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ATTORNEYS AT LAW

Four Penn Center, 13th Floor 1600 John F. Kennedy Blvd. Philadelphia, PA 19103-2808 215-587-1000 Main 215-587-1444 Main Fax www.postschell.com

David B. MacGregor

[email protected] 215-587-1197 Direct 215-320-4879 Direct Fax File #: 170401

November 16, 2018

VIA ELECTRONIC FILING (NON-PROPRIETARY VERSION)VIA HAND DELIVERY (PROPRIETARY VERSION)

Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor North P.O.Box 3265 Harrisburg, PA 17105-3265

Re: Pennsylvania Public Utility Commission, Bureau of Investigation and Enforcementv. UGI Utilities, Inc., Docket No. C-2018-3005151

Dear Secretary Chiavetta:

Enclosed for filing, please find the Non-Proprietary version of the Answer of UGI Utilities, Inc. (“UGI” or the “Company”) to the October 4, 2018 Formal Complaint of the Bureau of Investigation and Enforcement (“I&E). The original Proprietary Version of UGI’s Answer will be filed with the Pennsylvania Public Utility Commission (“Commission”) by hand.

REQUEST FOR CONFIDENTIAL TREATMENT OF PROPRIETY INFORMATION

UGI is filing a Proprietary Version of its Answer because the information and averments contained therein in relate to an ongoing National Transportation Safety Board (“NTSB”) investigation. NTSB regulations prohibit UGI, as a party to the NTSB investigation, from disseminating information except for the limited purposes of supporting the NTSB investigation. Specifically, NTSB regulations prohibit Parties from releasing “[information related to the accident,” “[a]ny information collected or compiled by the NTSB as part of its investigation, such as photographs, visual representations of factual data, physical evidence from the scene of the accident, interview statements, wreckage documentation...;” and “[a]ny information regarding the status of an investigation, or activities conducted as part of the investigation.” 49 C.F.R. § 831.13(a)(1), (c). “Parties are prohibited from releasing information obtained during an investigation at any time prior to the NTSB’s public release of information....” Id. The regulations further provide that “[a]ny dissemination of factual information by a party may be

Allentown Harrisburg Lancaster Philadelphia Pittsburgh Princeton Washington, D.C.

A Pennsylvania Professional Corporation

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http://www.postschell.com

mailto:[email protected]

Rosemary Chiavetta, Secretary November 16, 2018

made only as provided in this section.” Id. § 831.13(c)(2). The NTSB even goes so far as to prohibit Parties from disseminating information within the Parties’ organizations, unless the dissemination is to individuals within the organization “who have a need to know for the purpose addressing a safety issue including preventative or remedial actions.” Id. § 831.13(c)(3). “Any other release of factual information related to the investigation must be approved by the IIC prior to release....” Id. § 831.13(c)(4).

Pursuant to the NTSB’s regulations, UGI received permission from the NTSB to file a Proprietary Version of its Answer to I&E’s Formal Complaint under seal. The Proprietary Version of UGI’s Answer is contained in a sealed envelope which also has been stamped “CONFIDENTIAL.”

UGI requests that the Proprietary Version of its Answer that has been labeled “CONFIDENTIAL” and that is contained in the envelope that has been stamped “CONFIDENTIAL” be given confidential treatment by the Commission, including its various offices and bureaus. That is, UGI requests that the confidential materials be excluded from the Commission’s public document folder and that the confidential copies not be disclosed to the public.

UGI further notes that, to the extent that the NTSB concludes its investigation during the course of this proceeding, UGI will consider and work with the parties and the Commission to provide an updated version of its Answer with the proprietary designations and redactions removed.

If there are any questions concerning this matter, please contact me at the addresses or telephone numbers provided above. Copies of UGI’s Answer will be provided in accordance with the attached certificate of service

Respectfully submitted,

DB M/dam Enclosures

cc: Certificate of Service

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CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing has been served upon the following persons, in the manner indicated, in accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a participant).

NON-PROPRIETARY VERSION VIA E-MAIL & HAND DELIVERY

PROPRIETARY VERSION VIA HAND DELIVERY

Stephanie M. Wimer, Senior Prosecutor Michael L. Swindler, Deputy Chief Prosecutor Timothy K. McHugh, Prosecutor Bureau of Investigation and Enforcement Commonwealth Keystone Building 400 North Street, 2nd Floor West PO Box 3265Harrisburg, PA 17105-3265

Date: November 16, 2018

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PUBLIC VERSION - CONFIDENTIAL, PROPRIETARY INFORMATION REDACTED

BEFORE THEPENNSYLVANIA PUBLIC UTILITY COMMISSION

Pennsylvania Public Utility Commission, Bureau of Investigation and Enforcement,

Complainant,

Docket No. C-2018-3005151

v.

UGI Utilities, Inc.,

Respondent.

NOTICE TO PLEAD

YOU ARE HEREBY ADVISED THAT, PURSUANT TO 52 PA. CODE § 5.63, YOU MAY FILE A REPLY TO THE ENCLOSED NEW MATTER WITHIN TWENTY (20) DAYS AFTER THE DATE OF SERVICE. YOUR REPLY SHOULD BE FILED WITH THE SECRETARY OF THE PENNSYLVANIA PUBLIC UTILITY COMMISSION, P.O. BOX 3265, HARRISBURG, PA 17105-3265. A COPY OF YOUR REPLY SHOULD ALSO BE SERVED ON THE UNDERSIGNED COUNSEL.

Kent D. Murphy (ID # 44793) UGI Utilities, Inc.460 North Gulph Road King of Prussia, PA 19406 Phone:610-768-3628 Fax: 610-992-3203 E-mail: [email protected]

Date: November 16, 2018

Respectfully submitted,

)avid B. McGregor iPost & Schell, P.C.Four Penn Center 1600 John F. Kennedy Boulevard Philadelphia, PA 19103-2808Phone:215-587-1197 Fax: 215-320-4879 E-mail:[email protected]

Garrett P. Lent (ID # 321566)Post & Schell, P.C.17 North Second Street, 12th Floor Harrisburg, PA 17101-1601 Phone: 717-612-6032 E-mail:[email protected]

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Counsel for UGI Utilities, Inc.

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BEFORE THEPENNSYLVANIA PUBLIC UTILITY COMMISSION


Pennsylvania Public Utility Commission, Bureau of Investigation and Enforcement,

Complainant,

Docket No. C-2018-3005151

v.

UGI Utilities, Inc.,

Respondent.

ANSWER OF UGI UTILITIES, INC. TO THE FORMAL COMPLAINT OF THE BUREAU OF INVESTIGATION AND ENFORCEMENT

UGI Utilities, Inc. (“UGI”) hereby answers the Formal Complaint (“Complaint”) filed by

the Pennsylvania Public Utility Commission (“Commission”), Bureau of Investigation and

Enforcement (“I&E”) before the Commission on October 4, 2018. UGI denies the allegations in

the Complaint except as specifically and unequivocally admitted herein and denies all titles,

headings, footnotes, subheadings, and any other material not contained in numbered paragraphs.

UGI denies that it committed any violations of the Pennsylvania Code and Code of Federal

Regulations in connection with the July 2, 2017 natural gas explosion that occurred in the

Springdale Farms residential development in Millersville, Lancaster County, Pennsylvania.

I. COMMISSION JURISDICTION AND AUTHORITY

1. Admitted in part. The mailing address of the Commission is admitted. The

remainder of Paragraph 1 of the Formal Complaint contains a legal conclusion to which no

response is required. To the extent a response is required, UGI admits that the Commission is

authorized to regulate Pennsylvania public utilities pursuant to the authority granted to it by the

Public Utility Code.

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2. Admitted in part. The identity of the Complainant is admitted. The remainder of

Paragraph 2 of the Formal Complaint contains a legal conclusion to which no response is

required. To the extent a response is required, UGI admits that I&E is authorized to initiate

enforcement actions against Pennsylvania public utilities pursuant to the Public Utility Code.

3. Paragraph 3 of the Formal Complaint pertains to the Complainant’s legal

representation, to which no responsive pleading is required.

4. Admitted.

5. Paragraph 5 of the Formal Complaint contains, a legal conclusion to which no

response is required. To the extent a response is required, UGI admits that it is a “public utility”

and “natural gas distribution company” as defined in Sections 102 and 2202 of the Code. 66 Pa.

C.S. §§ 102 and 2202.

6. Paragraph 6 of the Formal Complaint contains a legal conclusion to which no

response is required. To the extent a response is required, UGI denies any factual averments

contained Paragraph 6,



contained in Paragraph 7.







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10. Paragraph 10 of the Formal Complaint contains legal conclusions to which no

response is required. To the extent a response is required, UGI denies Paragraph 10. By way of

further response, it is denied that UGI has violated any safety standards applicable to natural gas

public utilities in Pennsylvania.


response is required. To the extent a response is required, UGI admits Paragraph 11.




II. BACKGROUND

[BEGIN PROPRIETARY INFORMATION]

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[END PROPRIETARY INFORMATION]

III. VIOLATIONS

Counts 1 -11

68. The first sentence of Paragraph 68 re-alleges and reincorporates by reference

preceding allegations and requires no response beyond those made by UGI in response to the

preceding allegations. The remainder of Paragraph 68 sets forth conclusions of law to which no

response is required. To the extent a response is required, UGI denies the allegations.

Count 12


preceding allegations and requires no response. The remaining allegations contained in

Paragraph 69 sets forth conclusions of law to which no response is required. To the extent a

response is required, UGI denies the allegations.

Counts 13-18



Paragraph 70 set forth conclusions of law to which no response is required. To the extent a


Count 19

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Paragraph 71 sets forth conclusions of law to which no response is required. To the extent a


IV. REQUESTED RELIEF

72. Paragraph 72 consists of the Commission’s request for relief, which does not

require a response. To the extent a response is required, UGI denies that I&E is entitled to any

of the relief sought, or any other relief.







VII. NEW MATTER

1. I&E’s Complaint does not allege that UGI has violated any specific part or

subpart of 49 C.F.R. §§ 191.5, 192.13(c), 192.605(a) and 192.615 or 52 Pa. Code § 59.33(b).

Rather than identify specific violations of PHMSA’s and the Commission’s pipeline safety

regulations, the Formal Complaint attempts to require UGI to take actions, and/or maintain and

follow written plans and procedures that either are not specified in or are inconsistent with the

applicable regulations.

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2. By attempting to require UGI to take actions and/or modify its written plans and

procedures, I&E appears to be utilizing a complaint proceeding to modify and/or revise the

minimum pipeline safety standards set forth in PHMSA’s regulations, which have been adopted

by this Commission. Allowing I&E to pursue a complaint predicated on requirements that

are not explicitly set forth in PHMSA’s and the Commission’s regulations, would constitute

improper rulemaking. It also raises issues of fundamental fairness and creates significant

compliance uncertainty for gas distribution operators throughout Pennsylvania, who are not

parties to this Formal Complaint Proceeding.

3. To the extent that I&E and/or Commission believes that obligations in

addition to those explicitly set forth in PHMSA’s and the Commission’s regulations should

be applied to pipeline operators as minimum safety standards, UGI submits that such

requirements can only be considered in the course of a notice-and-comment rulemaking

proceeding, consistent with PHMSA’s and the Commission’s regulations. It is a

fundamental principle of administrative law that a federal or state agency must follow

appropriate rulemaking procedures that include notice and opportunity for public comment

when creating new compliance obligations.

4. Specifically, non-statutory mandatory requirements may only be imposed by

the Commission pursuant to regulations promulgated under the Commonwealth Documents

Law, 45 Pa. C.S. §§ 1201 et al., and Pennsylvania’s regulations governing the procedure for

adopting and revising regulations, 1 Pa. Code §§ 7.1 et al. A Pennsylvania agency cannot

create and apply new regulations or regulatory interpretations in the context of an

enforcement proceeding. See, e.g., Borough of Pottsowr v. Pa. Municipal Retirement Bd.,

551 Pa. 605, 609-10, 712 A.2d 741, 743 (Pa. 1998) (“Where an agency, acting pursuant to

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delegated legislative authority, seeks to establish a substantive rule creating a controlling

standard of conduct, it must comply with the provisions of the Commonwealth Documents

Law.”). Similarly, PHMSA may only adopt new minimum pipeline safety regulations

pursuant to the notice and comment procedures set forth in 49 C.F.R. Part 190, Subpart D.

49 C.F.R. §§ 190.301-190.343. I&E’s attempt to create and apply new regulations or

regulatory interpretations in the context of this enforcement proceeding is inconsistent with

this fundamental principles.

5. For these reasons, UGI submits that the Formal Complaint is an improper

attempt to create and apply new regulations or regulatory interpretations, which would

create new controlling standards of conduct for Pennsylvania pipeline operators that do not

currently exist under PHMSA’s or the Commission’s regulations.

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V. CONCLUSION

WHEREFORE, for all the foregoing reasons, UGI Utilities, Inc. requests that

Pennsylvania Public Utility Commission deny the October 4, 2018 Formal Complaint filed by

the Bureau of Investigation and Enforcement.

Kent D. Murphy (ID # 44793) UGI Utilities, Inc.460 North Gulph RoadKing of Prussia, PA 19406Phone:610-768-3628Phone:610-992-3203E-mail: [email protected]

1600 John F. Kennedy BoulevardPhiladelphia, PA 19103-2808Phone:215-587-1197Fax: 215-320-4879E-mail :[email protected]

Garrett P. Lent (ID #321566)Post & Schell, P.C.17 North Second Street, 12th Floor Harrisburg, PA 17101-1601 Phone:717-612-6032 Fax: 717-731-1985 E-mail:[email protected]

Date: November 16, 2018 Counsel for UGI Utilities, Inc.

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