechanism that generates this 23 phenomenon -- 24 MS. BALDWIN: 25 MR. EWING: Sure. And is it -- -- which is -- which we CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 haven't explored yet. 2 3 MS. BALDWIN: That's what I'm -- yeah. That's what I'm just trying to understand. 4 MR. EWING: 5 MS. BALDWIN: 6 We've love to do that. But one last question and I'll just -- 7 MR. BARTEL: 8 MS. BALDWIN: 9 Well, I -I'm getting far afield now. What confidence do -- you have that if you class -- you 10 classified this again as, like, a brittle fracture. 11 What confidence do you have that that's actually the 12 case? 13 Could it -- what -- if you could put a 14 percentage on it or you have an idea. 15 of -- 16 MS. KARAUS: Give me an idea May I just point something 17 out? 18 this because I share the same interest, but it appears 19 to me that the CAO presented us a preliminary finding 20 that these cracks did propagate quickly. 21 I understand your interest in the science behind And so I'm wondering if there's -- if 22 maybe there's someone at PHMSA -- OPS who has a 23 different opinion now. 24 it would be worth exploring. 25 160 MR. EWING: But if that opinion has changed, Yeah. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 161 MR. KATCHMAR: I've got an additional 3 MR. PHILLIPS: Oh. 4 MR. KATCHMAR: Oh, let's finish this one? 5 MR. PHILLIPS: We're not adjusting our 2 6 question. Well, we were -- preliminary findings related to this. 7 MR. KATCHMAR: Oh, no, not at all. 8 MR. PHILLIPS: I'm just listening to them. 9 Yeah. 10 MR. EWING: I don't -- I think maybe I can 11 summarize my understanding because we're both laypeople 12 when it comes to the answer. 13 14 Right? I think what Mark was suggesting there that -- . 18 19 , the word that you didn't use. 20 MR. BARTEL: 21 MR. EWING: 22 23 And I -- and I would not use. Okay. Then there we go. You pick the words that you like to use. MR. BARTEL: Yeah, yeah, because the 24 material -- the material today is the material that it 25 was when it was fabricated on site back in 2000 and -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HOPTAY: '6. 2 MR. BARTEL: -- '6. 162 So to pull your word 3 -7 MS. BALDWIN: 8 MR. BARTEL: 9 Uh-huh. -- which I think speaks to where you're trying to get at -- 10 MS. BALDWIN: 11 MR. BARTEL: Yes. -- it is -- it is more 12 typical -- and, again, the White Paper broaches this 13 subject because we understand it's what's in the mind of 14 PHMSA, and it's in the mind of Cheniere as well, that 15 So in 25 answer -- so I believe that answers your question. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA So CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 163 1 3 4 MS. BALDWIN: Okay. That's what I was asking. 5 MR. BARTEL: 6 MS. BALDWIN: 7 MR. EWING: 8 MS. BALDWIN: 9 That's fine. Does that -- does that -That's fine. Yes. Yeah. We are woefully beyond our stopping -- our stopping time. I don't want anyone to 10 despair of ever getting a lunch, but I -- if there are 11 any more questions for this particular witness, I -- 12 either on the phone or here, I ask that you -- 13 14 MR. KATCHMAR: Yeah, I do have a question. Can you go to the crack -- the Y-looking crack, Zone 4? 15 MR. BARTEL: 16 MR. KATCHMAR: 17 Is that Zone 4? Zone 2 -- 18 MS. BALDWIN: 19 MR. KATCHMAR: 20 MS. BALDWIN: 21 I don't think we have that. -- if that's possible. The picture is not on here. I think it was -- 22 MR. KATCHMAR: 23 MS. BALDWIN: 24 MR. EWING: 25 We actually prefer here. It was on the other one. Mr. Ewing -- She has it in the back of hers This was -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. SINGH: 2 MR. KATCHMAR: Okay. 3 MS. HALLIDAY: Kristin, if I could just 164 Referring to -- 4 ask a question. 5 asked to look at any of the So -- Mark, did you also -- were you also in 7 the -- for the outer tank, and do you believe that that 8 ? 9 MR. BARTEL: MR. KATCHMAR: 11 MR. BARTEL: We can clarify that. 10 12 I'm sorry. That was my exact question. We are discussing Tank 3 on the phone, Julie, I believe. 13 MS. BALDWIN: 14 MR. KATCHMAR: Yes. 15 MS. HALLIDAY: Well, I think that -- Yes. 16 right. 17 you know, that we have concerns that that We -- you could extend that to Tank 1 as well, , that that's why these vapors are 20 continuing to emit. 21 So there is for some reason vapors 22 communicating from inside the tank to outside the tank 23 through the that vapor 25 is emitting. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 165 Is that -- were you asked also to look at 2 the structural impact -- potential impact on how those 3 failures -- 4 MR. BARTEL: 5 MR. EWING: 6 MR. BARTEL: May I answer Tank 3? Yeah. In the photographs, which are 7 the slide that's up on the screen now -- for those on 8 the phone is what we called Zone 2. . And this So in each location where the -13 MR. KATCHMAR: 14 MR. BARTEL: 15 -- in answer to your question. 16 17 But do you know -- MR. KATCHMAR: Do you -- do you have a answer for 19 MR. BARTEL: 21 MR. KATCHMAR: 22 MR. BARTEL: I do not How far could it go? The -- Joe Hoptay? 24 MR. KATCHMAR: 25 MR. BARTEL: Thickness? It is -- it is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 thick. 2 3 MR. EWING: know how What we don't know is we don't -- 4 MR. BARTEL: 5 MR. KATCHMAR: I do not. Okay. 6 question. 7 thickness of steel all the way up? But let me ask this Is the tank built with the same wall 8 MR. BARTEL: 9 MR. KATCHMAR: MR. BARTEL: 12 and -- 13 MR. KATCHMAR: Okay. 11 The Okay. is this Is there a way that 14 you can analyze the crack and say it had to have this 15 much force to get this far through that thick plate? 16 17 18 166 MR. BARTEL: There would -- there would be a tremendous number of assumptions. MR. KATCHMAR: Okay. But then, you know, 19 if it went that far through that thick plate, which 20 is -- what are we talking? 21 MR. BARTEL: 22 MR. KATCHMAR: 24 MR. BARTEL: 25 MR. KATCHMAR: . CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 167 1 2 MR. BARTEL: 4 MR. KATCHMAR: Okay. 5 MR. PHILLIPS: Mark, were you asked to 6 look at Tank 1 as well? 7 8 MR. BARTEL: MR. PHILLIPS: 10 Right. MR. BARTEL: -- the second half of that question. 12 13 And I don't know that I answered -- I answered -- 9 11 Look at it. MR. PHILLIPS: Did you evaluate it in the same manner? 14 MR. BARTEL: So my understanding was that 15 And I don't 16 want to use Cheniere terms here because this isn't -- 17 this isn't Stress information. 18 19 MR. EWING: MR. BARTEL: 21 MR. EWING: I --- then let's not answer that question. 23 MR. BARTEL: 24 MR. EWING: 25 That -- if you didn't work on that -- 20 22 Yeah. Okay. That's maybe answerable by others here, and we'll do that. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. BARTEL: 168 So -- but to Julie's question -- it is Julie? 3 MS. BALDWIN: 4 MR. EWING: 5 MS. STEVENS: 6 MR. BARTEL: Yes. Yeah. Yes. To Julie's question, 7 , yes, ma'am. 10 you. Why -- bless Why that is happening, I do not know. 11 MR. EWING: That's not your expertise. 12 MR. BARTEL: Especially that it was a 13 -- 14 MR. EWING: 15 MR. BARTEL: 17 MR. EWING: Right. -- And yours is metallurgical, if 18 you will. 19 mechanism of action, and I think that will help get at 20 at least a partial answer to the questions you're 21 asking. 22 We have others here that will address the MR. PHILLIPS: But was -- did we get an 23 answer to were you asked to look at Tank 1 24 metallurgically? 25 MR. BARTEL: From the standpoint of? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. STEVENS: 2 MR. BARTEL: 3 MS. STEVENS: 4 MR. PHILLIPS: 5 MS. STEVENS: 6 MR. BARTEL: 7 At all. Could you clarify? At all. Evaluating -At all. Evaluating it in a different manner than Tank 3? 8 MS. STEVENS: 9 MR. EWING: 10 I mean, you -Well, did you -- did you look at Tank 1, Mark? 11 MR. BARTEL: Did I -- I looked at it in 12 order to answer -- provide the White Paper because 13 they're all the same material built by the -- designed 14 by the same company. 15 that are the discussion today are essentially triplets. 16 And so looking at Tank 3 is looking at 1 and 2 -- So the three tanks, 1, 2 and 3, 17 MR. PHILLIPS: 18 MR. BARTEL: 19 -- from the -- as an answer MR. PHILLIPS: 21 your view of those tanks? 22 MR. BARTEL: And that report includes And that report is germane to all three tanks and says so on -- 24 25 Okay. to your question. 20 23 169 MR. PHILLIPS: again? Gotcha. What was that date Sorry. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BARTEL: 2 MR. PHILLIPS: 3 MR. EWING: 170 The 21st of February. Okay. 21st. Thank you. I want to highlight one point 4 I think is important that you've been -- that you said 5 earlier, which is that the loss of certain metallurgical 6 characteristics through exposure to out-of-design 7 temperatures is regained as those temperatures recede 8 and design temp -- excuse me, design temperatures are 9 reestablished. 10 Is that correct? 11 MR. BARTEL: And that is the conclusion of the White Paper. 12 13 That is correct. MR. EWING: Thank you. I'm aware that you've already signaled you're ready for a break. 14 MS. BALDWIN: Yes. So we're at 12:55, 15 yes. 16 now for lunch. 17 meaning everybody in their seats at 2:00 o'clock -- All right. So let's go ahead and we'll adjourn So try to be back promptly at 2:00, 18 MR. EWING: 19 MS. BALDWIN: 20 Thank you. -- so we can make some more progress. 21 (Recess from 12:55 p.m. to 2:04 p.m.) 22 MS. BALDWIN: 23 24 25 Okay. I think we have everyone back. So let's start with the people on the phone, just for the court reporter. And we can go back CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 171 on the record. 2 Joe, Julie, can you guys just introduce 3 yourself briefly again just so we know exactly who's on 4 the phone? 5 MS. HALLIDAY: 6 MS. DAUGHERTY: 7 MS. BALDWIN: Sure. It's Julie Halliday. And Joe Sieve with PHMSA. Okay. So we can pick back 8 up where we -- where we left off. 9 was done with the questioning of the last witness so -- 10 MR. EWING: 11 MS. BALDWIN: 12 MR. EWING: I mean, I think PHMSA Thank you. -- we're back to Cheniere. I appreciate it. And I hope 13 everyone had a chance to eat. 14 the direction of your concerns and questions. 15 would propose a few things. 16 important to us, one of the concerns that we heard was 17 that we -- that Cheniere was not I would say fast off 18 the mark in bringing in expertise, either internally or 19 externally or in -- or in the nature of its actions. So we've tried to review And I One, a small matter, but 20 And while I was not able to complete it in 21 the timeframe of lunch, I think in very short order what 22 might be helpful if we may suggest that we be allowed to 23 submit it post-hearing is simply a timeline because 24 there were a lot of questions of when was this person 25 hired, when did this happen -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 (Phone beeping) 2 MR. EWING: 172 -- and it seems to me that a 3 full view of that might just on a piece of paper be a 4 helpful thing, and we can compile that and just send it 5 to you. 6 7 MS. BALDWIN: Okay. MS. WHITE: 9 MS. BALDWIN: This is Sentho White. Okay. So Sentho is obviously with DOT as well. 11 12 Who just joined us on the phone? 8 10 Just one second. That's perfectly acceptable to me and I'm sure -- 13 MR. PHILLIPS: 14 MS. BALDWIN: 15 MR. EWING: 16 responsive to some of these questions. 17 No objection. -- to the Region as well. Okay. It just seemed to be We have spent some time this morning 18 talking about concerns relating to structure, structural 19 integrity and the -- the structural condition of the 21 22 tanks. I think -- that is not a bad 23 encapsulation, I think, of your concerns, the potential 24 that there is a consequential catastrophic outcome 25 because of the structural condition of the tanks. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA And CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 173 1 we've been coming at that through a variety of questions 2 ultimately, but I'm not sure that it has fully resolved 3 itself into clarity. 4 Rather than picking up there, what I'd 5 like to do, because we decided among us that it might be 6 the easiest way to get at that, is to -- is to reach 7 over -- kind of work from the outside in, reach over to, 8 well, what's actually the mode of action here? 9 driving the problem? 10 What is And that is a particular mechanism which 11 we can describe -- and that's what I want to do next, a 12 particular mechanism that drives the thermal event and 13 it is the thermal event that is causing the phenomena 14 that we see leading to concerns about structure. 15 So by describing that process, we can get 16 back out to structure and complete that discussion 17 around the concerns with structure and whether or not 18 the structural condition of the tanks are in a state of 19 jeopardy with respect to catastrophe, using catastrophe 20 as a catch-all for everyone's grave concerns. 21 So I'd like to do that. I think that's 22 going to be the easiest. 23 come back to structure in that way, distinguish Tank 1 24 and Tank 3 from a structural standpoint I think more 25 readily than we can now before you understand -- And then we can also, having CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 174 everyone understands what's driving the thermal event. 2 There are a few other things we'd like to 3 do as well, but they are not as large as -- or as 4 important as those because those seem to be driving 5 people's interest and concern and also our desire. 6 that's what we'd like to do. 7 If that's -- if you're amenable -- 8 MS. BALDWIN: 9 MR. EWING: So I am. -- Ms. Baldwin, then what I 10 would ask is -- Maas, you definitely need your glasses 11 for this. 12 Let's -- let me set up this for a second 13 because we have been on the outside of the tank, if you 14 will, there, but really we need to figure out what was 15 driving things to the outside of the tank, if you will. 16 We -- it's useful to do it from the inside. 17 And so when one asks -- when one thinks 18 through, well, what could be doing that, there are a 19 number of I'll call them hypotheses to be explored. 20 This is by no means all of them. 21 Okay? 22 conceptually. 23 bit and why they were disposed of with robustness, that 24 is to say, with some confidence, and that then led us to 25 an understanding and a higher confidence that we did This is one slide. But you can -- and it's stated to be clear I think we might go through that a little CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 understand and do understand what the driving process 2 mode of failure is. 3 So, Maas, start us off a little bit at the 4 top end. 5 want to discuss because we think it is applicable, just 6 conceptually -- maybe I'll start. I think before he gets to the mode that we 7 Conceptually a hole in the inner tank. 8 Right? 9 the LNG get out? I mean, let's talk about the obvious. Well, maybe there's a hole. How did That's 10 not exactly a term of art. 11 Overfilling the tank, that's a concern that one might 12 have. 13 or could it just be spilling out because you got too 14 much in there. 15 16 A hole in the tank. A tank can be overfilled at least theoretically MS. BALDWIN: I'm sorry. For the benefit of the people on the phone also, we're on Page 20 -- 17 MR. EWING: 18 MS. BALDWIN: 19 MR. EWING: 20, right. -- of this exhibit. And there are a variety of 20 others, but those are two basic ones. 21 explain why they can be set aside in the briefest terms 22 in order to get to that third one, which is a 23 process-related mode of failure, if you will, a 24 mechanism for action. 25 175 We want to Let's get a little bit more detail -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HINZ: 2 MR. EWING: 3 MR. HINZ: 4 MR. EWING: 6 MR. HINZ: 7 MR. EWING: 8 MR. HINZ: 9 MR. EWING: 10 11 So let's --- about that. Let's go on to the next slide I think is probably the best way to -- 5 MR. HINZ: Well, just -Okay. -- explain the rationale -Okay. -- just real quick. No problems. So the most likely scenario 13 MR. EWING: 14 MR. HINZ: So what's the So the -- 16 MR. EWING: 17 MR. HINZ: 18 MR. EWING: 20 MR. HINZ: 21 -- So the next slide -- 19 176 The . The next slide, we'll see a drawing of how that works very simply. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 177 1 . That in a 4 nutshell is what we understand to be the -- to be the 5 mode. 6 MR. EWING: We can always come back to 7 that one, but at this point you probably need to 8 visualize this. 9 10 MR. HINZ: Just to orientate everyone, this is the 9 -- 11 MR. EWING: 12 MR. HINZ: We're on Slide 21. Yeah, Slide 21, yeah. This is 13 18 So what we expect is happening is in this 19 25 MR. EWING: So let me -- eccentric. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA I'm CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 eccentric. 2 MR. HINZ: 3 MR. EWING: 4 Okay. Can I put it in my terms for a second -- 5 MR. HINZ: 6 MR. EWING: 7 Go ahead. -- just to make sure everyone understands? 8 MR. HINZ: 9 MR. EWING: Okay. This is not a bad drawing, 16 MR. HINZ: 17 MR. PHILLIPS: 18 178 That's right. Can I just say -- one clarifying question. Is that right? 21 MR. HINZ: 23 MR. PHILLIPS: 24 MR. HINZ: Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. HOPTAY: I do not have their drawings, but I do believe so. 3 4 179 MR. PHILLIPS: It's only -- so at this point ? 7 MR. EWING: -- 9 MR. PHILLIPS: 10 MR. EWING: 11 MR. PHILLIPS: 12 MR. EWING: 13 answer -- but there's -- -- we've been -- MR. PHILLIPS: 15 MR. EWING: think that it is different -MR. PHILLIPS: 18 MR. EWING: -- because they were MR. PHILLIPS: MR. EWING: 23 MR. PHILLIPS: 25 Understood. I just want to orient -- 22 24 Right. designed -- 20 21 No problem. -- intrinsically no reason to 17 19 I wanted to clarify that. And I just don't know the 14 16 Right. Yeah. -- my focus in my head. Thank you. MR. EWING: So carry on. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. KATCHMAR: Can you give us the dimensions here of how far that's -- 3 MR. HINZ: 4 MR. HOPTAY: 5 MR. HINZ: 6 I can't, but Joe can. We'll pull some drawings. So we'll pull those drawings up with -- actually -- 7 MR. PHILLIPS: 8 MR. EWING: 9 MR. PHILLIPS: These aren't to scale? No. 10 MR. EWING: 11 MR. PHILLIPS: 12 MR. EWING: 13 I had to say it. That was a big straw. A joke's in the record. I think you were beginning to state that ? 15 MR. HINZ: 16 MR. EWING: 18 MR. HINZ: 19 MR. EWING: That's right. And, in turn, Yep. And ? 21 180 MR. HINZ: Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 20 MR. EWING: 23 MR. HINZ: 24 MR. EWING: 25 Maas, to be clear, That's right. Because there's only so much we could -- I could manage. But it essentially is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 181 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 ? 2 MR. HINZ: 3 MR. EWING: 6 MR. HINZ: 7 9 182 That's correct. And Okay. We heard it talked about before. MS. BALDWIN: 12 MR. HINZ: 13 MS. BALDWIN: 14 MR. HINZ: 15 MS. BALDWIN: It's the same. Oh, it's the same. Yes. So it's ? 17 MR. HOPTAY: 19 MR. PHILLIPS: 20 MR. HOPTAY: 21 MR. HINZ: 22 MR. HOPTAY: 24 MR. EWING: 25 MR. HINZ: ? It's -- yeah. There's a -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 -- 2 MR. HOPTAY: 3 MR. HINZ: 5 MR. HOPTAY: 6 MS. BALDWIN: 7 I mean, 8 outside of -- 9 183 Right. -- which is That's correct. So what you're saying is -, they are going MR. HINZ: That's correct. 10 MR. EWING: 11 MS. BALDWIN: 12 MR. HINZ: 13 MS. BALDWIN: 14 MR. EWING: . -- ? That's correct. Okay. They are. I gotcha. They're -- , you see, and they -- why don't you 16 come up as well just so we're all handy at the same time 17 and people can hear? 18 This 21 MS. BALDWIN: 22 MR. EWING: 23 MS. BALDWIN: 24 MR. EWING: or is it for -- Okay. And that's important because 25 . CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. EWING: 3 my earlier presentation, 184 Right. And you may remember that from . 6 MS. BALDWIN: 7 MR. EWING: 12 Uh-huh. You're taking the MS. BALDWIN: Where does that -- 14 MR. EWING: 15 MS. BALDWIN: -- 17 . So --- You said it goes -- MR. EWING: And that's right here. I'm 18 going to stand on this side so that they can correct me, 19 but I -- and the reason I want to speak for a second and 20 then I'll hand it right back to the experts -- 21 MS. BALDWIN: 22 MR. EWING: Sure. -- is I want to be sure that 23 you and I -- and you're more expert than I, but that we 24 have it clearly here so it's helpful for both of us. 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 185 in that sense. 2 MR. HINZ: 3 MR. EWING: 4 MR. HINZ: 5 MR. EWING: That's right. . That's right. But then here you see how -15 16 MS. BALDWIN: referring to And that's what you're ? 17 MR. EWING: 18 MS. BALDWIN: 19 MR. EWING: 20 That's -- All right. -- exactly, which, again, has nothing to do with, you know, . 23 Now, to carry it down -- 24 25 right, but what's interesting is -- and this is where you'll pick CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 up. 186 What's interesting is 5 And 6 You said, well, 7 be clear . And I want to -9 MS. BALDWIN: 10 11 MR. EWING: Uh-huh. -- right, which is just a piece of it, but that's the -- and this is the . 15 16 We'll pick up from there. But that is quite distinct from, for example, -- oh, is 20 that yours? I beg your pardon. 22 MS. BALDWIN: 24 MR. EWING: 25 MR. HINZ: And so this is It's Yes, that's right. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 3 MS. BALDWIN: 4 MR. EWING: 5 MR. HINZ: 6 MS. BALDWIN: Which means the Oh, okay. All right? Yeah, that's right. And that is coming -- you're 7 10 MR. HINZ: So coming -- -13 MS. BALDWIN: 14 MR. HINZ: Right. -- at . 18 MS. BALDWIN: 19 MR. HINZ: 23 MS. BALDWIN: 24 25 187 Uh-huh. That will happen as you So do you have any idea of -MR. HINZ: CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. HINZ: 3 MR. EWING: 4 Right. So -I would say, if I may, hold that only because it's specific to the incident also. 5 MS. BALDWIN: 6 MR. EWING: Okay. But maybe this -- that's why 7 this is sort of a conceptual. 8 completion of the conceptual, then we can -- 9 MS. BALDWIN: 10 11 188 MR. EWING: If we can allow the That's fine. -- get to the specifics. Thank you. 12 MR. HINZ: Is there anything else? I 13 think we've explained it. 14 if we can get some questions just to understand what it 15 is Miss -- 16 MR. EWING: 17 MR. HINZ: 18 MR. EWING: I'm just not sure whether -- Well, I -Okay. There's one more element that 19 I want between the two of you to answer, and that is -- 20 so since CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HOPTAY: As Maas pointed out, Okay? 5 MS. BALDWIN: 6 MR. HOPTAY: 11 Right. Or So there's And as I said this 23 morning, Perlite's like sand, so it's a much more 24 tortuous path than flowing through the fiberglass. 25 So believe also, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 189 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 190 1 . 4 MS. BALDWIN: 5 MR. PHILLIPS: 6 me. Any questions? Well, this just occurred to So are -- Is that 10 11 the idea? Is that -MR. HOPTAY: Well, you're going to have 12 15 MR. PHILLIPS: 16 MR. HOPTAY: Uh-huh. Obviously you have a So in that -- in that 18 distance, you're going to have . 20 MR. PHILLIPS: 21 MR. HOPTAY: 23 MR. PHILLIPS: 24 MR. HOPTAY: Right. It's going to Right. But we believe that there's 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. PHILLIPS: 2 MR. HOPTAY: 3 MR. PHILLIPS: 191 Okay. . But in terms of Is that -9 MR. EWING: 10 11 Yes. MR. PHILLIPS: to? Is that where we're headed That's what we're talking about? 12 MR. EWING: That is exactly correct. So I 13 think you're answering a slightly different question, 14 but I get your -- because it's the same question I had. 15 Oh, so it has the 18 and it -- I'll That doesn't mean that . 22 MR. PHILLIPS: 23 MR. EWING: 24 Sure. But which is where you and I, I think, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 helps explain that reason, which is that the 6 MR. PHILLIPS: 7 MS. BALDWIN: 8 question. . Okay. I have just a practical So you said that Right? 11 MR. HOPTAY: 12 MS. BALDWIN: Yes. But it has gotten through 13 14 MR. HOPTAY: Well, it --- 16 MS. BALDWIN: Right. So you don't know 17 ? 18 MR. HOPTAY: 19 MS. BALDWIN: 20 MR. HOPTAY: No. It can -- I think we do know -- You do? -- -- which I probably should have 22 mentioned this morning. At And we've -- and the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 192 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 193 1 3 MS. BALDWIN: 4 MR. HOPTAY: Oh, okay. And that's the one that 5 -9 MS. BALDWIN: 10 MR. HOPTAY: 11 MS. BALDWIN: 12 MR. HOPTAY: 13 MS. BALDWIN: 15 MR. HOPTAY: And are -- -- . -- -- They're --- The bottom is -- can you pull 16 up the one that we talked to this morning, please? 17 think like 3 or 4. 18 19 MR. EWING: Yeah. It was one of the earliest conceptual -- 20 MS. SINGH: The earliest conceptual 22 MR. EWING: Yes. 23 MS. SINGH: This one? 24 MR. HOPTAY: 25 MS. SINGH: 21 drawing? Yeah. That will work. Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA I CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HOPTAY: 2 MS. SINGH: 3 MR. HOPTAY: 194 Well, it's -- I mean -I can -That will work. This -- -14 MS. BALDWIN: 15 MR. HOPTAY: I understand. -- -18 19 MS. BALDWIN: I understand. But you don't have ? 21 MR. HOPTAY: 22 MS. BALDWIN: 23 MR. EWING: 24 MR. HOPTAY: Right. Okay. And -So we're . CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 3 MR. HOPTAY: 4 MS. BALDWIN: 5 195 And you have these Yes. And you called it a -- it's a -- 6 MR. EWING: 7 MR. HOPTAY: 8 MR. EWING: 9 MS. BALDWIN: 10 . It's like . A MR. EWING: -And I think one 11 point that you said so briefly but it's important is 12 that . 14 And so by . 19 MS. BALDWIN: 20 MR. EWING: Uh-huh. Because if we were CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 196 1 Okay. So it's not -- it's not -- if we were 5 . 9 10 MS. BALDWIN: MR. HINZ: Okay. Now, we should point out that 11 16 17 MR. EWING: Can you flip -- it's maybe the next one that shows . 19 MR. HINZ: So -22 MR. EWING: 23 MR. HINZ: 24 25 That's not it. That's the one. So there's -- is not shown on this one, but -MS. KARAUS: It's Slide 8 for those on the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 197 phone. 2 MR. EWING: 3 MR. HINZ: Thank you. So this is the . 7 MS. BALDWIN: You do not see the 8 -- 9 MR. HINZ: Yes, that's correct. 10 MS. BALDWIN: 11 MR. HINZ: 12 MS. BALDWIN: 13 MR. HINZ: 14 -- registering -- We do not So from the top? -- That's correct. 15 MS. BALDWIN: 16 MR. EWING: 17 MR. HINZ: 18 MR. EWING: 19 -- Okay. And -- So it appears to be -To be clear, before you -- to be clear, . 23 That is also one of the things relating to 24 If ever that becomes important, we can explain CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 198 it, but there are So 3 the one on the right -- 4 MS. BALDWIN: 7 MR. HINZ: 8 not shown on here. So There's a which is The It's irrelevant to this discussion, but there 10 are 11 . MR. EWING: It's not -- 13 MR. HINZ: 14 MR. EWING: No. -- for the purpose of 15 16 MS. BALDWIN: 19 MR. HINZ: 20 Are you ever Layne, what's that normal operating mode for -- 21 MR. EWING: 22 MR. BOUDREAUX: 23 Well -Normal operating mode would be . 25 MS. BALDWIN: Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. BOUDREAUX: 199 So prior to this 2 . 4 MS. BALDWIN: 6 MR. BOUDREAUX: 9 MS. BALDWIN: 10 But you don't do Okay. So how were you able to assess the -- you said it was 13 MR. EWING: 14 MS. BALDWIN: 15 MR. EWING: 16 MR. HINZ: The -- The -- is This one here. . . We've never 17 . 19 MS. BALDWIN: And that's by ? 21 MR. HINZ: 22 MR. EWING: 23 MS. BALDWIN: That's correct. That's correct. At what CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 200 -- 2 MR. HINZ: 3 MS. BALDWIN: 4 MR. HINZ: So we --- ? They collect -- that they -6 7 MS. BALDWIN: That they're -- okay. you -- 8 MR. HINZ: 9 MS. BALDWIN: 11 MR. HINZ: 12 MR. EWING: 13 way. 14 15 So They're There's That's correct. And -- great questions, by the And keep them coming. And one of the things that I wanted to clarify -- correct answers. But when you said -- we can explain 19 that in a moment -- 20 21 22 . MS. BALDWIN: you Okay. And that's because these -MR. EWING: Correct. And there was a 23 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 . 5 This is -- means that it's a if you will, . 12 13 So the fact, which we'll come back to, that this is -- 18 19 Right? So you moved it back here. Good. Not bad. Thank you. 20 MS. SINGH: You want it on -- 21 MR. EWING: No, no. 22 MS. SINGH: Here is good? 23 MR. EWING: What -- you have questions? 24 MS. BALDWIN: 25 Anything from Julie or Sentho, anything from you guys? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 201 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. KATCHMAR: 202 Can you back that slide that had the last -- 3 MS. HALLIDAY: Yeah. I just wanted to add 4 that there is a requirement in 59A Section 4.1.2 that 5 LNG containers must be designed to accommodate top and 6 bottom filling unless there's other positive means to 7 provide -- to prevent stratification. 8 MR. HINZ: 9 MS. HALLIDAY: 10 Okay. So while there can be a process, way to make this so that they don't use the 11 , we -- you know, we need more 12 discussions, I guess, in terms of is that going to meet 13 the requirements? 14 15 And then there's also on a drawing -- and maybe you guys could clarify this, but it looks like and -- 17 MS. BALDWIN: What page are you looking 18 at, Julie, just so that we're all referring to the same 19 drawing? 20 MS. HALLIDAY: Oh, I'm sorry. They're 21 actually different drawings, but it's -- when you look 22 at more detailed drawings of the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 203 1 3 And it looks like -- and, you know, maybe 4 there's more detailed drawings that show something else, 5 but it looks like 8 9 10 MS. BALDWIN: Do you guys have any other questions about anything you've heard thus far because I -- 11 MS. McDANIEL: I guess -- ." 17 So ? 19 MR. BOUDREAUX: 20 MS. McDANIEL: 21 MR. EWING: 22 MS. McDANIEL: 25 MR. BOUDREAUX: On Correct. Yes. And That didn't -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. McDANIEL: 3 MR. EWING: 4 MR. BOUDREAUX: 204 Perfect. Okay. So we . 7 MR. EWING: 8 MR. BOUDREAUX: 9 MS. McDANIEL: 10 So that -So we did not -So you're saying you , but to continue my -- but for 11 ? 14 MR. BOUDREAUX: So understand that we had 15 20 MS. McDANIEL: Okay. , though? 22 MR. BOUDREAUX: No. We didn't have the -- 23 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 205 . 2 MS. McDANIEL: So ? 4 5 MR. BOUDREAUX: used, yes. 6 MS. McDANIEL: 7 MS. BALDWIN: 8 understanding. 16 17 There was 19 What -- I'm just not What made MR. BOUDREAUX: address that. Okay. I can -- I can try to So we didn't MS. BALDWIN: So you didn't -21 22 MR. BOUDREAUX: was only the From what I understand, it -- 23 MS. BALDWIN: 25 MR. BOUDREAUX: didn't No. From -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. BOUDREAUX: 206 Okay. It was . 5 MS. BALDWIN: And your concern came where did the concern come 7 from? I'm trying to understand. 8 9 MR. BOUDREAUX: data. 10 11 I have to look back at my MS. BALDWIN: Okay. But there's -- some concern was raised -- 12 MR. BOUDREAUX: 13 MS. BALDWIN: 14 Yes. -- specifically with respect ? 15 MR. HOPTAY: 16 MS. BALDWIN: 17 and at the 18 ascertain, 19 when you Right. And you were able to go back and that ? 21 MR. EWING: 22 MR. HOPTAY: 23 MR. EWING: 24 MS. BALDWIN: 25 MR. EWING: And -- Right. -- which was part of that. Okay. So in your chronology -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. EWING: 3 Yes. -- we would fit that in and say yes -- 4 MS. BALDWIN: 5 MR. EWING: 6 207 That would be helpful. -- it was an incipient "huh" observation. and -- 8 9 MR. HOPTAY: But before that, before we came to a conclusion, . 13 MS. BALDWIN: 14 MR. HOPTAY: 15 MS. BALDWIN: 16 ahead of my -- continue. 17 MR. EWING: 18 19 20 The ? Right. And so -- and I'm getting I'm getting ahead of myself. And I'll make one other point because it was just raised as to the necessity to use a . One does and has that ambidexterity, if you will, in order to That's, however, not our condition. 23 We have , different -- 24 MS. BALDWIN: 25 MR. EWING: Products? Yeah. And, I mean, it's all CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 208 1 LNG, but it can be different than those sourcing and 2 totally -- it can be different temperatures. And so 3 when one is using and dealing with , one does 4 not have the same need for that . I just wanted to clarify from an 6 observational standpoint. 7 MR. WELLER: You would -- you would 8 typically see it in a regasification. 9 me if -- 10 11 MR. BOUDREAUX: That's correct. That's typically -- 12 13 Somebody correct MR. WELLER: Where you would be getting LNG -- 14 MR. BOUDREAUX: 15 MR. WELLER: That's typically in -- -- . 18 MR. EWING: 19 actually making our own. 20 MR. WELLER: 21 MR. HINZ: 22 MR. EWING: But we're an export so we're Which is the whole -Constantly -We're not receiving . 24 MR. HINZ: , CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 209 -- 2 MR. EWING: The second thing I wanted to 3 emphasize, or at least clarify and make sure that people 4 caught is . 8 This means that it was 14 MS. BALDWIN: 15 MR. EWING: 16 Right. And that is how we can explain in answer to your question, Mary, . 22 And that I'll let others speak to but -- 23 24 25 MR. HINZ: That's correct, yeah. Yeah, so -MR. EWING: -- correct or otherwise. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. HINZ: 210 So the position of -- so it appears that That's 7 8 essentially what we understand to have happened. MR. EWING: And this is 11 MS. BALDWIN: 12 MR. EWING: Right. If . Okay. -- correct me if I'm wrong, guys, but to keep 15 things moving -- 16 MR. HINZ: 17 MR. EWING: 21 MS. BALDWIN: 22 This was -It was That's what he said, , yeah. 23 MR. HINZ: 24 MR. EWING: 25 MR. HINZ: Due to the Yeah. The CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA . CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. PHILLIPS: 3 211 Thank you. So just to clarify, it wasn't the ? 8 MR. HINZ: 9 MR. PHILLIPS: 10 11 MR. HINZ: It wasn't -- No. It wasn't? I'm trying to understand the question. 12 MR. PHILLIPS: 13 trying to get the timeline. Yeah. So I'm just sort of So from ? 17 18 MR. EWING: The is not I think what the struggle with the -- 19 MR. HINZ: 20 MR. EWING: 21 MR. HINZ: 23 MR. EWING: 24 MR. PHILLIPS: 25 MR. EWING: So the answer is --- . So the answer is Right. That's why -- It was the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 . 2 MR. PHILLIPS: Right, yeah. So I don't 3 -- 4 MR. EWING: 5 MR. PHILLIPS: 6 MR. EWING: 7 MR. PHILLIPS: 8 212 yeah. That's what --- like that, no. -- was causing the There were . There were -- there were -I guess to say so that . And then it was -, I'm sure. 11 MS. STEVENS: 12 MR. PHILLIPS: 13 MR. EWING: 14 Yeah, . . Right. We had already taken the action to table -- 15 MR. PHILLIPS: ? 17 18 MR. EWING: -- because that was our -- 19 MR. PHILLIPS: 20 MR. EWING: Right. -- . But 21 23 MR. PHILLIPS: 24 MR. EWING: . Yeah. -- and and And some of these slides -- on Page 23, it CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 doesn't quite do full justice to 2 because I only have a page but -- 3 MR. PHILLIPS: 4 MR. EWING: 5 Sure. -- I think that does it. MR. HOPTAY: 7 MR. PHILLIPS: 8 MR. HOPTAY: 9 MR. PHILLIPS: 11 And, of course, Joe here, who's standing there, is -- 6 10 213 Yeah. -- is -Go ahead. MR. HOPTAY: Please. Well, one thing I wanted to point out is that the . 13 MR. EWING: 14 MR. PHILLIPS: 15 MR. HOPTAY: Right. Okay. Okay. There's some that will 16 . 19 So if you have -- you know, All those 22 things go into whether you have the event or not. 23 MR. PHILLIPS: 24 MR. HOPTAY: Okay. And it was . CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: Can you just briefly explain 2 what you mean -- and y'all keep using it, and I do, 3 too -- . 6 MR. HINZ: Yeah. I thought that -- so 7 . 12 13 15 16 MS. McDANIEL: But I would like to ask -- if you can go back to the Okay. So if I'm reading this right -- this is when the report was written -- you had these 17 , and that's . 20 So , I assume, and that's why -- I guess we're 24 25 just not capturing it here. But to me, when I look at it -- and I'm CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 214 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 215 1 not meaning to do the investigation part here, but when 2 I look at it for 5 So I don't know if that 6 you're going to provide Kristin whether that was going 7 to say -- ? 11 MR. EWING: The temperature -- the weather 12 events -- the weather temperature in January of 2018 -- 13 this is your timeline of 1-19, that was -- that was the 14 cold snap. 15 16 MS. McDANIEL: MR. BOUDREAUX: 18 MS. McDANIEL: MR. BOUDREAUX: 21 MS. McDANIEL: 23 24 So I think -There were cold snaps in November and December as well. 20 22 Well, there were cold -- 17 19 Okay. Yeah. So I think the -- That's why I was kind of curious whether there was any other -MR. BOUDREAUX: Take the -- he'll understand that is -- we didn't CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 216 1 2 3 MS. McDANIEL: So you were unaware -- 4 5 Okay. MR. BOUDREAUX: In other words, we weren't -- 6 MS. McDANIEL: 7 MR. BOUDREAUX: 9 MS. BALDWIN: -- -- -- And RCA is? 10 MR. BOUDREAUX: 11 MR. EWING: 12 MS. BALDWIN: 13 MR. EWING: 14 MR. PHILLIPS: 15 MR. EWING: 16 MR. PHILLIPS: Root cause analysis. Root cause analysis. Still working on that. Which is that comprehensive -Are these -- -- and systematic -Are these the I guess? 20 MR. HINZ: 21 MR. PHILLIPS: was it? 23 MR. HINZ: 24 MR. PHILLIPS: And when CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HINZ: 3 MR. PHILLIPS: 4 It was within MR. HINZ: 6 MR. PHILLIPS: So it wouldn't . Gotcha. So that -- you wouldn't have -- 8 9 Okay. have -- 5 7 MS. McDANIEL: It wouldn't MR. HINZ: 11 MR. BOUDREAUX: 12 MR. KATCHMAR: Is that -- 13 MS. McDANIEL: But I'm just kind of That's correct. That's correct. curious from that standpoint then. 22 MR. KATCHMAR: 23 MS. McDANIEL: 24 -- it wouldn't 10 14 217 . Right. Well, going the opposite way, yeah. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 . 4 5 MR. EWING: Let me be sure to understand. You are wondering why ? 7 MS. McDANIEL: 8 MR. EWING: 9 MS. McDANIEL: Yes. When? When you , which is when -- 11 -- however we were calling them, that when 13 you did that -- 14 MR. EWING: 15 MS. McDANIEL: Uh-huh. -- why you -18 MR. EWING: 19 MS. McDANIEL: Right. -- in . 21 MR. EWING: 22 MS. McDANIEL: I think -So by a -- I don't know, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 218 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 . 2 3 MR. EWING: I think there's a -- now I understand your question. Thank you for that. 4 MS. McDANIEL: 5 MR. EWING: Sorry. No, no. I'm -I just needed to pick 6 my way through it. 7 to answer. 8 that 9 industry standard that is applicable that governs, if 10 11 I think there are a couple of ways One is, of course, what's the purpose of And in particular also what is the you will, And both of those determined for us what 12 16 17 219 MS. McDANIEL: And, like I said, I don't disagree with that when -- 18 MR. EWING: 19 MS. McDANIEL: Okay. --- 21 MR. EWING: 22 MS. McDANIEL: Right. -- So my -- you took a remedial action CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 220 to -- 2 MR. EWING: 3 MS. McDANIEL: 6 MR. EWING: Yeah. -- Right. I think -- what I'll 7 say is I think that's a good point to -- observation to 8 make and perhaps that is something we can consider in 9 hindsight with more clarity. But what governed our 10 actions to explain -- to give the answer of why then we 11 would -- what explains the answer 16 So you're in some sense talking about 17 but it's an 21 observation and we take it on board. 22 23 I don't think, though -- this is important. Right? That's important to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 understand. 2 this But this 221 -- I'm pointing to it, but 7 MR. PHILLIPS: 8 MR. EWING: And just -- I want to be sure that that's understood in 11 12 13 15 the theory. MS. McDANIEL: Well, I mean, to be -- it sort of takes it MR. EWING: Well, -18 MS. McDANIEL: 19 MR. EWING: 20 MS. McDANIEL: 22 MR. EWING: 23 MS. McDANIEL: Right. So my -- -- the -- You Yeah. -- so to me -- that's where I'm 25 saying that you thought you were CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 so... 2 MR. EWING: 3 MS. McDANIEL: 4 Yeah. As my double-check, that's what I'm saying, I would think -- 5 MR. EWING: 6 MS. McDANIEL: 9 MR. EWING: 10 Yeah, yeah. -- at that point I take your point and we take it on board. 11 MS. McDANIEL: 12 MR. EWING: 13 MR. PHILLIPS: Okay. Thank you. We're still at the point 14 just -- and tell me if I'm wrong. 15 this is the hypothesis. 16 17 I mean, this is -- MS. McDANIEL: Yeah. We haven't -- yeah. MR. PHILLIPS: Yeah. We haven't confirmed You -- 18 19 222 this. Is that right? I mean, from -- 21 MR. EWING: It's not necessarily clear 22 that one needs to confirm it by putting someone into the 23 tank. 24 25 MR. PHILLIPS: I'm not saying that, but we're -- but this is still a hypothesis. Is that right? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 223 There's no -- 2 MR. EWING: Well, it's a hypothesis 3 that -- you know, in science, you go from hypothesis to 4 theory. 5 MR. PHILLIPS: 6 MR. EWING: Right. Right? Theorum and, you know, 7 -- 8 MR. PHILLIPS: Well, but the -10 MR. EWING: -- but there's a -12 13 MR. PHILLIPS: that So, I mean, we have a 14 . 15 16 We have a -- we know the -- MR. HINZ: Why do you say that? Why do you say 18 19 -- comes to let us know MR. PHILLIPS: Well, trust me. You don't want what I say to be -- 20 MR. WELLER: Let's tease that out -- 21 MS. KARAUS: If you're going to make a 23 MR. WELLER: -- because that's the -- 24 MR. EWING: 25 MS. BALDWIN: 22 statement -- Yeah. I think we shouldn't -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. WELLER: I think we need to go back to -- 3 MS. BALDWIN: 4 MR. WELLER: 5 MS. BALDWIN: 6 and -- back and forth. -- talk over each other. I'm sorry. I'm fine with the back Let's just be mindful of the -- 7 MR. WELLER: 8 MS. BALDWIN: 9 224 Sorry. -- court reporter. So could you, Mr. -- 10 MR. EWING: 11 MR. WELLER: 12 MS. BALDWIN: 13 MR. WELLER: Weller. Weller. Weller. Yeah. Sorry. I think it would be 14 helpful because we -- I think we've done this on maybe 15 prior calls maybe in several weekly briefings with them, 16 but it would be helpful to talk about that because I get 17 where you're coming from, Adam. 18 It's -- okay. And 20 I think we need to talk about the -- 21 MR. PHILLIPS: 22 MR. WELLER: Okay. -- and why that would -24 MR. PHILLIPS: 25 MR. WELLER: Okay. -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA . I CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 think that -- 2 MR. PHILLIPS: 3 MR. WELLER: 4 MR. EWING: 5 MR. HINZ: Sure. That was helpful for me. Yeah. So we talked about the 6 -- 7 8 MS. BALDWIN: -- I'm sorry. I -- 9 MR. HINZ: 11 MS. BALDWIN: 12 MR. EWING: 13 MS. BALDWIN: 14 MR. HINZ: 15 Volume? . I'm sorry. My language becomes a problem -- 16 17 225 MS. BALDWIN: I just want to make sure I get it. 18 MR. HINZ: And that was the that we're 21 concerned with. 22 MR. EWING: Go slow. Let her -- she's, I 23 think, taking this down and let's get clarity on the 24 two. 25 MR. HINZ: Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. HINZ: 10 . So please? 11 MR. BOUDREAUX: 12 MR. HINZ: 15 MS. BALDWIN: 16 MR. BOUDREAUX: 17 23 Since the Can I ask a question? And just to clarify real quick, when he says 20 21 is when they -- MR. EWING: And this is a key distinction from the MS. BALDWIN: Right. So CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 226 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. HINZ: 3 MR. EWING: 227 They were -That's outside -They were engaged early -- 4 earlier than -- the Matrix report -- can you put up the 5 summary? 6 7 It will have the dates, I think. MS. BALDWIN: Yeah. If she goes back one slide. 8 MS. SINGH: Yeah, the one that I -- 9 MR. EWING: Yeah, perfect. 10 So you see they were engaged much earlier. 11 MS. BALDWIN: 12 MR. EWING: 13 MR. HOPTAY: 14 MR. EWING: 15 MR. HOPTAY: When -- this is Yeah, or -- . . Well -- No. -- we got -- I think we were 16 actually brought on board right 17 issued questions to Cheniere to help us understand -- 18 MS. BALDWIN: 19 MR. HOPTAY: 23 MS. BALDWIN: 24 give me just a rundown? . We Right. -- Can you just I mean, you -- the study -- the 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 228 1 ? 3 4 And I'm interested just because I want to understand like what was, you know, But what -- first of all, what is 8 the -- 9 MR. EWING: 10 was it directed towards? 11 12 The purpose of the study, what MS. BALDWIN: study? What was the purpose of the And, two, why was there -- 13 MR. HINZ: 15 MR. PHILLIPS: 16 MR. HINZ: 17 MS. BALDWIN: 18 21 22 one slide? Yeah. -Okay. Can you go back just I read that wrong. MR. HOPTAY: Right. It says, " Well, I mean, we were commissioned to understand what the problem was. 23 MR. EWING: 24 MR. HOPTAY: 25 MS. BALDWIN: Yes. Okay? Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HOPTAY: 229 I'm part of the and so forth. 4 MS. BALDWIN: 5 MR. HOPTAY: 6 looked at the data. 7 questions. 8 apparent to us that Okay. We all got together. We We put together a bunch of When we got that data back, it became , the -12 MS. BALDWIN: 13 MR. HOPTAY: 14 MS. BALDWIN: 15 MR. HOPTAY: Right. -- overfilling, all that. Okay. At that time that . Now, 18 our charge was to understand what happened and give them 19 guidance on how to use it so there was not a problem. 20 MS. BALDWIN: 21 MR. HOPTAY: Uh-huh. It was not their intention -- 22 25 Okay? Now, it's not as widespread as the root cause CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 analysis going on now, but that's what we found. 2 MR. HINZ: 5 MR. EWING: 6 10 And So even though -- to finish it off, even though Right? 11 We nevertheless wanted to understand it. 12 Right? 13 wanted to understand it. Whether we thought we we . 25 230 There's a separate thing, which is, well, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 231 having explained it, is there -- is there a way that one 2 and that's -13 MS. BALDWIN: 14 MR. EWING: 15 MS. BALDWIN: But only up until that -I'm sorry? But only up until the 16 17 18 19 20 MR. EWING: Yes. It would -- the -MS. BALDWIN: So you wouldn't have caught any variations -- 21 MR. EWING: 22 MS. BALDWIN: 24 MR. WELLER: 25 MR. HINZ: -- would -- -- that were I don't think that's -We retrospectively reviewed the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 data to confirm that. 2 MR. EWING: 3 MS. BALDWIN: 4 MS. KARAUS: 5 MR. EWING: 6 Yeah. You can look at -- Right. Okay. So there was -We are continually monitoring it. 7 MS. KARAUS: 10 11 232 -- MR. PHILLIPS: Does that mean, though, that then ? 13 MR. BOUDREAUX: 17 MR. HOPTAY: No. So there was There were . 19 MR. WELLER: And the . 21 MR. EWING: 22 MR. WELLER: 25 It's . They're This is just to show you the history we have. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. KATCHMAR: 4 MR. EWING: 5 MS. STEVENS: 6 MR. EWING: 7 MS. STEVENS: 9 MR. HINZ: So not -It just Correct. When you changed -So -When you Yes. 10 MS. STEVENS: 13 MR. HINZ: 14 MS. STEVENS: Okay. 15 MS. BALDWIN: And in the report that -- Yes, we did. Got it. 16 ? 19 20 MR. HOPTAY: We asked the question during the -- 22 MS. BALDWIN: 23 MR. HOPTAY: Okay. We looked at that CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 233 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 234 1 3 MR. KATCHMAR: Do you know at what 4 -6 MR. HOPTAY: 7 MR. EWING: 8 I do not know that. Sorry. Would you repeat the question? 9 MR. KATCHMAR: Do you know what the 10 ? 12 MR. EWING: 13 MR. SHANDA: 14 MR. BOUDREAUX: 15 Oh. -- ? 16 MR. EWING: 17 MR. BOUDREAUX: 18 MR. KATCHMAR: 19 MR. EWING: 20 MR. KATCHMAR: 21 Are you talking about Yeah. I think -? Yeah. We set it. Okay. I mean, I -So I just -- it's curious to me that the is -- 23 MR. LEMMERMAN: 24 MR. KATCHMAR: -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. HINZ: So that 235 that you're describing is -5 MR. EWING: 6 here. So let me explain the It is essentially a 7 MR. KATCHMAR: 8 MR. EWING: 9 MR. KATCHMAR: 10 MR. EWING: -- . I understand. And I Yeah. Okay. Well, I wanted -- 13 14 No. understand how they work. 11 12 -- MR. KATCHMAR: But I'm just under -- trying to understand -- 15 MR. EWING: So you don't --- 17 18 MR. KATCHMAR: the I'm just talking about . 19 20 No. MR. BOUDREAUX: you saying? Can I repeat what I hear You're asking us 23 MR. KATCHMAR: 24 MR. BOUDREAUX: 25 MR. KATCHMAR: . Yeah. I can't -- Because, I mean, then if CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 the 236 was -- 2 MS. KARAUS: 3 MR. KATCHMAR: And so --- -5 MS. KARAUS: May I? It's a -- it's a good 6 question for an investigation, but I think it might be 7 taking us a little bit off track here -- 8 MR. KATCHMAR: 9 MS. KARAUS: 10 Okay. -- for purposes of discussing the CAO. 11 MR. KATCHMAR: 12 MS. KARAUS: 13 MR. EWING: 14 Is that -That's correct. But a quick answer may be provided right here. 15 16 Okay. MR. GALLAGHER: Gallagher with CBI. Yeah. This is Terry It's -- -19 MR. EWING: 20 MR. GALLAGHER: 21 MR. KATCHMAR: 22 MR. GALLAGHER: 23 . -Okay. And so what its common practice is to CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 Now, what they've done by , again, 9 10 MR. WELLER: But industry practice -- MR. GALLAGHER: Industry practice 11 typically for leak detection have it at the LNG 12 temperature or something very close to it. 13 MR. EWING: 14 MR. KATCHMAR: 15 MR. EWING: 22 MR. KATCHMAR: 23 MR. EWING: 24 MS. BALDWIN: 25 anyone on the phone? And that's -Okay. Thank you. That's why Gotcha. Okay. Thank you. Is there any questions from So we can move forward. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 237 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. PHILLIPS: I was going to ask Julie a quick question -- 3 MS. BALDWIN: 4 MR. PHILLIPS: 5 Julie, I think what you're hearing likely Sure. -- just if I can ask her. 6 is some you've heard subsequent to us issuing the CAO 7 and maybe some new. 8 9 238 Is that correct? MS. HALLIDAY: That's correct. I wasn't aware of the -. 11 MR. PHILLIPS: 12 MR. EWING: Okay. ? I'm sorry. or whatever? 14 MR. MARKOWITZ: 15 MR. EWING: 16 MR. MARKOWITZ: 17 MR. EWING: 18 MS. HALLIDAY: 19 ? MR. EWING: 21 MR. PHILLIPS: 23 Right. I just wasn't aware of that. 20 22 . Okay. Thank you. So is it fair to say that -- I'm sorry. Did I -- is it fair to say then that, you 24 know, in the run-up to the CAO you were learning some of 25 this information piece by piece, didn't know -- you CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 know, we didn't even receive our copy of the Matrix 2 report until the 27th, so, you know, this -- obviously 239 3 , but in terms of our knowledge 5 about it we're coming in relatively fresh? 6 MS. HALLIDAY: Correct. 7 MR. PHILLIPS: Okay. 8 MR. EWING: 9 10 Thank you. So to be clear, we disagree with that characterization and I'd like to explain why. We've been -- just to have them in front of us. Thanks. 15 18 MR. PHILLIPS: 19 characterization, by the way, advise you. 20 to say problems. 21 word would work because I'm not meaning to -- Don't let my I don't mean I mean to say whatever non-pejorative 22 MR. EWING: 23 MS. STEVENS: 24 MR. EWING: 25 MR. PHILLIPS: Yeah. I don't mean to pick -- It's important. -- on the word. Yeah, it is. It is, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 absolutely. MR. EWING: CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 240 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 -- 2 (Phone beeping) 3 MR. EWING: 4 MS. BALDWIN: 5 MR. EWING: 6 MS. BALDWIN: 7 MR. EWING: 8 241 Are we losing a -Somebody dropped off. Okay. That's a leaving beep. While we learned from the 22nd about a more -- that's all in the service of the 10 same purpose because our understanding of the mechanism 11 is not challenged. 12 This is important because there is a -- 13 there is an uncertainty level that's being expressed by 14 PHMSA that is not shared by Sabine Pass, and that -- 15 that's very important for lots of reasons. 16 get right now to something, which is -- Bryn can help 17 illuminate. 18 And we may When there are uncertainties, of course, 19 the mechanism is dialogue and all of that, which I think 20 has been happening in spades and will continue to 21 happen. 22 no notice CAO is not the appropriate mechanism, not the 23 right tool in the tool kit, given the regulatory 24 standard -- 25 The chosen method of engaging us to a CAO -- a (Phone beeping) CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. EWING: Somebody --- given the regulatory 3 standard that's -- I assume it's someone coming on 4 again. 5 MS. BALDWIN: 6 MR. PHILLIPS: 7 MS. BALDWIN: 8 MR. EWING: Yeah. MS. WHITE: Hi. 9 That was someone -Someone just getting on. -- getting back on. Hello. Has someone joined us? 10 11 White. Sorry. This is Sentho My call dropped. 12 MR. EWING: Super. Thank you. So, in any 13 event, we feel that that uncertainty can be resolved 14 numerous ways with tools that are in PHMSA's disposal 15 that do not involve reaching for an unfounded public 16 safety threat. 17 I focus on that because that is why we 18 have asked for this hearing. 19 the conclusion reached that this is and was and 20 continues to be, so long as it's in effect, a public 21 safety threat of the highest order that you have, all 22 right, when that is not correct. 23 242 We are very concerned with This is not to contest that there are 24 things to learn, diagnostics to run, prudent measures, 25 de-inventorying, a bunch of things to talk through, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 things you need to understand and get from us, all of 2 that. 3 We are not proposing that the correct 4 thing was to do nothing or that PHMSA should not do 5 anything with us. 6 reason, which is that resolving uncertainty is 7 distinct -- distinct from drawing the conclusion that 8 there is a public safety threat with that degree of 9 certainty, and I say it is likely -- that is the No. We're here for a very specific 10 standard, likely of serious harm. 11 greatly. 12 That concerns us We do have a public around us. We have 13 shareholders, although that's secondary. 14 economic. 15 meaningful to you. 16 why we think there are other tools that are more 17 appropriate, not that we're -- 18 19 243 This is very meaningful to us. That's It's very So I would like to briefly elaborate MS. HALLIDAY: If I could interrupt and just add -- 20 MR. EWING: 21 MS. HALLIDAY: 22 MR. EWING: 23 MS. HALLIDAY: Yeah. -- one comment -- Sure. -- because I think this is 24 important. 25 I was walked past Tank 1 on the way. When I came down and was escorted to Tank 3, And I had CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 previously asked, were there any other alarms that went 2 off? 3 check." 244 And it was, "I don't think so, but I need to 4 But I was walked past Tank 1 where there 5 were vapors emanating from the bottom of the tank, the 6 temperatures at that annular space , and nobody shared with me that there was an 8 issue with Tank 1. 9 I don't know if you were sharing it with 10 your other employees, with the contractors on site, but 11 you didn't share it with me. 12 you're not sharing with me. 13 know. So I don't know what else I don't know what I don't And it's at that point where you lose trust. 14 MS. BALDWIN: So, Mr. Ewing, I mean, I 15 think further to that point, I'm going to continue -- 16 I'm going to allow you to continue with your 17 presentation. 18 because I think it's important to understand, the -- 19 there's something -- oh, did you do that on purpose? But just in addressing this point, 20 MS. SINGH: 21 MS. BALDWIN: Yes. Okay. Can you put it back 22 to the left, the last slide because I had a couple of 23 questions? 24 It says even here, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 . 245 I would be curious to hear -- 2 you know, we've talked a lot about what the other tools 3 at PHMSA's disposal are to ensure that you make an 4 operational decision that could have a consequence. It 5 7 However, what a CAO is intended to do in 8 some circumstances is to impose corrective actions that 9 obligate an operator to take certain actions and/or 10 precautions. 11 presentation, I would like for you to keep that point in 12 mind -- So as you just proceed in your 13 MR. EWING: 14 MS. BALDWIN: 15 Yes. -- and, you know, give me what the argument -- 16 MR. EWING: 17 MS. BALDWIN: Yes. 18 listened to, you know -- 19 MR. EWING: 20 MS. BALDWIN: -- is because I have I hear you. -- a great deal of testimony 21 at this point and I have not made a decision either way, 22 obviously, but clearly there is a -- there could be a 23 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 I mean, I think that, you know, reasonable 2 people can disagree about certain things, but you have 3 taken at the very least a pretty definitive stance 4 against a procedure that was in use regularly prior to 5 at the very least 2016. 6 in mind. 7 niggling at me at this point. 8 9 10 So I just want you to keep that It's a -- it's a question that's sort of MR. EWING: getting to the key. You bet. I think this is And I would like to do two things -- 11 MS. BALDWIN: 12 MR. EWING: Sure. -- in addressing precisely 13 that. 14 moment to go through that analysis of tools. 15 we're not dictating to the agency what tools, but we're 16 seeking to do that to illuminate the ability to satisfy 17 your needs and concerns and trust concerns, which we 18 hear with concern on our side, with other mechanisms. 19 246 We will go through -- Bryn, I'll ask you in a Recognize But the second thing that I will then do 20 is address the tail end of what you said, which was -- I 21 believe you're communicating an incipient belief or 22 understanding that these indicators that you -- of 23 temperature on these dates, et cetera, indicate that 24 there may have been a serious -- that was the word you 25 used -- likelihood of harm. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 That is incorrect and we want to be sure 2 that you leave today understanding why. 3 of it is really important and . So that piece We're not. And there 5 are mechanisms that are available to you to get 6 comfortable with that. 7 is a counterfactual. 8 not result in that concern -- should not result in that 9 concern that suddenly we would have that likelihood of 10 But even if we did -- and this Okay? Even if we did, it would substantial harm. 11 That's actually not under the -- on the 12 table under any of these scenarios so I want to come 13 back to that because that -- you say it's niggling at 14 you. 15 to get that. Boy, it's an important niggle so I want to be sure 16 17 But let's look at the tools and discuss them in general terms to illuminate the difference. 18 19 MR. PHILLIPS: And I would just say for the record -- 20 MR. EWING: 21 MR. PHILLIPS: Yeah. -- we're glad to hear from 22 Bryn, of course, about the tools. 23 of this hearing, we have to decide whether or not the 24 CAO itself is valid. 25 247 But for the purposes So, I mean -- MS. KARAUS: We totally agree. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MR. PHILLIPS: 3 tools. Agreed. You know, we understand So I'm glad to hear it but -- 4 MR. EWING: 5 MR. PHILLIPS: 6 MR. EWING: 7 248 She's also --- we understand -- -- asked us and she's the hearing officer. 8 MR. PHILLIPS: 9 MR. EWING: 10 Well, of course. So we want to answer her. MR. PHILLIPS: 11 officer wants to hear. 12 obviously -- 13 Whatever the hearing But for our side, you know, MS. KARAUS: Well, so one reason why I 14 want to talk about this a little bit is because there 15 have been -- we understand what we've heard -- most of 16 what we've heard today has been expressions of concern 17 about your ability to conduct an investigation or get 18 information that you need in order to know the status of 19 the situation at Sabine Pass. 20 And you know the agency, of course, has 21 broad investigatory authority, and it's not just 22 because -- it's written out in your regulations in 23 Section 190.203 that you have broad investigatory 24 authority. 25 that you can go and request records, although it does And as part of that, it doesn't just say CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 249 1 say that. 2 at the facility, although it does say that as well. 3 And it doesn't just say that you can show up It also says that you can require testing 4 independently of a -- of a corrective action order. 5 the agency can require a company to conduct testing 6 without the issuance of a CAO, and that's in 7 Section 190.203(d). 8 sufficient, if you -- if you were dealing with an 9 operator who was uncooperative perhaps, there are, of So So -- but even if that was not 10 course, other tools, which I know you are familiar with, 11 and so -- but I will go over them briefly. 12 A notice of proposed safety order, of 13 course, is an option and is a tool that PHMSA has used 14 in the past in somewhat similar circumstances. 15 criteria for issuing a notice of proposed safety order 16 is the -- an integ -- the risk of an integrity threat, 17 which is a different standard from that for -- which is 18 required for a CAO. 19 MR. EWING: And the The risk of integrity threat 20 is very different from a determin -- is special. 21 very different from the determination which is 22 affirmative that there is a threat, and not only that, 23 that it is a likelihood of serious harm, and that 24 difference in threshold is the ballgame. 25 MS. KARAUS: Well, so I want to make It's CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 250 1 clear -- I want to make sure that it is clear, of 2 course, to everybody in the room that a safety order is 3 not some -- it's not like CAO Lite. 4 independent different mechanism which expressly provides 5 for the agency to able to order the company to take 6 corrective measures, very similar to a corrective action 7 order but without that determination of imminent hazard. 8 So it's not -- it's -- it does provide for 9 that type of authoritative corrective action on the part It is an 10 of the agency. 11 opportunity for informal consultation in between the 12 operator and the agency. 13 the information it needs and the two parties can come to 14 a greater understanding of what the actual situation is. It also expressly provides for the 15 MR. EWING: 16 MS. KARAUS: 17 MR. EWING: So the agency can gather all May I amplify on that point? Certainly. It is not just that this -- 18 the safety order allows there to be dialogue, but also a 19 dialogue about what will be the measures that everyone 20 feels comfortable with taking that makes sense to take. 21 So it's not a negotiated document in that 22 sense, but it is a discussion driven and information in 23 respect to the sharing mechanism that drives not just 24 your -- or facilitates not just your investigation but 25 also the decisions you're making on the remedies -- the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 remedies. 251 And so it is a particularly useful tool. 2 We emphasize -- and to Adam's point, it is 3 not for us to elect what tools you choose, and we do not 4 make that presumption. 5 to talk about those other tools in order to highlight 6 the threshold as to threat that distinguishes them 7 without reducing the ability of the agency to ensure 8 itself of information and controls over the actions to 9 be taken. 10 We really don't. But we wanted To a large degree -- to a large degree, we 11 do not have substantive objection to doing many of the 12 things that are in that CAO or CFA. 13 investigations on the spot, the initial conversations 14 internally to hire DNV to do a -- DNV is a very well 15 regarded consulting firm, to do a root cause. 16 We started our Those discussions happened on the morning 17 of the 23rd of January. 18 us that. 19 tools, not to be presumptive, but rather to highlight 20 the difference in standard. We didn't wait for you to tell So that's why we have this discussion about 21 Okay. 22 MS. KARAUS: 23 MR. EWING: 24 MS. KARAUS: 25 If you have -I have -Yes. Yeah. I have just one more thing to add is that you -- it sounds like you have CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 252 1 6 PHMSA has a history of sometimes following 7 an incident, not immediately issuing a CAO but engaging 8 in communication with the operator. 9 least one case that I can think of off the top of my And there's at 10 head, and I'm sure that there are others, where the 11 company then decided to reinstate operation of a 12 pipeline that had just experienced a failure and it was 13 only at that point that the agency said, "Okay. 14 on. 15 going well." 16 Hang We need a CAO because this conversation is not MR. EWING: Specifically you're taking 17 actions that we think are inconsistent with safety. 18 can intervene at this spot. 19 MS. KARAUS: 20 MR. EWING: 21 MS. KARAUS: You As -That's very important. As you know, you can issue a 22 CAO without any notice. 23 indication from Cheniere -- and, please, if anybody 24 behind me disagrees. 25 planning on doing anything like putting the tanks back If you were to get an I don't think that Cheniere is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 253 1 into service without having this conversation. 2 you -- if you were seriously concerned about that, you 3 could, of course, issue a CAO on the same day. 4 MR. EWING: 5 MR. PHILLIPS: But if Yeah. And just as part of -- 6 agreed, just to affirm that. 7 this process from the 22nd to the 8th was that 8 conversation. 9 know, we will always continue the conversation. But part of -- part of And like you said -- you mentioned, you It's 10 never our plan to shut the doors and say, you know, 11 stand on a thing we said 12 years ago and we can't hear 12 anything. 13 That's never how we operate. The 14 conversation always continues. 15 was something that happened on the 22nd and, you know, 16 step by step, as we walked along through those days 17 between the issuance of the CAO, we were not convinced 18 that there was a plan in place that convinced us -- that 19 assured us of safety. 20 But knowing that there That's why the CAO was issued. So, granted, we're not saying that there 21 was a new event on February the 8th. 22 we're saying. 23 the incident on the 22nd to the issuance on the February 24 the -- on February the 8th, there was a conversation 25 going on that didn't assure us that we were getting That's not what There's no new findings at all. But from CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 254 enough information about safety. 2 We're learning new things today, you know. 3 That conversation again is still ongoing, and that's 4 great. 5 a plan that you think works, and that's important. 6 we also need to know that, too. It should be like that. 7 MS. KARAUS: 8 MS. BALDWIN: 9 MS. KARAUS: But we're glad you have But We're the regulators. And -Sorry. I just want to -- 10 MS. BALDWIN: 11 MR. PHILLIPS: 12 MS. BALDWIN: Sure. -- ask. Yes. So, Adam, I'd like for you 13 just to specifically address where the likelihood of 14 serious harm to life, property or the environment is 15 now -- 16 MR. PHILLIPS: 17 MS. BALDWIN: Absolutely. -- or where it was at the 18 date of the issuance of the CAO if it cont -- if it's 19 the Region's contention that it continues today. 20 MR. PHILLIPS: 21 MS. BALDWIN: 22 23 Okay. And I would like to give Mary an opportunity to address that as well as Julie. MR. PHILLIPS: Sure, absolutely. It is -- 24 it's our contention that it did exist both to life, 25 property as the well as the environment. There are CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 major waterways. 2 export facility of LNG in the whole country. 3 you know, obviously a very important infrastructure 4 facility. 5 82 is also there. That is our major This is, The people that were on site, whether they 6 be -- no contention that this is next to a major city. 7 We're not saying that. 8 and I think this is the number we've gotten from 9 Cheniere, 107 people on the site at the time of the But there's at the very least, 10 incident. 11 that a major threat to life. 12 255 That's a major threat to life. We consider Of course, property, you know, being -- 13 there's a bridge right there. 14 infrastructure pieces and obviously any property that 15 Cheniere has that might be imperiled by any sort of fire 16 or, you know, a larger more dramatic event. 17 to make sure I give -- let me give Julie an opportunity 18 first and then Mary, if you want to speak to it. There's major, you know, 19 Julie, have I missed anything? 20 MS. BALDWIN: So I want And, Julie, specifically -- 21 and this is Kristin. 22 given some of the technical testimony that we've had 23 today -- we have more of an understanding now than we 24 had yesterday given Sabine Pass's presentations. 25 I'd like to hear specifically, Given the information about, you know, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 256 1 when the issue was discovered through how the -- you 2 know, what we're positing actually occurred on the 3 actual date of the incident, I'd just like -- 4 MS. HALLIDAY: 5 MS. BALDWIN: 6 MS. HALLIDAY: For me -Go ahead. I'm sorry. It's -- so there's, I 7 think, two points that go specifically to the imminent 8 hazard at the time we wrote the CAO in that there was 9 still continuing uncontrolled release of vapor that was 10 there was still -- the 12 13 of those tanks. 14 And at this point there hadn't been finite 15 element analysis. 16 matter expertise to assess the criticality of those 17 temperatures and those vapor emissions. 18 subsequently -- I mean, if we look like a year from now, 19 we could always -- hopefully we're getting better and 20 improving safety, but at that time that's what was known 21 by Cheniere and by PHMSA. 22 MS. KARAUS: There hadn't been other subject Right? So That was the situation. May I -- may I ask a 23 question? 24 But given those things that you see as possibly leading 25 to -- or pointing to an imminent hazard, what was You've asked two important questions, Julie. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 imminent -- what required the use of the CAO as opposed 2 to a different enforcement mechanism such as a safety 3 order given that the ? 6 MS. HALLIDAY: Well, you say 7 . 12 you know, you can look -- at one point they were 16 looking at Right? 21 24 25 MR. PHILLIPS: And is it fair to say, Julie -- this is Adam -- that we were concerned without CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 257 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 258 1 corrective measures in place -- without corrective 2 measures being in place that conditions might change on 3 the site in a way that we didn't anticipate and didn't 4 think would be safe for operation? 5 6 MS. HALLIDAY: Is that right? Absolutely. I mean, you look at -- there's . 8 what if there's an earthquake? 9 another event that's Right? Now, We now have that nobody can control. 11 MR. PHILLIPS: And so without PHMSA taking 12 action essentially, there is -- you know, without PHMSA 13 taking the CAO action, we were having to count on really 14 outside -- well, you know, our job is safety, number 15 one, just like Cheniere's job. 16 assurances and didn't have the confidence that without 17 the corrective measures, being the CAO, in place that 18 life, property and the environment would be protected. 19 20 21 22 But we didn't have any Mary, I didn't want to cut you off. You were -MS. DAUGHERTY: I apologize, but we have an ugly situation developing. 23 MR. EWING: 24 MS. DAUGHERTY: 25 MR. WELLER: Could you -Not in this room. Can we clarify on the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 record not in -- 2 MS. DAUGHERTY: 3 MS. BALDWIN: 4 MS. DAUGHERTY: For the record -Yes. Not in this room. 5 need to address the situation with the reporter. 6 They're getting -- 7 MS. BALDWIN: 8 MS. DAUGHERTY: 9 So we Okay. The reporter is getting pretty ugly with our folks -- 10 MR. EWING: 11 MS. DAUGHERTY: 12 259 Oh. -- about why they haven't been allowed back in the room. 13 MR. PHILLIPS: 14 MS. DAUGHERTY: So we need to either -- Okay. -- cut them loose, make a 15 decision on how -- what you want to do, but they've been 16 in there for quite a while. 17 MS. BALDWIN: Well, I don't think -- we 18 haven't reached the end of their testimony and we still 19 are discussing certain design elements. 20 we're at -- towards the end of that. 21 choose to leave. 22 them back in. 23 I anticipate They can always If they choose to stay, I may allow MS. DAUGHERTY: How long do you think 24 you're going to go today or do you think you'll wrap 25 over until tomorrow? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MS. BALDWIN: It just -- it depends. 260 What is the extent of sort of Cheniere's presentation? 3 MR. EWING: 4 MS. BALDWIN: 5 MR. EWING: So this is a gut feel. Yeah. And I'm including not just our 6 presentation, but you want to estimate, too. 7 that it being 3:30-ish -- I know you had said 5:00. 8 Maybe that's possible, but I would think by -- certainly 9 by 6:00 things are concluded. 10 MS. BALDWIN: 11 MR. EWING: My gut is Uh-huh. Or if they're not, if there's 12 a specific thing to be explored in some fashion that you 13 would like to explore. 14 MS. BALDWIN: 15 MR. EWING: Uh-huh. But I would think that that 16 can be accomplished. 17 timeframes as well as we can. We are intent on meeting your 18 MS. BALDWIN: 19 MR. EWING: 20 Okay. So I think that can be done. And that includes conversation time and Q and A. 21 MS. BALDWIN: And thank you for reminding 22 me because we still do -- I mean, this conversation 23 about standards, I mean, that's something that can be 24 public. 25 So to the extent there are additional CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 presentations or information that you need to bring 2 forward at this time that you would have a concern with 3 sharing with the public because it's confidential 4 business information, let's -- 5 MR. EWING: 6 MS. BALDWIN: 7 MR. EWING: 8 MS. BALDWIN: 9 261 We'll try to --- table this discussion. Yeah. And let me turn back to Cheniere because I know that we sort of devolved. 10 MR. EWING: 11 MS. DAUGHERTY: Yeah. So to clarify for me, 12 because I'm going to go talk to him, what time should we 13 estimate that he can come back in the room? 14 target? 15 16 MS. BALDWIN: I mean, it depends on how many -- how much additional information -- 17 MR. EWING: 18 MS. BALDWIN: 19 MR. EWING: 20 What's our That depends --- we have to --- on how many questions and how interested -- 5:00, so that gives us -- 21 MS. DAUGHERTY: 22 MR. EWING: 23 MS. BALDWIN: Sometime -- -- an hour past that. Well, let's take five 24 minutes right now because I just want to talk with Linda 25 like very, very briefly. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MS. BALDWIN: 3 Yeah. So let's take five minutes just to camp to the other room. 4 MR. EWING: 5 MS. BALDWIN: 6 Sure. I don't want to make, you know, this -- we do want to get done today -- 7 MS. DAUGHERTY: 8 MS. BALDWIN: 9 record for five minutes and I'll go out. Yeah. -- so let's go off the 10 (Recess from 3:37 p.m. to 3:45 p.m.) 11 MS. BALDWIN: 12 Okay. So let's reopen the -- 13 MR. EWING: 14 MS. BALDWIN: 15 Do we still have everyone on the phone, 16 May I turn this on? Oh, yes. Julie, Joe, Sentho? 17 MR. SIEVE: 18 MS. BALDWIN: 19 MS. WHITE: Yes. 20 MR. SIEVE: Joe Sieve is here. 21 MS. BALDWIN: 22 Joe's here. Anybody else? All right. So we're going to get started. 23 Oh, here's Mary. 24 MS. McDANIEL: 25 MS. BALDWIN: Sorry. Linda might be detained a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 262 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 little bit. 2 1:40 -- is it 2:47? So we'll go back on the record now. 263 It's 3 MS. McDANIEL: 4 MR. EWING: 5 MS. BALDWIN: 6 So in the next 30 minutes, I would like It's 3:47. It's 3:47, yeah. So it's 3:47. 7 for Cheniere, to the extent you have information or any 8 testimony that you need to bring forward that might 9 involve any confidential information, to attempt to 10 11 bring that forward. In that time period, I would also like for 12 the regional staff to, if you have any technical 13 questions, at this point please gather them. 14 again, if we have to do some mop-up at the end, I'm 15 happy to do that, too. 16 But let's -- before we -- you know, we've 17 been in this discussion of the standard of the 18 likelihood of serious harm for a while. 19 something that we can discuss publicly so... 20 MR. EWING: 21 MS. BALDWIN: 22 MR. EWING: 23 And, And that's That -- may I pick up there? Yes. Because that discussion, which I think is central -- 24 MS. BALDWIN: 25 MR. EWING: Right. -- does involve confidential CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 information. 2 might be time constrained, is I've set up a sequence of 3 people and I'm going to be sort of boom, boom. What I'm going to do, anticipating that we 4 MS. BALDWIN: 5 MR. EWING: 6 7 Okay. It's not that I'm trying to rush you guys or anybody. Let me quickly address this, very quickly, 8 Julie's stated concern, lightning strike, earthquake, a 9 couple of quick remarks, just to be clear. I understand 10 those are expressions of concern, fears, but there are 11 rejoinders and responses that do not disrespect that 12 fear but acknowledge it. 13 First, the LNG facilities you must 14 understand, Ms. Baldwin, are designed and configured to 15 withstand seismic events. 16 are well established, and we wouldn't have been able to 17 or allowed to construct it nor would we deem to operate 18 it if they had not met them. 19 do not control God, Zeus or anyone else, but obviously 20 provisions have been made in the design standards for a 21 long time for LNG facilities. 22 264 The codes that apply for that Lightning strike, yes, we The tanks, for example, themselves bear 23 proper grounding. 24 the containment zone is conceivable, but that is not 25 addressed by the CAO versus something else. A strike to a non-grounded part of The CAO CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 does not make that fact go away. 2 understanding of engineering does what it can with 3 respect to that threat. 4 those because they were raised. 5 The design and our So I want to be specific on Now, let me turn to the other element 6 underlying the concerns expressed by you, your niggling 7 feeling, if I may quote, and also to an extent Julie. 8 And I'll ask Paul Sullivan to come on up for a second. 9 10 265 We will address again briefly in a moment whether a in there could happen 12 or be expected to happen. 13 clear. 14 The answer is no, to be very We -- the answer is no there. But setting 15 that aside, even if there were, what is very important 16 to understand, what we started with, is that the 17 facility is configured, designed, constructed -- I don't 18 even say operated -- just the physical, passive elements 19 of it, even if there were a release of the inventory 20 that we have, as much or as little as people 21 subjectively may think it is, it will not result in the 22 vapor dispersion and threats associated with it 23 extending beyond the perimeter. 24 no indicator of anything other than generalized fear, if 25 I may, that that is something to be concerned about And, in fact, we have CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 here. 2 3 What we have, on the other hand, to give us confidence is the design standards and the -- 4 5 266 May I have the exclusive -- Nishita, the exclusion zone slide? 6 This is absolutely CEII. Obviously we're 7 not even going to give you the detailed version. 8 seen one before, I'm sure. 9 with great clarity and with Paul's help in short order 10 You've But I want to express this and then move on. 11 This is the relevant part of the facility. 12 You can see the tanks. These are concentric -- they're 13 not really concentric. I'll call them concentric. 14 These are flux lines. 15 will, that tell us in this case the thermal levels that 16 would be experienced. 17 They're just elements, if you You don't really know perhaps offhand what 18 that feels like, but we can describe what that feels 19 like. 20 facility, and that is if the entire full tank were to 21 catastrophically release its entire contents. 22 talking about anything remotely approaching to that. 23 would be counterfactual. 24 of possibility, and that is because of the inventory 25 level and the design features. And all of that must and is contained within the We're not It It's not -- it's not a matter CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 And this point is so important. 267 I would 2 like Paul to make it since he's the expert and -- on the 3 design. 4 MR. SULLIVAN: I'll follow that briefly 5 and say the 1600 is what we regard as the walk-away 6 line. 7 probably run away in this case, and that's it. Somebody affected would walk away. 8 9 10 They would So regarding that, this actually deals -the full extent of that deals with three tanks having failed because -- that's the reason why it has that 11 . So really I don't think anyone is 12 going to commit to understanding anything different than 13 this is the full extent of code required, you know, 14 safety requirements for every piece of inventory on the 15 site or any piece of inventory on the site to become 16 free from the containment of the tanks. 17 MR. EWING: I would like to point out one 18 aspect of that because it relates to the concerns that 19 were specifically enumerated to justify the likely 20 threat. 21 interstate, et cetera, what I think is the highway. 22 They include highways, waterways, you know, the Please understand -- it's a little hard to 23 see, but you can remember from the photo. 24 is here. 25 The waterway The highway is well beyond this picture. MR. SULLIVAN: Yeah. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: It doesn't get there. 268 There 2 is no mechanism of action that is described anywhere in 3 the record underlying the CAO that even posits a 4 mechanism. 5 mechanism that would lead to threat on that highway or 6 in that waterway. It does not even suggestively indicate any 7 MR. SULLIVAN: 8 MR. EWING: 9 10 Or the waterway, yeah. We would not be allowed to build here -- take the waterway. The Coast Guard is here -- was here. 11 MR. SULLIVAN: 12 MR. EWING: Was here. We would not be allowed to 13 build here. 14 ships coming in and coming out because we cannot 15 afford -- the United States can't afford, we can't 16 afford to have that threat possibility affecting the 17 waterway, any area that could be built residentially, a 18 highway or anything of the sort. 19 In fact, we have to model this for the I'm doing this with a certain oomph for 20 two reasons, speed, which I respect. 21 hour. 22 there. 23 that in order to get there. 24 preceded the construction of the facility as a whole. I've got a half But the second is there's no lack of clarity And one does not need to have done analysis of This preceded -- this 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 . 2 MS. BALDWIN: 3 MR. EWING: Uh-huh. There's an easier way for me 4 to put it than that, I suppose. 5 come up. 6 7 MR. PHILLIPS: And I'll ask Maas to Can I ask one quick question? 8 9 MR. EWING: Oh, please do. I'm sorry. I'm not trying to -- 10 MR. PHILLIPS: Are you contending that 11 it's impossible for your facility to be an imminent 12 hazard? 13 14 MR. EWING: that. I'm sorry. I didn't hear Impossible for? 15 16 269 MR. PHILLIPS: For your facility to ever be an imminent hazard. 17 MS. STEVENS: 18 MR. EWING: Because of its -No. What I -- what we are 19 contending is when you take this analysis, this analysis 20 supports -- it doesn't determine, but it supports our 21 understanding when we evaluate the conditions that we 22 actually have. 23 MR. PHILLIPS: 24 MR. EWING: 25 Sure. I'm really grateful for that question. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 MR. PHILLIPS: zones. MR. EWING: 4 MR. PHILLIPS: 5 MR. EWING: Oh, I know you do. presiding officer -MR. PHILLIPS: 8 MR. EWING: 9 MR. PHILLIPS: -- more than I do, but just -MR. EWING: 12 MR. PHILLIPS: 13 MR. EWING: 15 She gets it -- -- which is important. 11 14 Yeah, for sure. I'm explaining to the 7 10 We understand exclusion We have -- 3 6 Fantastic -Yeah. -- because then much will be clear. So the answer is no, we do not contend 16 that because every LNG facility is built to code or 17 should be built to code that there can never be a 18 CAO-worthy imminent hazard. 19 informed us -- informs us readily to how to calibrate 20 and understand the conditions that we have and how that 21 would relate to hazard. 22 270 Instead, this analysis That is what is important. We have nothing in the record that tells 23 us the mechanism of exposure, the exposure pathway, that 24 is claimed at a very high level of certitude likely to 25 cause a high level of harm. We just don't have that in CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 the record. 2 of people who have been thinking that through. 3 not understand that. 4 We don't see it ourselves. 271 We have a bunch We do And that is the point of difference. We 5 do not object -- we do not object to taking actions -- 6 being under your supervision and taking those actions, 7 ensuring that we have a dialogue on all of those things. 8 It is that finding of necessity that we really, really 9 do not think is fulfilled by the facts. 10 11 So with that and watchful of the time, Maas. 12 What we'd like to establish quickly -- and 13 then I'll turn it to Maas -- is -- and this is the most 14 simple of renderings. 15 we'll leave it there instead of many other slides. 16 condition of Tank 1 and the condition of Tank 2 is, of 17 course, in each case what drives our understanding of 18 hazard from -- or threat from those -- from those tanks. 19 Right? 20 Right? In the interest of time, The And so a finding of -- that they are to be 21 treated the same in the CAO, which is as it appears, 22 must be supported by a similar understanding, or at 23 least analogous understanding, of threat. 24 supported by the dissimilarity of their condition. 25 This is not So we'd like to examine that briefly, CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 first with you and then I'll come to Terry and Joe. 2 3 272 MR. HINZ: So, very simply, while we do have 6 MR. EWING: 7 MR. HINZ: What is NDE? So non-destructive examination. 8 . 16 MR. EWING: Pause. This is an issue that 17 Julie raised. 18 uncomfortable, sort of unhappy as we hear it, that she She felt, I think, I would say 19 . 20 want to re-raise it on her behalf, if you will. 21 worried about I just She was , please. 23 MR. HINZ: The CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 273 1 3 4 MR. EWING: Meaning the was not -- 5 MR. HINZ: 7 MS. McDANIEL: 8 The But it is important to note that that's . 10 MR. EWING: 11 MS. McDANIEL: That -Any . 13 MR. EWING: 14 MS. HALLIDAY: That's correct. Meaning that ? 16 MR. HINZ: 20 MS. HALLIDAY: 21 So it Okay. Because I looked on the . 23 MR. HINZ: 25 MR. EWING: Okay. So that was The , and then CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 274 . 2 MR. HINZ: 3 MR. EWING: That's correct. And there's -7 MR. HINZ: 8 MR. EWING: 9 MR. HINZ: 10 MR. EWING: 16 MR. HINZ: 17 -- by FERC -That's correct. -- and Yes, that's correct. Thank you. 18 19 That's correct. MR. KATCHMAR: And . that correct? 20 MR. EWING: 21 MR. KATCHMAR: Correct. FERC told me it was a 22 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA Is CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 4 MR. LEMMERMAN: It had to do with that -- 5 MR. KATCHMAR: 7 MR. HINZ: 8 275 They say If you actually read the report, that . 10 11 MR. KATCHMAR: heard. It's got a -- that's what I And it was They -- you know, it wasn't -14 MR. EWING: 15 MR. KATCHMAR: FERC is not here so I can't -It wasn't . 17 MR. EWING: 22 MS. KARAUS: 23 MR. KATCHMAR: 24 MS. KARAUS: 25 The Can I -- can I ask -No, it's okay. Before -- you mentioned it, Think we're trying to establish a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 timeline. When did that Does somebody else maybe have the answer? 3 MR. HINZ: 4 MS. KARAUS: 5 MR. HINZ: 6 I'd have to refer to my notes. Okay. I would have to refer to my notes. 7 MR. EWING: 8 MS. KARAUS: 9 MR. EWING: 10 11 MR. HOPTAY: Joe? That's what -Thanks, Maas. As I said this morning, there's 23 24 We can look at them. The plan is to have -- I don't -- it's on this side. But That's when we can make the CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 276 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 277 1 . 3 MR. EWING: 4 MS. HALLIDAY: 5 So -Can I make a comment on the repair? 6 MR. EWING: 7 MS. BALDWIN: Please. 8 MS. HALLIDAY: Okay. Please. The -- so it was -- 9 . 11 But as I read what was done, it -- what they essentially did was . 14 It's -- but that's not the intent. 19 And if you go back to . 22 MR. EWING: 23 MS. HALLIDAY: 24 I think what -I'm concerned that, you know, there's going to be -- with the thought of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 and 278 . 2 MR. EWING: Thank you, Julie. This is 3 Kevin. 4 appropriate dialogue that is resolved through expert 5 discussion and does not actually -- and I'm not pointing 6 out the irrelevance of your remark, not at all. 7 respectfully take it on board. What I would say is that is part of an I 8 The point I want to make is with respect 9 to the CAO, that's -- issuing the CAO and particularly 10 making the hazard finding is not necessary to resolving 11 whatever differences there may be or not about the 12 sufficiency of a particular repair action. 13 can be overseen, supervised, directed, et cetera, 14 through many other mechanisms that do not involve threat 15 if you're really, really to address that. 16 MS. HALLIDAY: Right. All of that And the reason I 17 brought it up was related to the imminent hazard because 18 my concern was that you're going to put Tank 1 back into 19 service without making a permanent -- without, one, 20 doing the analysis to find out if -- what has happened, 21 right, because we don't know about . 23 24 25 Nobody knows. You haven't seen it. There's no way to evaluate it without getting into the tank. MS. KARAUS: that on a legal basis. Well, I'll just respond to A concern that the company might CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 do something just doesn't quite reach the standard that 2 is required for a CAO just -- 3 MS. McDANIEL: Well, if I can speak up, 4 before we took the break, Julie had the opportunity to 5 say -- speak for the immediacy for the -- and then it 6 was the Region's turn and I didn't get to get my turn. 7 So -- 8 9 10 MS. BALDWIN: I do want you to state that, but if it doesn't -- it doesn't relate to a technical matter -- 11 12 279 MS. McDANIEL: Yeah. It sort of applies, though, to the conversation we're having right now. 13 MS. BALDWIN: 14 MS. McDANIEL: Okay. So if it's all right, the 15 Region's position was -- is to support that. 16 folks from our -- two engineers from our office went out 17 there on February the 2nd. 18 was some concern about -- discussions about repair and 19 things. 20 Two field And during that visit, there So the CAO wasn't in place. And so I 21 think there was discussions about maybe putting things 22 back in service prior to a full analysis being done or 23 some of these other parts being done. 24 our imminence -- our immediacy for the CAO was for that 25 reason. So CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 280 1 We did not feel that without the CAO we 2 would be able to have those conversations and get the 3 repairs made as necessary before putting this back into 4 service. 5 there and the discussions that they had when they were 6 on site. And that's based off the engineers' visit 7 And so that sort of supports what Julie 8 has been talking about in getting information and 9 sharing that information and having that forward. 10 their part is sort of what led to the Region also 11 feeling that in order to make the repairs go, the CAO 12 was necessary instead of one of the other tools that 13 were available. So 14 MR. EWING: 15 My quick thought on it, before turning to Thank you for that. 16 the next, in light of time, is the issue that's being 17 addressed there -- the category of issue that's being 18 addressed there is the sufficiency of measures that are 19 being taken. 20 That is wholly different from a conclusion 21 of likely serious harm there, their orthogonal. 22 think that's -- orthogonal's too strong. 23 relationship, but that relationship is attenuated and we 24 don't understand why that concern requires that finding. 25 That concern is resolved through measured actions that And I There is a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 may be required through a number of other mechanisms, 2 but that don't hinge on the finding of threat. 3 MS. McDANIEL: And I think -- I think 4 that's where we disagree, that through the discussions 5 we didn't feel that the -- there were -- then there 6 would be a threat because they were not going to be 7 addressed with all the information necessary to 8 eliminate the threat you might have on your facility. 9 MR. EWING: 10 11 281 MS. BALDWIN: I think we've -So I don't want to abridge this conversation, but I would like to push us -- 12 MR. EWING: 13 MS. BALDWIN: Yeah. -- forward to the next 14 technical or confidential piece of information because I 15 would like for Julie, since she was one of the accident 16 investigators actually at the scene, to have an 17 opportunity to ask any questions of one of your various 18 subject matter experts in, you know -- so let's move on 19 to that. 20 standard. 21 And we'll have -- we'll come back to this CAO So is there any further presentation that 22 requires viewing this document or another map or 23 testimony by another technical expert, and then I'll 24 just allow some catch-all questions to Pete or Julie or 25 anybody on the phone. And then we can move towards CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 (unintelligible). 2 282 We've got about 20 minutes left. MR. EWING: I -- what I would say is that 3 everything has been -- at least this end certainly has 4 been abbreviated in order to accommodate that. 5 MS. BALDWIN: 6 MR. EWING: 7 But is it necessary? 8 balance. 9 spoke of earlier. Uh-huh. So is there more? You bet. I think we need to strike a We're trying to honor that balance that you If I feel like the discussion -- I 10 would like to suggest that if I feel like the discussion 11 that is a wider discussion leads again into that 12 territory, while it is undesirable, I'll -- and we feel 13 like -- 14 MS. BALDWIN: 15 MR. EWING: 16 You let me know. -- we need to respond, I will let you know. 17 MS. BALDWIN: 18 MR. EWING: Okay. What I would like to have the 19 opportunity still to do is to address -- which I think I 20 can do without getting too deep into the proprietary 21 unless people want to challenge a lot on the details -- 22 are to examine the seven specific bases cited for -- and 23 some of them are brief, for the finding of imminent 24 harm. 25 MS. BALDWIN: Uh-huh. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: I would like also then to draw 2 back and summarize some key points that I think need to 3 emerge here as our perspective on the facts. 4 And the last thing that I would like is I 5 really would like -- and maybe that's what we do now -- 6 an opportunity for anyone to ask questions that 7 illuminate a point of confusion from a technical 8 standpoint, not maybe new debate -- 9 MS. BALDWIN: 10 11 12 Right. MR. EWING: order. -- in your -- to follow your But if there's something, let's address it now. MS. BALDWIN: I think that that probably 13 makes the most sense. 14 the phone and then we'll move to the people that are 15 actually at the table. 16 Let's start with the people on So, Julie, are there any questions that 17 you have of Cheniere's representatives from a technical 18 standpoint on any of the presentations that we have -- 19 20 25 MS. HALLIDAY: Yeah. I've just got one question, and that's -- we talked about the MR. EWING: 283 Let me understand your CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 question, Julie. 2 it. 3 counterfactual, This is Kevin. when? MS. HALLIDAY: 8 MR. EWING: when? MS. HALLIDAY: 12 MR. EWING: timeframe then. 14 15 Paul? Very briefly, Julie, What's in there -- and I'm not going to go through it in detail because -MR. EWING: Can we flip it up so we can see that? 23 MS. BALDWIN: 24 MR. SULLIVAN: 25 Okay. there's 21 22 Well, we'll just assume a MR. SULLIVAN: 19 20 If there was -- And the timing of that is 10 13 I will try to field You're asking the hypothetical, which is also a 4 9 284 we can put it up there. Yes. Oh, yeah, we can put the -- But basically it has to do with CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 You know, 2 MR. EWING: 3 MR. SULLIVAN: is -Page 17. Forgive me. is, Julie, that 4 We did a lot of them at BG 11 available -- they were done a few years ago. 12 got a copy now. I haven't 13 . CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 285 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 In fact, the other . 10 So they -- what they -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 286 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 something like that, whatever it would be. 2 The So that is -- that is the situation. 6 Julie, I hope that answers the question. 7 MR. HINZ: 8 MS. HALLIDAY: 9 287 Can I just -So if there's a person working in the dike and it catches fire -- 10 MR. SULLIVAN: Yes. 11 MS. HALLIDAY: -- would you say that if 12 they're inside this fire that that's an imminent hazard 13 to them? 14 MR. SULLIVAN: Well, if they're inside the 15 fire, it would be. 16 would be kept away that distance from the possible 17 source. 18 But the point about this is they MR. HINZ: So can I just -- can I just 19 add -- we just had, I think, a misstatement. 21 Also -- 22 MR. SULLIVAN: 23 MR. HINZ: Oh, I didn't realize that. So what you're seeing is the 24 That was CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 288 the -- that was . 4 MR. EWING: And, Maas, ? 6 MR. HINZ: 7 MR. EWING: 11 MR. HINZ: 13 MR. EWING: 14 MR. HINZ: 17 MR. EWING: Yes. If it happened, So Yeah, correct. So The which I think is the point. 19 MR. HINZ: 20 MR. EWING: 21 MR. PHILLIPS: 22 Yes. So -- Thank you, both. Just to be clear -- I'm sorry. ? 24 MR. HINZ: 25 MR. PHILLIPS: Yes, it is. So this is based on the -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. HINZ: 2 MR. PHILLIPS: 3 MR. HINZ: 4 MR. PHILLIPS: 5 MR. HINZ: Yes, this is -- that's correct. 7 MR. PHILLIPS: 8 MR. EWING: 10 ? Okay. It's actually -- it's -- the . in the public. -- Yes, that's correct. 6 9 289 Gotcha. Okay. Thank you. So we obviously can't do that When the -- when the public stepped out, we had just heard from the -- from PHMSA their We 12 did not have an opportunity to address that. 13 It is very important to us, when they come 14 back in, to be allowed -- not in the detail and with 15 this information, but to summarize that, summarize what 16 you have just heard. 17 that so that they don't fail to have our perspective on 18 that. I would like the opportunity to do 19 Can I do that, please? 20 MS. BALDWIN: 21 22 23 24 25 I think that that makes sense. So is there any other question on the -on any aspects of the presentation from OPS? MS. HALLIDAY: No. I just think that, you know, they made the point that there is the potential CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 290 1 3 I mean, there's We've seen -8 we've seen that happen. 9 MR. EWING: We, of course, which we did not talk about 11 earlier because it seemed fairly straightforward 14 In addition, with the absence of 15 flammability, you know, an ignition source is not 16 sufficient without the correct concentration of gas to 17 cause the fire. 18 I think we've probably established sufficiently, for the 19 quick time that we have, our view on that. All these are important to understand. 20 MS. BALDWIN: 21 MR. EWING: 22 Uh-huh. May I, when they come back in -- 23 MS. HALLIDAY: 24 MS. BALDWIN: 25 questions. I have no more questions. Okay. So OPS has no more Is that right? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MS. BALDWIN: Thank you, Julie. Do you have any other 3 testimony from anybody else in the room that requires 4 this document? 5 MR. EWING: No. Can we flip it, please, 6 to the generic Cheniere page or something other than 7 that? 8 MS. BALDWIN: 9 MR. EWING: 10 11 291 I can take it off as well. MS. BALDWIN: That's fine. So we're just going to go off the record until the member of the press rejoins us. 12 (Recess from 4:18 p.m. to 4:22 p.m.) 13 (Open to public) 14 MS. BALDWIN: 15 So there has been much meeting and I would Okay. Let's go back on. 16 like to in particular ask if both parties address 17 themselves to the CAO standard. 18 only from OPS hear how that threshold was met as of the 19 date of the issuance of the CAO but to address 20 themselves to the conditions as they present themselves 21 today. 22 So I would like to not And I'd ask the same thing for Cheniere. 23 I would like a very targeted argument that's sort of 24 tied in with the facts as well as the standards that are 25 articulated in the CAO. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 I know I've sort of -- well, let's turn to 2 Cheniere first because, again, that was part of their 3 presentation, and then we'll turn to OPS. 4 MR. PHILLIPS: 5 MS. BALDWIN: Sure. And, I mean, I will say 6 there's been some information that's -- that was 7 presented here that the Region has not had an 8 opportunity to fully go through or that -- to that end, 9 but we'll talk about this later. 10 There -- we can have a post-hearing 11 submission by either party to wrap up those loose ends, 12 though our -- we have a very tight turnaround. 13 just putting that out there so we can start thinking 14 about what that is going to look like. 15 16 17 So I'm But I'll turn back to Cheniere so that we can sort of discuss the CAO standard. MR. EWING: As we've talked about really 18 throughout the day and certainly in the morning -- and 19 I'm standing just to project a little bit better into 20 the microphone. 21 292 The standard for this particular CAO is 22 really two different determinations, but they can 23 essentially be combined. 24 an imminence and a likelihood of serious harm to life, 25 property or the environment. They reflect an imminence -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 293 And our concern and the reason why we're 2 here is that whatever view one might take of the facts, 3 it does not include that standard. 4 several reasons. 5 also with the agency before the issuance of the CAO. 6 know it now, getting to the point of temporal, what we 7 know and what we can say. 8 for it. 9 And we know this for We knew this early on in discussions We There are a number of reasons I'll start with something fundamental 10 because earlier in the day there was discussion about 11 the possibility or the hypothesis and concern about a 12 large pool fire with catastrophic consequences. 13 this really is why we're here, because that is not 14 factually accurate. 15 here with a clear understanding of that. And And I want to be sure that we leave 16 There are specific reasons why we come to 17 that conclusion readily and with confidence, and you've 18 heard many of them with some detail earlier today, based 19 on very detailed information. 20 there is several things. But what you have seen 21 First, the configuration and the design 22 philosophy of the facility, which is to international 23 standards, to U.S. Code and to the legal requirements, 24 includes an extensive analysis of the potential and the 25 potential consequences of such an event and how it might CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 294 arise. 2 And we would not be allowed to construct 3 or operate if the zones of vapor dispersion or the 4 thermal consequence of ignition to that were to extend 5 beyond the boundaries of the property. 6 That alone does not mean that there cannot be risk, but 7 what it does mean is that this imminence and the 8 severity, much less a likelihood in this harm to public 9 safety is not in evidence. 10 They do not. The second thing that factors into that 11 very, very importantly is the nature, scope and scale of 12 the event that actually transpired on the 22nd of 13 January and how much we know about it. 14 for example, the scale of the release was fully 15 contained in the secondary containment area, which is 16 its purpose. 17 design philosophy of a single containment tank. 18 That is its design. In particular, That is part of the So if there is to be a release, as there 19 was on the 22nd, actually a design function well within 20 its design parameters and therefore also within the 21 hazard analysis that was required at the outset under 22 the exclusion zone analysis. 23 is the scale of this release from the outer tank or 24 through the outer tank did not come close to presenting 25 a factual basis for a concern for some kind of pool fire What that means translated CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 or conflagration or catastrophic loss. 2 Similarly we know, and we knew that 3 imminently after the 22nd, that the inventory level in 4 the tanks was being drawn down purposefully. 5 prudent measure. 6 They were half or less, and they were drawn down 7 according to appropriate safety protocols in a linear 8 fashion, straight down tank. 9 very short period of time. It's a They were not full to begin with. 3 was drawn down within a You have the specifics on 10 that. 11 end of that drawn down period is a very small fraction 12 of the contents against which a worst case scenario was 13 modeled. And therefore the LNG that is in the tank at the 14 These are facts, and these facts help us 15 understand and gauge the level of threat or absence of 16 level of threat that we're talking about. 17 to be very clear about that. 18 So I wanted We also have facts relating to our 19 understanding of the mechanism, the mode by which a 20 thermal event transpired, what caused it. 21 result of structural issues or was it the result of an 22 operating issue or a process issue? 23 one we have evaluated closely with you today and 24 obviously for weeks previously. 25 Was it the The distinction is The upside of that conversation -- or an CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 295 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 analysis, rather, is that it is not structural and the 2 mode that actually generates that event is operational. 3 We described it in some detail, resolving, in fine 4 detail, I think, the mechanism of action. 5 296 That's important to understand, not -- for 6 a specific reason, and that is that we can see that if 7 it is operationally defined, it is also operationally 8 controlled. 9 drives the event also allows us to comprehend early on, 10 before the CAO was even issued, but certainly also now, 11 what is the direction of the controls that can be placed 12 to prevent that operational mode of failure? 13 further fact that contributes to our understanding and 14 calibration of whether there is a threat remotely 15 similar to the threshold that is legally required. 16 So the mech -- understanding the mode that That is a What I'd add -- a couple of more points. 17 It's important that we note when there is an issue with 18 any facility regulated by PHMSA or for that matter any 19 other safety agency, but particularly here with PHMSA 20 and with LNG facilities, there are a number of different 21 tools available. 22 have different purposes, but they also have overlapping 23 purposes. 24 25 They're always within reach. They To say that this CAO was improvidently, incorrectly issued on the basis of a misunderstanding of CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 297 1 the threat level is not to say that no action by PHMSA 2 is merited, no oversight by PHMSA is merited, no 3 remedial measures or diagnostics and analytics and 4 conversation is merited. 5 that is possible through a number of different 6 instruments that allow PHMSA to be in control and -- of 7 that conversation and dialogue so it is fact based. 8 9 All of that is merited. All What is distinctive about the no action -excuse me, the no notice CAO, however, is that all of 10 that control comes coupled with the finding of imminent 11 and very substantial endangerment, and that is 12 principally our objection. 13 founded in our view at all, and we're concerned about 14 that aspect of it. 15 of the condition then and now. 16 That is not factually We think it is a mischaracterization A few more points that I think are 17 relevant to your question. 18 similarly and specifically with respect to the 19 corrective actions that are called for for each. 20 this was a no notice CAO, there was not an opportunity 21 to fully explore with you why that would be 22 inappropriate. 23 The CAO treats two tanks Since So we do so now, and I have done so. Tanks -- the remedial actions or 24 corrective actions that are appropriate to any piece of 25 equipment -- in this case Tank 1 and Tank 3 -- should be CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 298 1 defined by the threat and the mode that generates that 2 threat, the hazard fundamentally that is presented by 3 the two. 4 tanks. 5 different. While there are some similarities, they are 6 different. We've explored the reasons why that's the 7 case. And that is driven by the condition of the two The condition of the two tanks is fundamentally 8 9 And our concern there is that the treatment of both tanks as similar disregards a very 10 important difference in their actual condition. 11 not academic for us because condition informs hazard. 12 And to misunderstand condition is to misunderstand 13 hazard, and we want that rectified. 14 This is Finally, we're concerned with the basis 15 that has been articulated in the CAO for the imminence 16 and the seriousness of threat, which, as I said, we do 17 not see supported by the evidence. 18 There are several. I'll briefly enumerate them, and I will 19 not take long to do so. 20 that it is either erroneous -- and I'll identify them -- 21 or it is simply not founded and explained in any way in 22 the record. 23 basis for the determination of threat but have no basis 24 for understanding in the record how it was arrived at or 25 what the mechanism would be to support it. But the fundamental on each is And so we come to this as an established And this is CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 299 inadequate. 2 First, the presence of approximately 3 500 Sabine employees and contractors on site. 4 mustered. 5 many. 6 reason, it is misunderstood or remains in the CAO. 7 is not the number of people who were on the facility. 8 It is important to us. We did a head count. We know precisely how We've communicated that for weeks. 9 We For whatever That The reason it's important and not just a 10 detail is that we count the people who come on and we're 11 responsible for their lives. 12 and our ability to track them and confirm that they are 13 all present -- not 106, not 108, but that they're all 14 present -- is extremely important to us. 15 a numerical detail. 16 likewise. 17 And so how many there are So that is not I hope and trust PHMSA feels Second, the potential disruption to major 18 transportation, waterways, highways. 19 literally comes without any anchoring in the record. 20 There is a waterway there. 21 away to the north basically. 22 Yes. 23 would a threat from these facts or even more egregious 24 facts extend to that waterway or to that highway, 25 especially at the level of likelihood and serious harm? This statement There is a highway a ways You can see it on a map. But by what plausible mechanism would that -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 It baffles us. 300 We have a number of things 2 to inform us about that and to inform the agency about 3 that. 4 under Coast Guard, FERC and PHMSA regulation, industry 5 standards and codes, our facility is designed so that 6 even if there were a catastrophic release, which did not 7 happen, and is not capable of happening now -- we do not 8 have full tanks. Perhaps the most important or trenchant is that 9 Even if that were to happen, the exclusion 10 zone analysis establishes that there is not a threat 11 that extends beyond the facility, therefore not into the 12 waterway and therefore not into the highway. 13 very important to us. 14 and we find no fact in it. 15 This is We look at that second finding Third, the hazardous nature of the 16 product. 17 vaporous hydrocarbons, are potentially flammable. 18 confined space, which is not the case here, they can 19 have other characteristics of risk and harm. 20 observe that a facility carries a hazardous product or a 21 hazardous material is not a finding of threat. We recognize that hydrocarbons, particularly 22 In a But to A pipeline grid carries natural gas right 23 now. 24 issuing CAO's to the owners and operators of those 25 facilities. That is not a basis for shutting in or making -- We don't know what's being driven out there CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 301 1 other than the most, at a gross level -- I don't mean 2 gross in a colloquial way, but in a very basic level to 3 observe there are hazards on site -- well, there are 4 potential hazards on site because of the nature of the 5 material. 6 conclusion that here there's an imminent serious threat. 7 That's absent. But that does not lead to a fact-based 8 9 Unpredictability of brittle failures and ignition sources. These are two different things, but 10 they were combined in that particular sentence. That's 11 a quote. We've 12 talked about the metallurgy of that. 13 why there can be confidence that structure is not the 14 driver for the event that occurred. 15 for the reasons I mentioned earlier. 16 process-driven failure mode. 17 failure mode. 18 a risk that may or may not exist. 19 We have talked about brittle failure. We've talked about This is important It is a It is not a structural This tells us much about potential scope, With respect to ignition sources, we 20 remind everyone that ignition sources in the containment 21 area are forbidden. 22 scale and scope, was very small compared to the capacity 23 of that containment they're in, very small. 24 appropriately locked off to limit access while work 25 continues. And the nature of the release, its It is That is not a basis for a public safety CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 302 threat finding. 2 As to the uncertainties as to the cause of 3 the event, I think we've explored in some detail our 4 understanding, going back to work that was done a few 5 years ago even, what the failure mode is and how it is 6 constituted and it gives us the confidence in explaining 7 all the phenomena that we have observed to date. 8 event on the 22nd does not challenge or undermine that 9 understanding that was reached even a few years ago 10 about a potential action that can happen in certain 11 operational scenarios that we control. 12 So the And, finally, with respect to the fact 13 that there are ongoing investigations, that that should 14 be a basis for issuing a threat finding, is difficult to 15 understand. 16 means an exploration. 17 collaborative, very important, hopefully over time very 18 trusting and respectful, as it has been, engagement to 19 understand what happened, why and what are the 20 appropriate measures. 21 not a basis for finding a threat. 22 Of course there's an investigation, which It means a joint and That there is an investigation is So we are concerned that these seven 23 expressly enumerated reasons for the finding are really 24 insufficient to meet that standard. 25 I end with a simple thought, which I have CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 303 1 expressed before, but it's important to restate. 2 goals, as expressed by PHMSA earlier today, and ours 3 coincide. 4 and greater safety. 5 PHMSA's mind about us, I believe, as has been expressed, 6 nor is there any doubt about our understanding that that 7 is your objective. 8 Your It is always to have and get toward greater There is no doubt about that in Where we have parted here is not that 9 there needs to be dialogue, there needs to be an 10 understanding of analytics, there needs to be an 11 understanding of what is an acceptable repair or not. 12 All of that can be worked out. 13 direction can even be put in place. 14 accomplished without an unfounded finding of public 15 threat. A measure of control and All that can be And that's why we've come. 16 So I appreciate the time that you've taken 17 to listen to us and the engagement from everyone here on 18 PHMSA's side to explore these issues. 19 to continuing to do so. 20 MS. BALDWIN: 21 MR. EWING: 22 MS. BALDWIN: 23 MR. PHILLIPS: 24 25 We look forward Okay. Thank you. Adam? Thank you all, again, and thank you, Ms. Baldwin, for the hearing. I just wanted to reiterate a few things. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 304 1 I won't go -- won't go deeply down the rabbit hole again 2 on too much. 3 sort of our activating language out of the regulation 4 when PHMSA promulgated the final rule on the specific 5 regulations that related to LNG, so from 193 of our 6 regulations. 7 summary part. 8 because obviously we live in and move by legal 9 standards. So you know you're not dealing with Adam's 10 standards. You're dealing with PHMSA's standards. 11 So I just wanted to quote, again, from And I would -- again, this is just in the And these are activating words for us "Because of the grave consequences that 12 could result from a major accident at a facility, 13 present regulations are considered inadequate." 14 was part of why PHMSA essentially stated to the world -- 15 really to the country and to the world, why we were 16 doing something specific about LNG. 17 Now, this is 1980. That I'm not -- I'm not 18 trying to imply that there was a major accident. 19 not what I'm saying. 20 different, and you all know that. 21 better than anybody. 22 specific kind of material, and it means obviously you 23 all specialize in LNG. 24 things because obviously it's a particular kind of -- 25 it's a particular kind of product. That's What I'm saying is that LNG is You all know that This is a specific kind of -- a So I assume you don't do other So that means, you CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 know, when a situation like this comes to us, we also 2 face it with that in mind. 3 305 So we're dealing with a very particular 4 kind of product, which when it comes to the specific 5 kind of facility that Sabine Pass is it may be a 6 unicorn. 7 facilities all over the place dotting the landscape that 8 are -- that are the same. 9 We're not talking -- there aren't other So for everybody, when we were dealing 10 with this circumstance, we understood, you know, that 11 you all had a lot of history with this issue that, you 12 know, came up on January the 22nd. 13 great. 14 operating their own facilities. 15 but we don't want to know more than you because 16 obviously you live with your facility every day. 17 And for us, that's We never want to know more than the people We want to know a lot, But when we came on this situation, what 18 we saw concerned us. 19 talking about the CAO standard back and forth. 20 know, you all have used the word "threat." 21 to show here is that there is or would be a hazard to 22 life, property or the environment. 23 there's any question here, whether the number be one or 24 whether the number be a thousand and one, that there is 25 a hazard, potentially at least, to the lives that were So, you know, again, we've been You What we have I don't think CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 306 1 on the site. 2 that, I'm pretty sure. 3 would be a flammable liquid and -- a flammable product 4 can create -- potentially create a hazard. 5 Nobody, I don't think, is questioning Any kind of facility where there And, again, I'm not lowering the standard 6 for the sake of just sort of meeting a threshold. 7 we walk on -- we walk on a unicorn site that's dealing 8 with a particular kind of product that's had a release, 9 where I don't think in the history -- since 1948, there But 10 hasn't been a reported release essentially of LNG from 11 containment. 12 That's unique. We're all dealing with -- we're all 13 dealing with a unique environment. 14 to life, property and the environment, including -- 15 okay. 16 CAO, doing it without notice, is that there was a 17 likelihood of serious harm. 18 something -- when we walk on site and we recognize not 19 only do we have a lack of containment, which is 20 something unique, and even the history really of how the 21 country has dealt with or has experienced LNG, but we 22 also have potential -- three potential tanks, which, 23 again, by testimony we've seen today from you all, not 24 from us, that were designed similarly and manufactured 25 similarly that might potentially have design issues that So that is a hazard The standard that we also have to meet for the Now, that's also CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 are consistent. 2 walked on site in context, that seemed to us to be a 3 consistent hazard that we needed to address. 4 307 That, again, seems like -- when we So, again, you all knew a lot more about 5 this. 6 experience with this that is years long, which is great, 7 and that's good, you know, for us to know. 8 the scene on January the 22nd and ended up over time 9 finding out more and more and more and more. And you all have had -- you all have had We came on A part of 10 the concern that goes into this CAO and that goes into 11 the -- really the difference between January the 22d and 12 February the 8th, which is issuance of the CAO, is we 13 were consistently not having our concerns assuaged. 14 We wanted to make sure that safety was in 15 place, the hazards were mitigated, there was less threat 16 to -- harm -- less threat of harm to life, property and 17 the environment, and we consistently weren't getting 18 the -- we weren't -- we weren't finding the partnership 19 in safety that we wanted to make sure we had for this 20 specific incident. 21 That's not to cast a dispersion on Sabine 22 Pass or Cheniere. 23 think continue to have good relationships. 24 circumstance, dealing with a very unique release, we 25 were struggling to get to the point of feeling We consistently have had a -- and I But in this CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 308 1 comfortable that there was -- there was enough 2 cooperation amongst the two parties to have the -- to be 3 assured that we were all moving towards safety. 4 So, you know, we've talked a little bit 5 about the determination conditions. 6 because y'all don't want to hear me talk anymore 7 probably. 8 manufactured by the same -- by the same folks, designed 9 and manufactured being different, but Tanks 1 through 3 I won't repeat them But Tanks 1 through 3 were designed and 10 were consistent. 11 the potential for this being a design problem, which 12 would be consistent then theoretically for each of the 13 three. 14 Again, your own testimony talked about The conditions on -- the conditions that 15 we were concerned about would not change appreciably 16 Tanks 1 through 3. 17 specific hazard dealing with Tank 3, but then the 18 concern began to grow that this might be a larger 19 problem than we thought. 20 explains not only part of why we considered this CAO 21 worthy but why we included Tanks 1 and 3 within the 22 design -- or within the CAO. 23 So we walked into obviously a So obviously that sort of You all talked about the number of people 24 on site. 25 I know Kevin -- I appreciate that you all want to know I wanted to address sort of a factual issue. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 309 1 exactly how many people were on site. 2 for us to know and for us to hear. 3 those things, too. 4 preliminary. 5 ourselves. 6 We expect that we will find out exactly how many people 7 were on site, and we gladly fixed those things. 8 is never a problem for us. 9 That is so good We want to know Like I said initially, CAO's are They are -- they are extensions of We don't expect that our findings are final. Safety is Job One. So for us, if we are 10 concerned about safety, we're going to step out. 11 take that risk of being wrong on the numbers, no 12 problem, and then we'll fix those things. 13 you know that from us. 14 hope we continue to demonstrate that to you. 15 So that We'll I hope that I hope that you know that and I So in terms of our -- you know, ultimately 16 PHMSA doesn't jump out on these things. 17 out on CAO's without having a concern and a consistent 18 concern. 19 that without corrective actions, without really an 20 intervention on PHMSA's part, we weren't going to get to 21 the safety partnership that we really needed to assure 22 ourselves and really to do our duty, which is our duty 23 to safety as the regulator. 24 25 We don't jump And the consistent concern here ultimately was MS. BALDWIN: So that's what we see. Well, can you address yourself to the situation as it stands today, or does CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 there continue to be a serious likelihood of imminent 2 harm? 3 MR. PHILLIPS: Yes. And here's part of 4 the reason why. 5 non-technical expert, but -- because my technical 6 experts are finding out today some things that are 7 completely fresh. 8 will have this conversation is great. 9 found these things out today is great. I say yes as the -- as the So whether -- like the fact that we The fact that we I'm glad to hear 10 them. 11 what it seems like Sabine Pass already knows and 12 Cheniere already knows. 13 conversation. 14 appreciably changed. 15 310 But we need time to -- we need to be assured of That's great. Let's have that But as of today, yes, nothing has MR. EWING: Ma'am, forgive me. May I 16 clarify something that I believe was your intention but 17 might be misunderstood? 18 Adam -- 19 MR. PHILLIPS: 20 MR. EWING: 21 things that are fresh -- Sure. -- when you say you learned 22 MR. PHILLIPS: 23 MR. EWING: Yeah. -- I think it's fair to say -- 24 please confirm -- that you didn't learn fresh of new and 25 different bases for concern or incidents occurring? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. PHILLIPS: 2 MR. EWING: 3 Absolutely not. You learned more information -- 4 MR. PHILLIPS: 5 MR. EWING: 6 MR. PHILLIPS: 7 MR. EWING: 8 311 Absolutely not. -- and perspective -Yes. -- and expert testimony and other information that illuminated the existing issues. 9 MR. PHILLIPS: 10 MR. EWING: 11 MR. PHILLIPS: Yes. Is that correct? Thank you for clarifying. 12 There has been -- we didn't learn anything today that 13 has anything to do with new incidents, new concerns on 14 our part for determinations of necessity for any new 15 CAO's, nothing like that. 16 What we did learn today and what we did 17 get for the first time today was a number of new -- or a 18 number of new chances to sort of look at the data that 19 you all have been looking at for a few years, and that 20 is great. 21 nothing like that, absolutely. That has nothing to do with new incidents, 22 MR. EWING: 23 MR. PHILLIPS: 24 25 Thank you. Thank you for giving me that opportunity. MS. BALDWIN: Julie, anything? CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. HALLIDAY: 2 MS. BALDWIN: 3 No. I'm good. 312 Thank you. Is there anything else, Mr. Ewing, you'd like to present? 4 MR. EWING: Nothing other than our thanks. 5 I really appreciate very much your engagement, your 6 questions very sincerely, and also that of all the folks 7 at PHMSA. 8 way of talking about issues that are important to all of 9 us. This has been a respectful, very effective 10 11 So with real sincerity, thank you all for that, and I hope you feel likewise. 12 13 MS. DAUGHERTY: wanted to discuss something before the end? 14 MR. EWING: I believe I addressed it right 15 at the outset of my remarks. 16 MS. DAUGHERTY: 17 MR. EWING: 18 MS. DAUGHERTY: 19 OPS, you had mentioned you Okay. Good. Thank you. Just wanted to make sure we didn't skip over it. 20 MR. EWING: 21 appreciate that very much. 22 MS. BALDWIN: I appreciate that. I So let's discuss 23 post-hearing submissions. 24 like the opportunity to submit a post-hearing brief in 25 this matter? I assume that Cheniere would CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 313 It seemed to me, coming out of 2 our dialogue today, I mentioned at least one summary of 3 information that you all might find helpful so we'd like 4 to prepare that. 5 by now because we worked on it. 6 able to submit that. 7 complex document, but that would be informative. 8 9 I believe it may already be prepared We would like to be I don't think it's a tremendously Beyond that, I think we would be guided by the questions that you have after you come back to 10 wherever you would come back and these comments and this 11 information settles in your mind. 12 questions, I understand the timeline you're on. 13 have questions, if you need clarification of something, 14 I have no doubt and certainly would like to encourage 15 you to reach out to the parties so that they can offer 16 proper assistance. 17 MS. BALDWIN: If you have If you So OPS, you mentioned you 18 need some time to review some on the information that we 19 have, the -- 20 MR. PHILLIPS: Well, that's -- yeah. 21 That's sort of -- for us, there might be two issues 22 here, and maybe the first issue being sort of whether or 23 not what we did on February the 8th was okay. 24 that's kind of the threshold issue, you know, we want to 25 deal with. I think And if you want to hear more from us on CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 314 that, we're glad to, you know, provide it. 2 In terms of the details of I think what 3 we've heard from Cheniere today, which has been very 4 helpful sort of post February the 8th, yeah, I mean, 5 certainly we're going to have that conversation. 6 always going to be ongoing. 7 That's In terms of putting a time limit on that, 8 I don't know -- that feels a little artificial to me 9 because there might be -- you know, these are long-term 10 issues. 11 even agree to a timeframe on saying how long can we look 12 at, you know, what we've seen today. I don't know that we want to or could really 13 MS. BALDWIN: Well, of necessity by 14 regulation, I have to issue a decision within five 15 business days. 16 MR. PHILLIPS: 17 MS. BALDWIN: 18 Right. So what I will do is give OPS until the end of the week. 19 MR. PHILLIPS: 20 MS. BALDWIN: Okay. That's Friday. We're not 21 talking about -- it's not a voluminous amount of 22 information. 23 MR. PHILLIPS: 24 MS. BALDWIN: 25 Sure. So I will give OPS until Friday at the close of business if they wish to submit a CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 315 1 post-hearing submission to augment the arguments that 2 they -- 3 MR. PHILLIPS: 4 MS. BALDWIN: Okay. That's fair. I will say to both parties 5 it will be limited to the discussion that we had at this 6 table today. 7 will again reemphasize not only am I looking at what the 8 circumstances were at the time of the incident, I am 9 also looking towards whether or not there is a continued No new arguments will be set forth. But I 10 necessity for a corrective action order to remain in 11 effect. 12 MR. PHILLIPS: 13 MS. BALDWIN: 14 So I ask that you address those concerns. 15 MR. EWING: 16 MS. BALDWIN: 17 MR. EWING: 18 Okay. Ms. Baldwin -Yes. -- for point of clarification -- 19 MS. BALDWIN: 20 MR. EWING: Yes. -- do you mean to say that 21 you're inviting post-hearing briefs to cover the same 22 terrain? 23 we had identified that we would like to submit that I 24 think is responsive to you. 25 that from your saying, "Okay. Or -- I mean, there was one specific item that So I want to distinguish Now rehash or CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 resummarize." 2 this ground. 3 4 7 It would seem to me that we've covered MS. BALDWIN: Sure. So this is sort of a -- 5 6 MR. EWING: And I want to be clear on what you mean. MS. BALDWIN: Sure. This is sort of a 8 natural consequence of me liberally allowing the 9 submission of documents. So in a normal circumstance, 10 everyone would have had all of the information at the 11 time of the hearing, and therefore I would not be 12 inclined after the hearing to ask for the parties to 13 reflect on that information. 14 316 But what I am saying is in this particular 15 context, because I liberally allowed the submission of 16 documents, that I will allow OPS an opportunity, at the 17 very least, to review those documents as opposed to just 18 viewing them on the fly. 19 MR. EWING: 20 MS. BALDWIN: Understood. And so that is, you know, 21 very different than saying that they may come forward 22 with new arguments. 23 MR. PHILLIPS: No. 24 MS. BALDWIN: Yeah. 25 We'll commit to that. It is -- it is still an opportunity for them to have further reflection on CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 317 the materials that were submitted today. 2 MR. EWING: 3 MS. BALDWIN: Thank you. That being said, I am -- I 4 will allow Sabine Pass, if they so choose, to submit any 5 document -- not rehashing, again, arguments that were 6 already made. 7 opportunity, I will allow that until the close of 8 business on Friday as well. 9 But if you would like a similar MR. EWING: We appreciate that. We'll 10 reflect on whether there's something that was learned 11 today -- 12 MS. BALDWIN: 13 MR. EWING: Yes. -- that we feel would be 14 helpful to you and -- to you for us to summarize 15 briefly. We're not going to explore larger themes. 16 17 MS. BALDWIN: I do appreciate that because I will not -- 18 MR. EWING: 19 MS. BALDWIN: 20 MR. EWING: 21 MS. BALDWIN: I understand. -- allow a back and forth -Right. -- on these issues. I 22 simply don't have the time in which to do that. 23 ask, again, for brevity and just really succinctly. 24 I think it is fair to allow OPS to have the opportunity 25 to review. So I CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA But CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: We agree. 318 And, as you know, 2 we suggested a different timetable that would be more 3 commodious for everyone to review -- 4 MS. BALDWIN: 5 MR. EWING: Appreciate it. -- which was declined. I will 6 reserve one privilege, which isn't mine to have but may 7 need ask for, and that is if and when you offer your 8 reflections -- you may not but you may -- it clearly be 9 submitted simultaneously to us so that we may look at 10 them, recognizing that otherwise it's an ex parte 11 communication. Right? We need to see -- 12 MR. PHILLIPS: 13 MR. EWING: 14 MS. BALDWIN: 15 MR. PHILLIPS: 16 Are you doubting that? We would share it. simultaneously send to both. 17 MR. EWING: 18 MR. PHILLIPS: 19 MR. EWING: 20 MS. BALDWIN: 21 MR. EWING: 22 Right. Yeah. We would typically I mean, that's -- Yeah. -- how we do it. Yeah. I just saw the -- No. -- doubt on your face and I thought -- 23 MR. PHILLIPS: 24 MR. EWING: 25 MS. BALDWIN: Yeah. -- oh, boy. I -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. EWING: 2 MS. BALDWIN: 3 Okay. Every party must be included in any -- 4 MR. EWING: 5 MS. BALDWIN: 6 319 Yes. Thank you. -- post-hearing submission -- 7 MR. EWING: 8 MS. BALDWIN: 9 MR. EWING: Thank you very much. -- just to be clear. And the request is simply if 10 for some reason -- which I don't anticipate, but if for 11 some reason we feel that there's a fundamental 12 misunderstanding of something in the summarized 13 material, which can happen if you are left to -- if 14 anyone is left to their own devices looking at something 15 that was abbreviated. 16 something, but we will, if we may, flag it to you, 17 identify what that concern is and ask permission to 18 alleviate that misunderstanding. 19 would suggest as a way to avoid -- We will not immediately submit 20 MR. PHILLIPS: 21 MR. EWING: 22 MR. PHILLIPS: 23 MR. EWING: 24 25 That would be what I And this is a -- -- responsive filings -Yeah. -- but also avoid just plain error in understanding what we have provided. MR. PHILLIPS: It's a little bit, you CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 know -- I mean, as you know, it's a little bit of a 2 pitfall, right, because if you all are summarizing what 3 you said here and then we hear something new, you know, 4 we get into the same back and forth. 5 We'll commit to not putting in anything that's new and 6 addressing only what we've heard today. 7 on the slides. 8 know, we get you only things that are responsive. 9 So it's difficult. We'll base it You know, we'll make sure that, you MS. BALDWIN: Because, again, I want -- I 10 want to be clear what I'm asking OPS for. 11 MR. PHILLIPS: 12 MS. BALDWIN: Right. I am asking them to offer 13 any response to the materials that they have not had -- 14 that they have not yet had at the hearing. 15 MR. EWING: 16 MS. BALDWIN: 17 MR. EWING: 18 MS. BALDWIN: 19 MR. EWING: 20 21 And I understand. Okay. I understand. That's -And that's perfectly sensible. My request is only -MS. BALDWIN: You probably won't agree 22 with whatever it is they have to say. 23 take that as a given, how -- 24 25 320 MR. EWING: So I'm going to Well, I don't know that that's the case, ma'am, but -CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MS. BALDWIN: 2 MR. EWING: 3 MS. BALDWIN: 321 Well --- my point is --- I haven't seen it yet, 4 but we'll -- I think that we -- I think we're all on the 5 same page. 6 redundancy, but at the same time we are under a time -- 7 a time crunch here and -- I mean, I anticipate a certain amount of 8 MR. EWING: 9 MS. BALDWIN: Yeah. -- so for that reason I do 10 have to cut it off at the close of business on -- and 11 I'll make that 5:00 p.m. Eastern Standard Time on 12 Friday. 13 MR. EWING: 14 MS. BALDWIN: 15 MR. WELLER: 16 MS. BALDWIN: 17 MR. WELLER: 18 Eastern Daylight or -Eastern Daylight Time. And this process -That's right, EDT, not EST. -- doesn't need to be in a bubble either. 19 MS. BALDWIN: 20 MR. WELLER: 21 be in a bubble either. 22 guys can -- EDT. This process doesn't need to If there's a clarifications, you 23 MR. PHILLIPS: 24 MS. BALDWIN: 25 MR. WELLER: Oh, right. And that is absolutely true. That's just so -- CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 MR. PHILLIPS: 2 MR. WELLER: 3 MR. PHILLIPS: MR. EWING: That's -- we're open to that. MS. BALDWIN: Discussions can continue between the parties. 10 11 I'm glad you said it, We don't want to -- 8 9 No. though. 6 7 I'm stating the obvious but it's -- 4 5 For sure, yeah. MR. PHILLIPS: You don't want us to call you -- 12 MS. BALDWIN: 13 MR. PHILLIPS: 14 MS. BALDWIN: I -- I --- include you in all -I -- no, but I encourage 15 those discussions to be ongoing. 16 when my decision will issue. 17 me updated as to avoid unnecessary work on my part. 18 19 I just ask that you keep Is there anything else that the parties would like to discuss before I close the record? 20 MR. EWING: 21 MS. BALDWIN: 22 MR. PHILLIPS: 23 You have an idea of minute. Thank you. No? If you can give me one Sorry. 24 No. 25 MS. BALDWIN: We're all set. Thank you. We're set? Okay. CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA 322 CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 2 3 So we can close, 5:00 p.m. on the dot. 323 I appreciate -- I appreciate everyone's cooperation today. (Proceedings concluded at 5:00 p.m.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA CONFIDENTIAL - CORRECTIVE ACTION HEARING 3-21-18 - CONFIDENTIAL 1 STATE OF TEXAS ) 2 COUNTY OF HARRIS ) 324 3 REPORTER'S CERTIFICATION TO THE TRANSCRIPT OF CORRECTIVE ACTION ORDER HEARING MARCH 21, 2018 4 5 6 I, Diana Ramos, a Certified Shorthand Reporter 7 in and for the State of Texas, do hereby certify that 8 the above and foregoing pages contain a full, true and 9 correct transcription of my shorthand notes taken upon 10 the occasion set forth in the caption hereof, as reduced 11 to writing by me and under my supervision. 12 I further certify that the transcription of my 13 notes truly and correctly reflects the exhibits offered 14 into evidence, if any; that I am neither counsel for nor 15 related to any party in this cause and am not 16 financially interested in the outcome. 17 18 Certified to by me on this 23rd day of March, 2018. 19 20 21 22 23 ____________________________ Diana Ramos, CSR CSR No. 3133, Expires 12-31-2018 DepoTexas, Inc. Firm Registration No. 95 13101 Northwest Freeway, Suite 210 Houston, Texas 77040 888.893.3767 24 25 CRITCAL ENERGY / ELECTRIC INFRASTRUCTURE INFORMATION, CONFIDENTIAL BUSINESS INFORMATION, AND CONFIDENTIAL INFORMATION Redactions Made by Cheniere Pending Review by PHMSA