Kennewick-based company says it is ‘committed to achieving compliance’

Cascade Natural Gas agreed to a $2.5 million fine in late March for not having safety-related paperwork for much of its pipelines in and around Kennewick.

If the Kennewick-based corporation accomplishes the required fix-it work on time, $1.5 million of that fine will be forgiven, according to the Washington Utilities & Transportation Commission, or WUTC. Originally, Cascade Natural Gas faced a $4 million fine before the company and state reached an agreement.

Cascade also must have a third party evaluate the company’s pipeline safety management program.

The fine comes after Cascade Natural Gas did not produce paperwork to prove that slightly less than 40 percent of its 559.67 miles of high-pressure pipelines can handle the state’s 60 pounds-per-square-inch safety standard. That includes no paperwork for 22.12 miles out of the 53.34 miles of high-pressure pipelines in the corporation’s Kennewick district.

There are percentages worse than the Kennewick district’s. In Cascade’s Bellingham district, 56 percent of 105.5 miles of high-pressure pipelines could not be confirmed as safe. For Cascade’s Mount Vernon district, safety test records were missing for almost 53 percent of its 103.9 miles. The Yakima district could not prove the safety of 52 percent of its 50.5 miles of high-pressure pipelines.

“Cascade Natural Gas recognizes the importance of having accurate records and is committed to achieving compliance through the settlement agreement. We view the settlement agreement as a compromise of each side’s positions, but one that assures continued public safety and allows Cascade to achieve the agreed upon milestones. Work is already well under way and we are committed to meeting the plan requirement,” the company said in a written statement.

Cascade serves almost 200,000 residential and business customers in 68 communities throughout the state, including Aberdeen, Bellingham, Bremerton, Kennewick, Longview, Moses Lake, Mount Vernon, Walla Walla, Wenatchee and Yakima.

The problem dates back to 2010 when a Pacific Gas & Electric pipeline exploded in San Bruno, California, sending flames roughly 1,000 feet into the air, killing eight people and destroying at least 35 homes. Causes included bad welds, inconsistent thicknesses in pipes and poor record keeping, according to various reports.

That explosion prompted WUTC staff to increase scrutiny of similar factors in Washington.

During a spring 2013 routine inspection of a pipeline near Kalama, Cascade Natural Gas could not produce documents on what the “maximum allowable operating pressure” of that buried pipe should be. A few weeks later, the company could not produce documents on the “maximum allowable operating pressure” during a similar pipeline inspection at Bellingham.

Suspecting that could be a system-wide issue, the WUTC requested that Cascade check all of its records pertaining to “maximum allowable operating pressures.”

Cascade Natural Gas soon replied that it was missing such records for 28 pipeline segments in Washington. In October 2013, these records were discovered missing in a WUTC inspection of a Cascade Natural Gas pipeline near the Columbia River’s eastern bank about eight miles downstream from Burbank. Six months later, the company told the WUTC that it lacked such records for 98 pipeline segments.

In February 2015, Cascade Natural Gas agreed to turn in a comprehensive report on this issue to the WUTC by Aug. 12, 2015. It missed that deadline and turned in that report on Jan 29, 2016. In a legal filing, Cascade Natural Gas said the delay was due to a key person being unavailable.

WUTC staff concluded that the January report was insufficient, and the company submitted a new one on April 29, 2016.

“Overall, staff finds that Cascade has demonstrated a lax attitude toward compliance that exposes the public to an unacceptable level of risk. As shown by the 2010 explosion in San Bruno, California, which killed eight people, inadequate oversight can have catastrophic consequences,” according to a WUTC staff report from July 12, 2016.

“The large number of segments lacking (maximum allowable operating pressures) confirming documents raises obvious public safety concerns. But equally concerning is the change in Cascade’s data over time,” the WUTC staff’s 2016 report said.

The WUTC staff reported that Cascade provided it with four different figures on four different dates of how many pipeline segments lack documented results on pressure tests. That breakdown is as follows:

• Sept. 9, 2013 — 28 undocumented segments including four in Kennewick, three in Walla Walla and four in Sunnyside.
• April 17, 2014 — 98 undocumented segments, including 13 in Kennewick, two in Walla Walla and nine in Sunnyside.
• Jan. 29, 2016 — 90 undocumented segments, including 10 in Kennewick, two in Walla Walla and nine at Sunnyside.
• April 29, 2016 — 116 undocumented segments, including 15 at Kennewick, two at Walla Walla and 12 in Sunnyside.

“The fluctuations … call into question Cascade’s ability to provide accurate data. The shifting data suggests that Cascade does not know its system well enough to pinpoint exactly how many Washington high pressure pipeline segments it is operating with insufficient (maximum allowable operating pressure) confirming documentation,” the WUTC staff’s July 12, 2016, report said.

The settlement agreement outlined the requirements and deadlines for forgiving the $1.5 million in suspended fines.

These include:

• $250,000 of the suspended fine would be forgiven if safety tests and paperwork are in place for 50 percent of the undocumented pipelines by Dec. 31, 2018.
• $250,000 of the suspended fine would be forgiven if all of the safety tests and paperwork for the undocumented pipelines is completed by Dec. 31, 2023.
• $500,000 would be forgiven if a review of all of Cascade’s high-risk pipelines is conducted with a mutually agreed-upon fix-it plan on any extra shortfalls is in place by March 31, 2018.
• $500,000 would be forgiven if the third-party evaluation is completed by Dec. 31, 2017. This evaluation is to cover management’s commitment, engagement by all affected parties, emergency preparedness and documentation.