[53 Pa.B. 6346]
[Saturday, October 7, 2023]
[Continued from previous Web Page]
Appendix A
BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Pennsylvania Public Utility Commission, : Bureau of Investigation and Enforcement's : Investigation of the April 9, 2020 Incident at : Docket No. M-2023-3019782 134 Water Dam Road, Waynesburg, Greene : County, PA (Mifflin Energy Corp.) :
PROPOSED ORDERING PARAGRAPHS 1. That the Joint Petition for Approval of Settlement filed on June 26, 2023 between the Commission's Bureau of Investigation and Enforcement and Mifflin Energy Corp. is granted and the underlying Settlement Agreement is approved in its entirety as submitted without modification.
2. That, in accordance with Section 3301 of the Public Utility Code, 66 Pa.C.S. § 3301, within thirty (30) days of the date this Order becomes final, Mifflin Energy Corp. shall pay a civil penalty in the amount of one hundred thousand dollars ($100,000). Said payment shall be made by certified check or money order payable to ''Commonwealth of Pennsylvania'' and shall be sent to:
Rosemary Chiavetta, Secretary
Pennsylvania Public Utility Commission
Commonwealth Keystone Building
400 North Street
Harrisburg, PA 171203. That upon receipt of the civil penalty payment of the above amount from Mifflin Energy Corp. the above-captioned matter shall be marked closed.
Appendix B
BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Pennsylvania Public Utility Commission, Bureau : of Investigation and Enforcement's Investigation : of the April 9, 2020 Incident at 134 Water Dam : Docket No. M-2023-3019782 Road, Waynesburg, Greene County, PA (Mifflin) : Energy Corp.) :
THE BUREAU OF INVESTIGATION AND ENFORCEMENT'S STATEMENT IN SUPPORT OF THE JOINT PETITION FOR APPROVAL OF SETTLEMENT
TO THE HONORABLE PENNSYLVANIA PUBLIC
UTILITY COMMISSION:Pursuant to 52 Pa. Code §§ 5.231, 5.232 and 69.1201, the Pennsylvania Public Utility Commission's (''Commission'' or ''PUC'') Bureau of Investigation and Enforcement (''I&E''), a signatory party to the Joint Petition for Approval of Settlement (''Settlement'' or ''Settlement Agreement'') filed in the above-docketed matter (''Informal Investigation''), submits this Statement in Support of the Settlement Agreement between I&E and Mifflin Energy Corp. (''Mifflin Energy'' or ''Company'').48 I&E avers that the terms and conditions of the Settlement Agreement are just and reasonable and in the public interest for the reasons set forth herein.
I. Background
I&E's informal investigation concerns an explosion that occurred on April 9, 2020 at 134 Water Dam Road, Waynesburg, Greene County, Pennsylvania (''Incident''). The Incident destroyed the residence at 134 Water Dam Road where the female homeowner suffered second degree burns.
Mifflin Energy owned and operated a gas well, Shoup # 4,49 which is located on a 210-acre parcel leased to Mifflin Energy that included the properties at 134 Water Dam Road and 169 Water Dam Road. Prior to and at the time of the Incident, gas from this well was made available to the residences at 134 Water Dam Road, the site of the explosion, and 169 Water Dam Road, a neighboring property, from a 2-inch production line running in a northerly direction for approximately 300 feet from Shoup # 4 to a tap located on the property of 134 Water Dam Road. At the tap, there is a ''T'' and two shut-off valves, one on each side of the tap. On one side of the tap, there is a service line serving the residence at 134 Water Dam Road. On the other side of the tap, there is a service line that crosses a public township road and terminates on the property of 169 Water Dam Road. According to Mifflin Energy, the home at 134 Water Dam Road was constructed by its owner prior to 2005 when Mifflin Energy acquired its production and gathering facilities in the vicinity. It is not known if the homeowners at 134 Water Dam Road were aware they were constructing their home close to the service line that conveyed gas from Mifflin Energy's production facilities to the property at 169 Water Dam Road.
The meter and regulator for the service line to 134 Water Dam Road were immediately adjacent to the tap and approximately 1,000 feet away from the former residential structure at 134 Water Dam Road. The meter and regulator for the service line to 169 Water Dam Road were also immediately adjacent to the tap prior to March 2020. However, less than one month prior to the Incident, on or about March 28, 2020, the owner of 169 Water Dam Road contacted a Mifflin Energy representative seeking permission to relocate Mifflin Energy's meter, as well as their own pressure regulator, closer to the residence at 169 Water Dam Road. The Mifflin Energy representative granted the homeowner's request to move the Mifflin Energy meter. There is no written record of the work performed related to the relocation of the meter and regulator.
Pipeline Safety Inspectors from I&E's Safety Division responded to the scene on the day of the Incident and initiated an investigation. The suspected cause of the Incident was a leak on the service line. The gas leak that led to the Incident occurred on the 1-inch bare steel service line to 169 Water Dam Road between the Mifflin Energy tap and the relocated meter serving 169 Water Dam Road and in proximity of the residence at 134 Water Dam Road. Prior to the Incident, the I&E Safety Division was not aware of Mifflin Energy's pipeline facilities since the Company was not registered with the PUC or PHMSA as a pipeline operator. The question of Commission jurisdiction over the service line was debated amongst the Parties and was a key factor in the decision of the Parties to settle this matter.
On June 26, 2023, the Parties filed a Joint Petition for Settlement in this matter. This Statement in Support is submitted in conjunction with the Settlement.
II. The Public Interest
Pursuant to the Commission's policy of encouraging settlements that are reasonable and in the public interest, the Parties held a series of settlement discussions. These discussions culminated in this Settlement Agreement, which, once approved, will resolve all issues related to I&E's informal investigation involving allegations related to the Incident in question.
The factual circumstances of this case warrant the resolution as memorialized by the Settlement Agreement. At first blush, it would appear that Mifflin Energy should be classified as a ''pipeline operator'' as that term is defined under Act 127, 58 P.S. § 801.102, based on I&E's view that Mifflin Energy owned or operated ''equipment or facilities in [the Commonwealth of Pennsylvania] for the transportation of gas or hazardous liquids by pipeline or pipeline facility regulated under Federal pipeline safety laws.'' I&E posited that moving the meter to a location away from the tap and adjacent to the residence at 169 Water Dam Road transformed the service line into a jurisdictional service line, with jurisdiction ending at the outlet of the relocated consumer meter pursuant to 49 CFR § 192.3. Upon that meter relocation, I&E posited that Mifflin Energy became responsible for complying with Act 127 and applicable Federal pipeline safety regulations. The circumstances here exemplify the fine line between facilities deemed non-jurisdictional and facilities deemed jurisdictional such that all of the responsibilities under Act 127 must be adhered to. In this case, mitigating factors ensue that warrant settlement. Those factors include the means by which the facilities became jurisdictional (a homeowner's request to simply relocate a meter downstream), the short timeframe for which Mifflin Energy was deemed by I&E's Safety Division to be jurisdictional prior to the Incident (less than three weeks) and a subsequent change in circumstances regarding the facilities (the operating assets of the Company have since been sold to a non-affiliated entity). As a matter going forward, even if the Act 127 pipeline operator rules and regulations applied to Mifflin Energy at the time of the Incident as I&E posits, with its operational assets now sold, Mifflin Energy is no longer subject to those rules and regulations and thus prospectively removed from the jurisdiction of the Commission. In amicably resolving this matter, I&E agreed to forego formal enforcement action regarding the alleged violations and related remedial measures that would have otherwise been pursued for compliance with the Act and related Federal pipeline safety laws, finding that the public interest is best served under the unique circumstances portrayed here with a swift and fair settlement.
III. Terms of Settlement
I&E and Mifflin Energy, intending to be legally bound and for consideration given and received, desire to fully and finally conclude this investigation and agree that a Commission Order approving the Settlement without modification shall create the following rights and obligations:
Mifflin Energy shall pay a civil penalty in the amount of One Hundred Thousand Dollars ($100,000) pursuant to 58 P.S. § 801.502 and 52 Pa. Code § 69.1201. Said payment shall be made within thirty (30) days of the Commission's Final Order (not subject to pending appeal or other legal challenge) approving any Settlement Agreement in this matter and shall be made by certified check or money order payable to the ''Commonwealth of Pennsylvania.'' The docket number of this proceeding shall be indicated with the certified check or money order and the payment shall be sent to:
Rosemary Chiavetta, Secretary
Pennsylvania Public Utility Commission
Commonwealth Keystone Building
400 North Street
Harrisburg, PA 17120Mifflin Energy agrees that the civil penalty shall not be tax deductible pursuant to Section 162(f) of the Internal Revenue Code, 26 U.S.C.S. § 162(f).
Since Mifflin Energy has sold its operational assets to a new owner that has no affiliation with Mifflin Energy, the Parties agree that the remedial measures that would otherwise be sought and potentially imposed upon Mifflin Energy, are no longer applicable to Mifflin Energy, as the sale of these assets relinquishes Mifflin Energy from falling within the definition of a pipeline operator and, accordingly, Act 127's pipeline operator requirements are no longer applicable to Mifflin Energy.
Upon Commission entry of a Final Order (not subject to pending appeal or other legal challenge) approving the Settlement Agreement in its entirety without modification, I&E acknowledges and confirms that Mifflin Energy is and will be released from all past or future claims that were made or could have been made by I&E and/or the Commission for monetary and/or other relief based on allegations that the Company failed to comply with the requirements of the Code, the Act, and any other state or federal regulations addressing gas pipeline safety.
I&E acknowledges and confirms that Mifflin Energy, given its prior sale of its physical assets and its participation in this Settlement Agreement with respect to the Incident, has no prospective obligations as a pipeline operator under state or federal law with respect to any pipeline or related facilities involved in the Incident.
I&E and Mifflin Energy jointly acknowledge that approval of this Settlement Agreement is in the public interest and fully consistent with the Commission's Policy Statement regarding Factors and Standards for Evaluating Litigated and Settled Proceedings, 52 Pa. Code § 69.1201. The Parties submit that the Settlement Agreement is in the public interest because it effectively addresses I&E's allegations that are the subject of the I&E informal investigation, and avoids the time and expense of litigation, which entails hearings, travel for I&E and Mifflin Energy's witnesses, and the preparation and filing of any potential briefs, exceptions, replies to exceptions, and appeals. Appendix B and Appendix C are Statements in Support submitted by I&E and Mifflin Energy, respectively, setting forth the bases upon which they believe the Settlement Agreement is in the public interest.
IV. Conditions of Settlement
The benefits and obligations of the Settlement Agreement filed alongside this Statement in Support shall be binding upon the successors and assigns of the Parties to the Settlement.
The Settlement Agreement may be signed in counterparts and all signatures attached hereto will be considered as originals.
In order to effectuate the Parties' Settlement Agreement, the undersigned Parties request that the Commission issue a Final Order approving the Settlement without modification.
The Parties agree that any Party may petition the Commission for a hearing or take other recourse allowed under the Commission's rules if the Commission Order rejects the Settlement Agreement or otherwise modifies the terms of the Settlement Agreement. In that event, any party may give notice to the other that it is withdrawing from the Settlement. Such notice must be in writing and must be given within twenty (20) business days of the entry of the Final Order which modifies or rejects the Settlement Agreement. The consequence of any Party withdrawing from the Settlement Agreement as set forth above is that all issues associated with the requested relief presented in the proceeding may be fully litigated by the filing of a Formal Complaint unless otherwise stipulated between the Parties and all obligations of the Parties to each other set forth herein are terminated and of no force and effect. In the event that a Party withdraws from Settlement Agreement as set forth in this paragraph, I&E and Company jointly agree that nothing in the Settlement Agreement shall be construed as an admission against or as prejudice to any position which any Party might adopt during litigation of this case.
I&E and Company jointly acknowledge that approval of the Settlement Agreement is in the public interest and is fully consistent with the Commission's Policy Statement for evaluating litigated and settled proceedings involving violations of the Code and Commission regulations. 52 Pa. Code § 69.1201. The Commission will serve the public interest by approving this Joint Petition for Approval of Settlement.
The Settlement Agreement avoids the time and expense of litigation in this matter before the Commission, which likely would entail the filing of a Formal Complaint, the preparation for and attendance at hearings, and the preparation and filing of testimony, briefs, reply briefs, exceptions, and reply exceptions. The Parties further recognize that their positions and claims are disputed and, given the inherent unpredictability of the outcome of a contested proceeding, the Parties recognize the benefits of amicably resolving the disputed issues through settlement.
Since the Parties agree to the terms of the Settlement Agreement, adopting it will eliminate the possibility of any appeal from the Commission Secretarial Letter or Order, thus avoiding the additional time and expense that they might incur in such an appeal.
The Settlement consists of the entire agreement between I&E and Mifflin Energy regarding the matters addressed herein. Moreover, this Settlement Agreement represents a complete settlement of I&E's informal investigation against Mifflin Energy's alleged violations of the Public Utility Code and the Commission's regulations. The Parties expressly acknowledge that the Settlement Agreement represents a compromise of positions and does not in any way constitute a finding or an admission concerning the alleged violations of the Public Utility Code and the Commission's regulations. The Settlement shall be construed and interpreted under Pennsylvania Law.
None of the provisions in this Settlement shall be considered or shall constitute an admission, a finding of any fact, or a finding of culpability on the part of Mifflin Energy in this or any other proceeding. The Settlement is presented without prejudice to any position that either Party may have advanced, and without prejudice to the position any Party may advance, in the future on the merits of the issues in future proceedings, except to the extent necessary to effectuate the terms and conditions of this Settlement.
The terms and conditions of the Settlement Agreement constitute a carefully crafted package representing reasonably negotiated compromises on the issues addressed herein. Thus, the Settlement Agreement is consistent with the Commission's rules and practices encouraging negotiated settlements set forth in 52 Pa. Code §§ 5.231 and 69.1201.
V. Legal Standard for Settlement Agreements
Commission policy promotes settlements. See 52 Pa. Code § 5.231. Settlements lessen the time and expense that the parties must expend litigating a case and, at the same time, conserve precious administrative resources. Settlement results are often preferable to those achieved at the conclusion of a fully litigated proceeding. ''The focus of inquiry for determining whether a proposed settlement should be recommended for approval is not a 'burden of proof' standard, as is utilized for contested matters.'' Pa. Pub. Util. Comm'n, et al. v. City of Lancaster—Bureau of Water, Docket Nos. R-2010-2179103, et al. (Order entered July 14, 2011). Instead, the benchmark for determining the acceptability of a settlement is whether the proposed terms and conditions are in the public interest. Pa. Pub. Util. Comm'n v. Philadelphia Gas Works, Docket No. M-00031768 (Order entered January 7, 2004).
I&E submits that approval of the Settlement Agreement in the above-captioned matter is consistent with the Commission's Policy Statement regarding Factors and Standards for Evaluating Litigated and Settled Proceedings Involving Violations of the Public Utility Code and Commission Regulations (''Policy Statement''), 52 Pa. Code § 69.1201; see also Joseph A. Rosi v. Bell-Atlantic-Pennsylvania, Inc., Docket No. C-00992409 (Order entered March 16, 2000). The Commission's Policy Statement sets forth ten (10) factors (''Rosi factors'') that the Commission may consider in evaluating whether a civil penalty for violating a Commission order, regulation, or statute is appropriate, as well as whether a proposed settlement for a violation is reasonable and in the public interest. 52 Pa. Code § 69.1201.
It is important to note that the Commission will not apply the Rosi factors as strictly in settled cases as in litigated cases. 52 Pa. Code § 69.1201(b). While many of the same factors may still be considered, in settled cases, the parties ''will be afforded flexibility in reaching amicable resolutions to complaints and other matters as long as the settlement is in the public interest.'' Id.
The first factor considers whether the conduct at issue was of a serious nature, such as fraud or misrepresentation, or if the conduct was less egregious, such as an administrative or technical error. Conduct of a more serious nature may warrant a higher civil penalty while conduct that is less egregious warrants a lower amount. 52 Pa. Code § 69.1201(c)(1). I&E alleges that the conduct in this matter involves a question of Commission jurisdiction under Act 127 based on the configuration of the Company's facilities. The question of jurisdiction arose from an Incident investigation where one individual suffered injuries. I&E notes that the Incident was an isolated event and did not place members of the general public at grave risk of injury. Nevertheless, because safe and adequate service to the public is a major concern when gas safety incidents occur, I&E considers the consequences of the Incident to be of a serious nature, which warrants a higher civil penalty.
The second factor considers whether the resulting consequences of Mifflin Energy's alleged conduct were of a serious nature. When consequences of a serious nature are involved, such as personal injury or property damage, the consequences may warrant a higher penalty. 52 Pa. Code § 69.1201(c)(2). Here, the Incident involved a gas explosion and resulted in the destruction of property and the injury of one individual. It was the investigation of this Incident that led I&E's Safety Division to question the jurisdiction of the Company's facilities. The failure of a jurisdictional entity to comply with Act 127 is deemed to be serious. Here, a dispute arises as to whether Mifflin Energy was in fact a jurisdictional entity as a result of a meter relocation on a service line. Whether or not the Incident itself was jurisdictional, consequences of a serious nature were involved.
The third factor to be considered under the Policy Statement is whether the alleged conduct was intentional or negligent. 52 Pa. Code § 69.1201(c)(3). ''This factor may only be considered in evaluating litigated cases.'' Id. Whether Mifflin Energy's alleged conduct was intentional or negligent does not apply since this matter is being resolved by settlement of the Parties.
The fourth factor to be considered is whether Mifflin Energy has made efforts to change its practices and procedures to prevent similar conduct in the future. 52 Pa. Code § 69.1201(c)(4). As noted in the Joint Petition, since the Incident, Mifflin Energy has divested itself from the operational assets that were at issue here. Given that Mifflin Energy no longer has any assets that could fall under the jurisdiction of the Commission, the Company has removed itself from the possibility of any future violations.
The fifth factor to be considered relates to the number of customers affected by the Company's actions and the duration of the violations. 52 Pa. Code § 69.1201(c)(5). Again, I&E determined that this was an isolated Incident involving facilities that served only two residences. The jurisdictional issue raised related to a single service line. Mifflin Energy has since sold all of its operational assets and does not own any jurisdictional facilities.
The sixth factor to be considered relates to the compliance history of Mifflin Energy. 52 Pa. Code § 69.1201(c)(6). An isolated incident from an otherwise complaint company may result in a lower penalty. Here, Mifflin Energy was not known to have any jurisdictional facilities prior to the Incident and, thus, has no compliance history with the Commission.
The seventh factor to be considered relates to whether the Company cooperated with the Commission's investigation. 52 Pa. Code § 69.1201(c)(7). Mifflin Energy has cooperated with I&E's investigation in order to address the violations alleged as a result of the Incident. Given that Mifflin Energy no longer owns or operates the facilities related to the Incident, the jurisdictional issue and application of Act 127 to these facilities no longer apply to Mifflin Energy prospectively. It was determined that this severely limited the value of pursuing litigation against Mifflin Energy. The Parties further determined that it was in their respective best interest, as well as in the public interest, to settle this matter and to reach an amicable agreement as to an appropriate civil penalty amount that adequately balances all the relevant interests under the unique circumstances of this case. A fair and equitable civil penalty has been reached in this Settlement Agreement without the need to pursue formal enforcement action.
The eighth factor to be considered is the appropriate civil penalty necessary to address the Incident and to deter future violations. 52 Pa. Code § 69.1201(c)(8). I&E determined that the change in circumstances resulting in the elimination of prospective obligations under the Act did not completely exonerate Mifflin Energy from the violations it alleges Mifflin Energy committed, and to which Mifflin Energy continues to assert do not apply. As noted above with regard to the seventh factor, given that seeking deterrence from committing future violations does not apply here under the circumstances noted, I&E submits that the negotiated civil penalty amount of $100,000, which is not tax deductible, is a fair, substantial and sufficient result to find that this Settlement Agreement is in the public interest.
The ninth factor to be considered relates to past Commission decisions in similar situations. 52 Pa. Code § 69.1201(c)(9). I&E submits that the circumstances of this matter are unique, but that other settlements involving Act 127 have been approved by the Commission. In Pa. Pub. Util. Comm'n, Bureau of Investigation and Enforcement v. Bushkill Group, Inc., Docket No. C-2015-2512950 (Order entered November 30, 2018), the Commission approved the Joint Petition for Approval of Settlement as submitted without modification resolving allegations including but not limited to failing to file Act 127 reports and failing to maintain a procedural manual for operations where respondent agreed to pay a civil penalty of $37,500. Similarly, in Pa. Pub. Util. Comm'n, Bureau of Investigation and Enforcement v. XTO ENERGY, Inc. and Mountain Gathering, LLC, Docket No. C-2014-2444722 (Order entered September 3, 2015), the Commission approved a settlement agreement wherein the respondent agreed to pay a civil penalty of $30,000 to resolve the allegations alleged that the respondents failed to timely identify and classify pipelines for reporting and assessment purposes pursuant to Act 127. By comparison, the instant matter involves a Company that unwittingly, by approving the relocation of a single meter, became a jurisdictional pipeline operator in the eyes of the I&E Safety Division for less than a month prior to I&E's investigation. Here, Mifflin Energy has since sold its operational assets divesting itself from any possible Commission jurisdiction going forward, and agrees to pay a civil penalty of $100,000 to resolve the matter.
The tenth factor considers ''other relevant factors.'' 52 Pa. Code § 69.1201(c)(10). In support of the $100,000 civil penalty, I&E again notes the unique circumstances of this matter. Mifflin Energy, given its prior sale of its operational assets and its participation in this Settlement Agreement with respect to the Incident, has no prospective obligations as a pipeline operator under state or federal law with respect to any pipeline or related facilities involved in the Incident. Given the fair civil penalty to be paid by Mifflin Energy, there is simply no benefit to proceeding to litigation or seeking a more significant monetary penalty.
In conclusion, I&E fully supports the terms and conditions of the Settlement Agreement. The terms of the Settlement Agreement reflect a carefully balanced compromise of the interests of the Parties in this proceeding. Moreover, the circumstances of this case evidence that there are no prospective remedies to apply to Mifflin Energy since the Parties agree that Mifflin Energy's sale of its operational assets removes the Company from the realm of Act 127 jurisdiction going forward. Mifflin Energy has agreed to pay a fair civil penalty as part of this Settlement Agreement. The overarching jurisdictional issue of ''farm tap'' facilities is to be addressed by PHMSA. Accordingly, approval of this Settlement Agreement is in the public interest.
Wherefore, I&E supports the Settlement Agreement as being in the public interest and respectfully requests that the Commission approve the terms of the Joint Petition in their entirety without modification.
Respectfully submitted,
Michael L. Swindler
Deputy Chief Prosecutor
PA Attorney ID No. 43319Pennsylvania Public Utility Commission
Bureau of Investigation and Enforcement
Commonwealth Keystone Building
400 North Street
Harrisburg, PA 17120
(717) 783-6369
mswindler@pa.gov
Appendix C
BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Pennsylvania Public Utility Commission, Bureau : of Investigation and Enforcement : : Docket No. M-2023-3019782 v. : : Mifflin Energy Corp.
MIFFLIN ENERGY CORP. STATEMENT IN SUPPORT OF FULL SETTLEMENT OF INFORMAL INVESTIGATION TO THE PENNSYLVANIA PUBLIC UTILITY COMMISSION:
Mifflin Energy Corp. (''Mifflin Energy'')50 hereby files this Statement In Support Of Full Settlement Of Informal Investigation (''Statement'') in connection with a Joint Petition for Approval of Settlement (''Settlement Agreement,'' ''Settlement,'' or ''Joint Petition'') entered into by Mifflin Energy and the Pennsylvania Public Utility Commission's (''Commission'') Bureau of Investigation and Enforcement (''I&E'') (collectively, ''Joint Petitioners'') in the above-captioned proceeding. The Settlement Agreement is intended to resolve all issues related to a natural gas explosion that occurred on April 9, 2020, at 134 Water Dam Road, Waynesburg, Greene County, Pennsylvania (the ''Incident''), including any alleged liability arising under the Gas and Hazardous Liquid Pipelines Act of Dec. 22, 2011, P.L. 586, No. 127, 58 P.S. § 801.101 et seq (''Act 127''). Mifflin Energy has settled the threatened prosecution to: (i) avoid the greater expense of defending I&E's allegations in a fully litigated formal complaint and (ii) achieve certainty in final resolution of this matter. Rather than engage in months of costly litigation that would delay final resolution of the issues in this matter, Mifflin Energy has provided I&E with all information requested, fully cooperated with I&E, and the Joint Petitioners have developed a reasonable resolution of I&E's informal investigation of the Incident. The Settlement Agreement is in the public interest and meets all legal requirements. Therefore, it should be approved by the Commission without modification.
I. Background
1. The background of this proceeding is accurately set forth in Paragraphs 15—31 of the Joint Petition and is incorporated herein by reference. As noted therein, this matter involves a failure that occurred on consumer-owned piping delivering gas to a residential homeowner pursuant to the terms of what is more commonly known as a ''free gas'' or ''farm tap'' agreement, which was also a gas production lease. Mifflin Energy became a party to that agreement upon acquiring certain production wells in July 2005. As originally executed in May 1982, the agreement (the ''Lease Agreement'') authorized the homeowner to use a certain amount of the gas produced from the well for domestic purposes, so long as the homeowner took all of the steps necessary to establish a connection with the production pipeline that carried the gas from the well. The Lease Agreement expressly stated that the homeowner assumed all liability under the free gas provision, and that Mifflin Energy's only obligation with respect to the consumer-owned piping was to install and maintain a meter for purposes of measuring the amount of gas consumed.
2. In March 2020, the homeowner exercised their right under the Lease Agreement to relocate the regulator on the consumer-owned piping to a point closer to their residence. The homeowner also relocated the meter as part of that project with Mifflin Energy's acquiescence. Approximately three weeks later, the consumer-owned piping failed at a point between the connection to Mifflin Energy's production pipeline and the relocated regulator and meter set, causing an explosion that damaged an adjacent home and injured a resident. Other than agreeing to the meter relocation, Mifflin Energy had no involvement in any of the events leading up to the Incident.
3. Mifflin Energy understands the nature of the allegations I&E would have asserted under Act 127 in a formal complaint if one had been filed with the Commission in connection with the Incident and will describe in this Statement both the reasons why the Settlement should be approved consistent with the Commission's regulations and the legal and factual defense Mifflin Energy would have presented had this matter gone to litigation. While the Settlement is in the public interest and should be approved without modification, Mifflin Energy does not acknowledge liability with respect to the allegations I&E has raised. However, to resolve I&E's informal investigation of the Incident without the additional cost and uncertainty of litigation, Mifflin Energy has agreed to pay a significant penalty in the amount of $100,000.
II. Mifflin Energy's Defense of I&E's Allegations
4. Had this matter been litigated before the Commission, Mifflin Energy would have proffered the following evidence and legal arguments to demonstrate that Mifflin Energy did not commit any of the violations alleged by I&E.
5. Mifflin Energy was not legally responsible for installing or maintaining the portion of the consumer-owned piping that failed during the Incident. The consumer-owned piping originated at a tap on a Mifflin Energy production facility, ran past the residence at 134 Water Dam Road (the ''Beyer Residence''), and terminated at the residence at 169 Water Dam Road (the ''Churney Residence''), Waynesburg, Greene County, Pennsylvania. Pursuant to the terms of the Lease Agreement, the homeowner had the sole and exclusive responsibility for installing and maintaining this piping in its entirety, except for the meter used to measure the amount of gas consumed. Mifflin Energy had no other rights or responsibilities with respect to that piping under the Lease Agreement. This is consistent with prevailing Pennsylvania law. See Adams v. Public Utility Commission, 819 A. 2d 631 (2003); Leslie P. Midla v. Equitable Gas Company, 2007 WL 7233729 (2007) (holding that free gas or farm tap agreements create private contractual rights between the parties); see also T.W. Phillips Gas and Oil Co. v. Jedlicka, 615 Pa. 199, 208 (2012) (holding that an oil and gas ''lease is in the nature of a contract and is controlled by principles of contract law''); Zettlemoyer v. Transcontinental Gas Pipeline Corp., 540 Pa. 337, 334 (1995) (''It is well established that the same rules of construction that apply to contracts are applicable in the construction of easement grants.'').
6. Mifflin Energy did not initiate or otherwise participate in any of the work that preceded the Incident. Under the express terms of the Lease Agreement, the homeowner was responsible for installing and maintaining the regulator that controls the gas pressure in the consumer-owned pipeline involved in the Incident. The homeowner of the Churney Residence decided to relocate the regulator and meter, using its own contractor and at its expense, away from the tap on Mifflin Energy's production line to a location closer to its home. Attached as Appendix 1 to this Statement is a map showing the consumer-owned piping, the Beyer Residence and the Churney Residence in the area where the Incident occurred. Mifflin Energy was not involved in the work itself and did nothing more than agree to the homeowner's request to relocate the meter. The Incident occurred approximately three weeks later, causing damage to the Beyer Residence and injuries to a resident.
7. Mifflin Energy acted promptly in responding to the Incident. After the Incident occurred, Mifflin Energy was on the site of the Incident daily for weeks and worked with the Pennsylvania Department of Environment Protection (''DEP'') to map the source of the gas and conduct soil sampling. Mifflin Energy also submitted a report on the Incident to the DEP.
8. Mifflin Energy cooperated fully with I&E during all phases of its investigation. On August 13, 2020, I&E notified Mifflin Energy that it had opened an investigation of the Incident and served data requests on Mifflin Energy. Mifflin Energy filed complete responses to all data requests on September 2, 2020. Mifflin Energy also attended a meeting with Commission gas safety representatives at the site of the Incident on November 20, 2020, and assisted with the marking of the production line and taps that connected to the customer-owned pipelines leading to the Beyer Residence and the Churney Residence.51 In response to periodic inquiries on the status of I&E's investigation, Mifflin Energy was advised that the informal investigation was ongoing. On February 23, 2023, I&E reported the results of its investigation to Mifflin Energy. Settlement discussions ensued, which formed the basis of a Joint Petition for Settlement.
9. Mifflin Energy's view is that it was not subject to the Commission's jurisdiction under Act 127 at the time of the Incident. Act 127 only authorizes the Commission to apply the Pipeline and Hazardous Materials Safety Administration's (''PHMSA'')52 federal pipeline safety standards in 49 CFR Part 192 to certain intrastate gas pipeline facilities, 58 P.S. §§ 801.103, 801.501. PHMSA's federal pipeline safety standards in Part 192 do not apply to facilities that are used in the production of natural gas, see 49 U.S.C. § 60101(21)(A); 49 CFR §§ 192.8 and 192.9; see also PHMSA Letter of Interpretation to Mr. Edward M. Steele, Public Utilities Comm'n of Ohio, PI-92-010 (Mar. 12, 1992) (''Part 192 does not apply to production facilities''); PHMSA Letter of Interpretation to Mr. Lance Fellhoalter, Engineering Technician, OXY USA, Inc. PI-93-060 (Oct. 8, 1993) (''The regulations in Parts 40, 191, 192, and 199 apply to pipeline facilities used in the transportation of gas beginning at the end of the production process.''), and Act 127 prohibits the Commission from applying any state safety regulations that are inconsistent with or greater or more stringent than the Part 192 requirements. 58 P.S. § 801.501(a). Mifflin Energy only ever used the wells and pipelines at issue in the case to engage in the production of natural gas. Therefore, the Commission cannot exercise jurisdiction over Mifflin Energy under Act 127.
10. In Mifflin Energy's view, the portion of the consumer-piping that failed during the Incident is not subject to the Commission's jurisdiction under Act 127 either. PHMSA has long recognized that persons who receive gas for their own consumption are not engaged in transportation of gas or owners or operators of jurisdictional gas pipeline facilities under the Pipeline Safety Act or Part 192. PHMSA established that principle more than 25 years ago in a 1996 letter of interpretation, stating that a farmer who receives gas for use in operating a farm, a school that receives gas for use in operating a cafeteria and cooking equipment, and a community association that receives gas for use in running street and entrance lighting service were not jurisdictional gas pipeline operators under Part 192, PHMSA Letter of Interpretation to Mr. Massoud Tahamtani, Virginia State Corp. Comm'n, PI-96-002 (Feb. 13, 1996). PHMSA affirmed this principle more recently in a 2018 letter of interpretation, noting that a customer who receives gas in a farm tap configuration is ''not engaged in the transportation of gas'', PHMSA Letter of Interpretation to Mr. Michael J. Schmitt, Kentucky Public Service Comm'n, PI-18-0019 (Nov. 5, 2018). PHMSA also acknowledged in both interpretations that Part 192 does not apply to any piping or appurtenances owned by the customer who receives gas for their own consumption, PHMSA Letter of Interpretation to Mr. Massoud Tahamtani, Virginia State Corp. Comm'n, PI-96-002 (Feb. 13, 1996); PHMSA Letter of Interpretation to Mr. Michael J. Schmitt, Kentucky Public Service Comm'n, PI-18-0019 (Nov. 5, 2018). As in these prior cases, the consumer was solely responsible for installing and maintaining the portion of the piping that failed during the Incident pursuant to the express terms of the free gas clause in the Lease Agreement. Mifflin Energy believes the Commission could not apply Part 192 to either the consumer or the consumer-owned- and-operated portion of the piping, or exercise jurisdiction over the same under Act 127, at the time of the Incident.
11. Mifflin Energy's position is that I&E's allegations that Mifflin Energy violated Act 127 rest on an erroneous interpretation that PHMSA issued following the Incident. In January 2021, without prior notice to Mifflin Energy, I&E submitted a request to PHMSA for an interpretation on the jurisdictional status of the consumer-owned piping that failed during the Incident, i.e., ''whether the portion of consumer-owned line that experienced the leak was subject to the definition of 'service line' set forth in 49 CFR § 192.3 at the time of the incident and whether the producer was responsible for this portion of the line.'' In September 2021, without prior notice to Mifflin Energy, PHMSA issued a letter interpretation advising I&E that the portion of the piping extending from the tap to the relocated meter was a service line under the definition provided in 49 CFR § 192.3, even though the consumer owned and assumed legal responsibility for that piping under the terms of the Lease Agreement; that the Lease Agreement had no impact on the determination as to whether that piping was part of a service line under 49 CFR § 192.3, even though the customer owned and assumed legal responsibility for that piping under the express terms of the free gas clause in the Lease Agreement; and Mifflin Energy was an operator under Part 192 solely because of its ownership of the meter that the customer relocated closer to the Churney Residence, even though the consumer had the sole and exclusive obligation under the Lease Agreement to establish the piping connection necessary to receive the free gas and to install and maintain the regulator.
12. In response to being informed by I&E at the end of its investigation that it had obtained an interpretation from PHMSA regarding Mifflin Energy's liability, Mifflin Energy filed a petition pursuant to 49 U.S.C. § 60117(b)(1)(J) asking PHMSA to issue a declaratory order affirming the non-jurisdictional status of the consumer-owned piping that failed during the Incident and rescinding the erroneous September 2021 interpretation. Specifically, Mifflin Energy has asked PHMSA to declare that (1) customer piping is not subject to the safety standards in Part 192, and (2) that the owner or operator of a non-jurisdictional production or gathering line that delivers gas directly to customer piping pursuant to a free gas or farm tap agreement is not responsible for ensuring that the customer's piping complies with Part 192. Mifflin Energy also asked PHMSA to rescind its September 2021 letter of interpretation as contrary to longstanding precedent and well-established law, including the customer notification requirements in 49 CFR § 192.16. Indeed, as Mifflin Energy explained in its petition, PHMSA acknowledged in promulgating the customer notification requirements in 49 CFR § 192.16 that ''regardless of length, customer piping downstream from an operator's service line is not subject to the maintenance standards of Part 192.''53 PHMSA also acknowledged throughout the rulemaking process that ''the Federal gas pipeline safety standards do not require gas pipeline operators to maintain customer-owned services lines[,]''54 and that the customer notification requirement in 49 CFR § 192.16 ''do[es] not require operators to take over the maintenance of these lines.''55 PHMSA recently notified Mifflin Energy that its petition for a declaratory order has been accepted by the agency and will be made available for public comment prior to disposition.
13. Pennsylvania jurisdictional utilities have raised concerns similar to Mifflin Energy's concerns about being made responsible for maintaining customer-owned service lines. Under Section 1510 of the Public Utility Code, 66 Pa.C.S. § 1510, maintenance of state jurisdictional consumer service lines is the responsibility of the service line owner (''[m]aintenance of service lines shall be the responsibility of the owner of the service line.''). In a 2020 Tentative Implementation Order at Docket No. L-2020-301917 (''Tentative Implementation Order''), the Commission requested comments on a proposal to make utilities responsible for repair and maintenance of customer-owned service lines located between the utility's Commission-jurisdictional gas distribution line and the utility meter, citing 49 CFR § 192.3.
14. Among the comments filed to the Tentative Implementation Order were several submitted by the Energy Association of Pennsylvania (''EAP'') and Columbia Gas (''Columbia''), a natural gas distribution company.56 The EAP noted that ''federal regulations do address circumstances where the customer owns and maintains a portion of the service line'' and that the federal regulations at 49 CFR § 192.16 ''require an operator to provide notice to the customer if that operator does not maintain the customer's buried piping and to provide notice that if the customer's buried piping is not maintained, it may be subject to potential hazards of corrosion and leakage.''57 The EAP further stated that the notice requirement of § 192.16 of the federal regulations contradicts making the ''operator'' responsible for maintenance and repair of the service line between the utility main and the outlet of the meter.58 In this case, official notice by Mifflin Energy to Churney that he was responsible to maintain his service line was irrelevant because Churney was fully aware that Mifflin Energy did not maintain the service line.
15. Similarly, Columbia noted in its comments to the Tentative Implementation Order that Part 192 does not require an operator to own service lines and that ''[t]here is nothing in section 19.13(c), or any other section of Part 192, that requires an operator to perform or pay for the actual work that is necessary for compliance.''59 Columbia also stated that there are several instances in Part 192 where customers are responsible for maintaining service lines where the operator does not maintain customer-owned piping, and that 49 CFR § 192.16 was inconsistent with the Commission's proposition in the Tentative Implementation Order that the utility/operator be responsible for safety compliance between the main and the meter outlet.60
16. Thus, Pennsylvania utilities agree with Mifflin Energy that Part 192 does not make an operator responsible for repair and maintenance of customer-owned piping downstream of the operator's facilities and up to the consumer's meter. In Mifflin Energy's case, this conclusion is particularly apt when the source piping is non-jurisdictional production facilities and the consumer's lease made it clear that maintenance and repair of the consumer-owned pipe was the consumer's responsibility.
17. Even if Part 192 and Act 127 applied to the consumer piping that failed during the Incident, Mifflin Energy's view is that it did not have fair notice of the interpretation of 49 CFR § 192.3 that forms the basis for I&E's alleged violations. That lack of fair notice is demonstrated by the fact that I&E could not determine the jurisdictional status of the piping involved in the Incident without seeking an interpretation from PHMSA. Mifflin Energy cannot be subject to civil penalties without having fair notice of the interpretation of 49 CFR § 192.3 that forms the basis for I&E's alleged violations, as well as a due process opportunity to confront the proponent of that interpretation.
18. Finally, Mifflin Energy would show in its defense of I&E's allegations that, notwithstanding the fact that it had been operating wells since 2005, its career as an alleged Pipeline Operator started in 2020 the day its meter was relocated by the homeowner and ended approximately three weeks later when the consumer-owned service line leaked, caused an explosion and was retired from use. Any alleged responsibility of Mifflin Energy under these circumstances was not a well-established and generally accepted gas safety requirement ignored by Mifflin Energy at the time of the Incident.
III. Reasonableness of the Settlement
19. It is well-established that Commission policy encourages settlements.61 The public benefits from settlements because they reduce the time and expense the parties must expend in litigating a case while simultaneously conserving important administrative resources. Also, settlements are more predictable than the results likely to be achieved in full litigation. In order to accept a settlement, the Commission must first determine that the proposed penalty is in the public interest.62
20. In Rosi v. Bell Atlantic Pennsylvania Inc., et al., 94 Pa. P.U.C. 103 (Order entered March 16, 2000) (''Rosi''), the Commission established standards to be applied in determining whether a particular enforcement outcome is in the public interest. See also, Pennsylvania Public Utility Commission v. NCIC Operator Services, M-00001440 (Tentative Order entered December 20, 2000 outlining the ''Rosi Standards''). These standards have been reviewed by the Joint Petitioners and compared against the proposed outcome in this case. The Settlement Agreement meets the standards outlined by Rosi as being in the public interest, as further discussed below.
21. Further, approval of this Settlement Agreement is consistent with the Policy Statement promulgated by the Commission63 establishing the ten Rosi factors it may consider in evaluating whether a civil penalty for violating a Commission order, regulation or statute is appropriate, as well as whether a proposed settlement for a violation is reasonable and in the public interest. The Policy Statement, by its own language, is only considered a ''guide'' to the Commission in evaluating these types of matters. Moreover, the Commission has recognized that ''the parties in settled cases should be afforded flexibility in reaching amicable resolutions to complaints and other matters so long as the settlement is in the public interest.'' The terms of the Settlement Agreement, as well as the ten factors the Commission evaluates in reviewing a settlement of an alleged violation, are addressed below.
a. Whether the conduct at issue was of a serious nature?—There was no egregious, willful fraud or misrepresentation element of Mifflin Energy's conduct, which suggests that a substantially lower penalty, if any, is appropriate in this case. There was no Mifflin Energy conduct whatsoever, except for acquiescing in the Lessor's plan to relocate the Lessor's own regulator and Mifflin Energy's meter along a pipe that Mifflin Energy had never maintained, did not own and did not have a legal right to access under the Lease. For negligence to be present, Mifflin Energy would have had to know of some duty, defined by clear legal precedent, that relocation of the meter under the circumstances applicable here imposed certain maintenance responsibilities on it, a proposition that had not been articulated to Mifflin Energy until I&E completed its informal investigation.
b. Whether the resulting consequences of the conduct at issue were of a serious nature?—While any gas explosion is a serious matter, no fatalities were involved in the Incident, all damage claims have been resolved, and there are no longer any ongoing investigations related to damages, persons or property. Mifflin Energy has fully cooperated with all investigations of the Incident. Further, it is Mifflin Energy's position that there were no consequences of its actions. The only consequences that occurred were as a result of the Lessor moving its own regulator on its own service line.
c. Whether the conduct at issue was deemed intentional or negligent?—This factor is only considered in evaluating litigated cases.
d. Whether the regulated entity made efforts to modify internal practices and procedures to address the conduct at issue and prevent similar conduct in the future?—At no time in its entire history of operating has Mifflin Energy ever been a regulated entity. In fact, until I&E completed its informal investigation and shared its conclusions, Mifflin Energy had no expectation it could even be considered a regulated entity. Mifflin Energy no longer owns facilities producing or transporting gas and there are no customers extant whose service would be prospectively affected.
e. The number of customers affected and the duration of the violation—First, it is Mifflin Energy's position that there were no violations, and that the Incident was caused by the Lessor's actions and the Lessor's failure to maintain its own consumer-owned line. Further, the Incident occurred only days after Mifflin Energy's meter was relocated by the Lessor. A small number of gas users was affected and fortunately no fatalities arose from the Incident.
f. The compliance history of the regulated entity which committed the violation—As noted above, it is Mifflin Energy's view that it has committed no violations of any law or regulation and at worst was arguably a regulated entity for a matter of days as to a single gas meter. Further, Mifflin Energy never sought or accepted status as an operator of any pipeline facilities under federal or state law. There is no negative compliance history for Mifflin Energy.
g. Whether the regulated entity cooperated with the PaPUC—Mifflin Energy timely provided I&E answers to its questions in the informal investigation almost three years ago. No further contact, questions or discussions were forthcoming from I&E until I&E provided to Mifflin Energy a letter in early 2023 communicating the results of I&E's investigation of the Incident. Prior to that time, in response to Mifflin Energy's periodic inquiries for a status of the investigation, I&E only advised the investigation was ongoing. Mifflin Energy's cooperation with the investigation was full and complete.
h. The amount of penalty necessary to deter future violations—Even assuming a violation occurred (which Mifflin Energy disputes, as noted above), there is no issue of future violations by Mifflin Energy given the sale of its assets. No deterrent is necessary for Mifflin Energy and therefore no amount is necessary ''to deter future violations.''
i. Past PaPUC decisions in similar situations—Mifflin Energy is unaware of similar prior investigations where the analysis supporting violations was a new analysis, not within the knowledge or ability of the alleged violator to address in advance, and not fully consistent with prior interpretations of existing law and regulations. In other cases where I&E has sought a penalty from an alleged violator of pipeline safety regulations in the range sought in this matter, the party was well aware of its status as a utility operator and had reason to be fully conversant with PHMSA and Commission gas safety requirements, unlike Mifflin Energy.
j. Other relevant factors—Mifflin Energy has not ignored well-established and clear gas safety requirements and contends that any safety requirements applicable to the consumer-owned piping was the duty of the homeowner, not Mifflin Energy. Mifflin Energy acted at all times consistent with its private contractual obligations. All damage issues have already been amicably resolved by the affected parties.
22. Based on the above analysis, the Settlement Agreement is consistent with the Commission's ten-factor Policy Statement, has been designed to provide a thorough and appropriate response to I&E's informal investigation, and is therefore in the public interest. The Company has endeavored to work with I&E to prepare reasonable settlement terms. The Settlement Agreement is intended to address all concerns raised during the informal investigation. In addition, the Settlement Agreement will eliminate the possibility of further Commission litigation and appeals, along with their attendant costs.
IV. Conclusion
Mifflin Energy and I&E have worked diligently and cooperatively to reach a reasonable and comprehensive settlement of all issues raised by I&E's informal investigation that is in the public interest. The Settlement Agreement penalty should be expressly found to satisfy the ten factors in the Commission's Policy Statement at 52 Pa. Code § 69.120l(c) as being in the public interest. Mifflin Energy supports the Settlement Agreement and respectfully requests that the Commission approve it in its entirety without modification.
Respectfully submitted,
BUCHANAN INGERSOLL & ROONEY PCBy:
John F. Povilaitis (PA ID No. 28944)
Alan M. Seltzer (PA ID No. 27890)
409 North Second Street
Suite # 500 Harrisburg,
PA 17101-1357
Tel: (717) 237-4800
john.povilaitis@bipc.com
alan.seltzer@bipc.com
Counsel for Mifflin Energy Corp.Dated: June 26, 2023
Attachment 5
Appendix C
VERIFICATION I, Robert Clay, an owner and employee of Mifflin Energy Corp., hereby verifies that the information in the foregoing Mifflin Energy Corp. Statement in Support of Full Settlement of lnformal Investigation, is true and correct to the best of my information, knowledge and belief I understand that these statements are made subject to the penalties of 18 Pa.C.S. Section 4904, relating to the unsworn falsification to authorities.
Dated: June 26, 2023
BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Pennsylvania Public Utility Commission, : Bureau of Investigation and Enforcement's : Investigation of the April 9, 2020 Incident at : Docket No. M-2023-3019782 134 Water Dam Road, Waynesburg, Greene : County, PA (Mifflin Energy Corp.) :
CERTIFICATE OF SERVICE I hereby certify that I have this day served a true copy of the foregoing Joint Petition for Approval of Settlement upon the parties listed below, in accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a party).
Served via Electronic Mail
John F. Povilaitis
Alan M. Seltzer
Buchanan Ingersoll Rooney
409 North Second Street
Suite 500
Harrisburg, PA 17101
john.povilaitis@bipc.com
Counsel for Mifflin Energy Corp.Michael L. Swindler
Deputy Chief Prosecutor
Bureau of Investigation and Enforcement
PA Attorney ID No. 43319
(717) 783-6369
mswindler@pa.govDate: June 26, 2023
STATEMENT OF CHAIRPERSON
STEPHEN M. DeFRANKBefore joining my staff as legal counsel, Stephanie Wimer was employed in the Commission's Bureau of Investigation and Enforcement and worked on this investigation. Please note that she has not advised me in this matter.
Date: September 21, 2023
STEPHEN M. DeFRANK,
Chairperson
STATEMENT OF CHAIRPERSON
STEPHEN M. DeFRANKToday, the Commission votes to publish in the Pennsylvania Bulletin the proposed settlement entered into between the Commission's Bureau of Investigation and Enforcement (I&E) and Mifflin Energy Corp. (Mifflin Energy) involving a natural gas explosion that occurred on April 9, 2020 in Waynesburg, Green County. The incident resulted in the destruction of one residence and the owner of that residence sustaining second degree burns. Fortunately, there were no fatalities as a result of the explosion. The Commission's action today sets a deadline of 25-days from publication in the Pennsylvania Bulletin for interested parties to file comments concerning the proposed settlement.
As discussed in the Opinion and Order, since I&E's investigation into the incident was initiated nearly three years ago, Mifflin Energy's operating assets have been sold to a new owner, Mifflin Energy Resources, LLC (Mifflin Energy Resources). Despite the similar name, Mifflin Energy and Mifflin Energy Resources have no affiliation or relationship. Furthermore, the terms of the settlement note, among other things, that ''Since Mifflin Energy has sold its operational assets to a new owner that has no affiliation with Mifflin Energy, the parties agree that the remedial measures that would otherwise be sought and potentially imposed upon Mifflin Energy, are no longer applicable to Mifflin Energy, as the sale of these assets relinquishes Mifflin Energy from falling within the definition of a pipeline operator and accordingly Act 127's pipeline operator requirements are no longer applicable to Mifflin Energy.''64 Regardless, however, of who is the current owner of the facilities involved in this incident, the Commission is still obligated to ensure that all necessary remedial measures are taken to ensure that an incident like this never happens again.65
A better understanding of this issue of who is responsible for any remedial measures is necessary before determining whether the proposed settlement is in the public interest and should be approved. This is particularly true given the potential devastation associated with every natural gas explosion. We are fortunate that this incident did not cause any fatalities. However, we must ensure that we are doing everything possible to prevent such incidents from ever occurring, regardless of who is the current owner of specific facilities. Therefore, I invite any interested party to submit comments on this issue.
September 21, 2023
DateSTEPHEN M. DeFRANK,
Chairperson
STATEMENT OF VICE CHAIR
KIMBERLY BARROWOn April 9, 2020, a natural gas explosion occurred in Waynesburg, Greene County Pennsylvania. A service line running directly from a natural gas well to a residential customer failed, a so-called ''farm tap.'' Mifflin Energy, the owner of the well and the natural gas extracted from it, now enters into a settlement to pay a civil penalty in the amount of one hundred thousand dollars. Mifflin Energy no longer owns the facilities, as they have been sold to Mifflin Energy Resources, a company that the Petition states is unaffiliated with Mifflin Energy. Today we publish the Joint Settlement in the Pennsylvania Bulletin for comment.
Whoever owns the facilities in this case, the Commission is still obligated to ensure the facilities are safely managed. I would expand that our Bureau of Investigation and Enforcement has concluded that farm tap facilities, that are designed like the facilities here, are subject to the Commission's authority to enforce federal regulations. The Bureau of Investigation and Enforcement relied on a Letter of Interpretation from PHMSA in making this conclusion. Not only must the facilities at issue be reviewed to ensure safe service, but the new owners should also conduct a comprehensive review of their facilities to prevent further dangerous conditions. All operators with farm taps must ensure that the facilities which are their responsibility are well-maintained. When modifications are made to farm taps, as happened here, facility owners must reevaluate whether the modifications were installed safely. I ask all natural gas drillers in Pennsylvania who are supplying gas to landowners via farm taps to use this incident as a prompt to review the design and operational safety of their own farm taps.
September 21, 2023
DateKIMBERLY BARROW,
Vice Chairperson
[Pa.B. Doc. No. 23-1391. Filed for public inspection October 6, 2023, 9:00 a.m.] _______
48 I&E and Mifflin Energy are collectively referred to herein as the ''Parties.''
49 Shoup # 4 is one of four wells formerly owned and operated by Mifflin Energy on the Shoup Lease. The Shoup Lease is a 210-acre natural gas and oil lease in Washington Township, Pennsylvania, which was entered into on May 3, 1982 by Margaret E. Shoup and her family, and Kepco, Inc. Mifflin Energy purchased the wells on the Shoup Lease in July of 2005.
50 Mifflin Energy is a natural gas production company with three employees that owned production facilities in the vicinity of the Incident since 2005. Mifflin Energy's operating assets were sold to a new owner, Mifflin Energy Resources, LLC effective on January 1, 2022. Mifflin Resources, LLC has no legal affiliation with Mifflin Energy.
51 The well, production line and taps associated with the Incident were all in place at the time Mifflin Energy first obtained these facilities in July 2005.
52 PHMSA is a United States Department of Transportation agency that was created under the Norman Y. Mineta Research and Special Programs Improvement Act (P.L. 108-426) of 2004. PHMSA develops and enforces regulations for the safe, reliable, and environmentally sound operation of the nation's 2.6-million-mile pipeline transportation system and the nearly 1 million daily shipments of hazardous materials by land, sea, and air. PHMSA comprises two safety offices, the Office of Pipeline Safety and the Office of Hazardous Materials Safety. PHMSA is located in five regions across the country and headquartered in Washington, DC.
53 Customer-Owned Service Lines, 60 Fed. Reg. 41,821, 41,821 (Aug. 14, 1995).
54 Customer-Owned Service Lines, Notice of Proposed Rulemaking, 59 Fed. Reg. 5,168, 5,169 (Feb. 3, 1994).
55 Id.
56 After receiving comments, the Commission has not taken further action on the Tentative Implementation Order.
57 Citing 49 CFR § 192.16(b)(1)-(2). Comments of EAP at Docket No. L-2020-3019417, p. 7.
58 Comments of EAP at Docket No. L-2020-3019417, p. 7.
59 Comments of Columbia Gas at Docket No. L-2020-3019417, p. 5.
60 Comments of Columbia Gas at Docket No. L-2020-3019417, p. 6.
61 See 52 Pa. Code § 5.231.
62 Pennsylvania Public Utility Commission v. Columbia Gas of Pennsylvania, Inc., Docket No. C-2010-2071433, 2012 PUC LEXIS 1377 at *6 (Order approving settlement agreement entered on August 31, 2012).
63 52 Pa. Code § 69.1201.
64 See, Order at 8, quoting paragraph 4.c of the Settlement. Similarly, paragraph 4.e of the settlement states that ''I&E acknowledges and confirms that Mifflin Energy, given its prior sale of its physical assets and its participation in this Settlement Agreement with respect to the Incident, has no prospective obligations as a pipeline operator under state or federal law with respect to any pipeline or related facilities involved in the incident.''
65 It is also noted that the issue of whether this matter even falls within the Commission's jurisdiction is still pending before the Pipeline and Hazardous Materials Safety Administration (PHMSA). See, Order at 6.
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