UGI ENERGY SERVICES — Safety Order

case documentOfficial PDF12020009NOPSO_Operator Post-Hearing Submission_06112021_(20-187254).pdf#

party submissionOfficial PDF12020009NOPSO_Operator Request for Hearing_01192021_(20-187254).pdf#

12020009NOPSO_PHC Hearing Scheduled_02022021_(20-187254)_text.pdf, page 1Official PDFFebruary 2, 2021 VIA ELECTRONIC MAIL TO: kcoyle@babstcalland.com and robert.burrough@dot.gov Mr. Keith Coyle, Esq. Counsel for UGI Energy Services Babst Calland 505 9th Street NW, Suite 700 Washington, DC 20004 Mr. Robert Burrough Director, Eastern Region Pipeline and Hazardous Materials Safety Administration 820 Bear Tavern Road, Suite 103 West Trenton, New Jersey 08628 Re: Notice of Hearing, UGI Energy Services CPF No. 1-2020-009-NOPSO Dear Mr. Coyle and Mr. Burrough: In accordance with 49 C.F.R. § 190.211, an informal hearing will be held regarding the Notice of Proposed Safety Order issued by the Pipeline and Hazardous Materials Safety Administration in the above-referenced case. The hearing will take place on April 6, 2021, beginning at 9:00 am Eastern Time. The hearing will be held via videoconference. I will provide the videoconference information prior to the hearing. At least 10 calendar days prior to the hearing (or by March 27, 2021), both parties must submit and exchange any additional written materials they intend to present at the hearing and the name and email address of each attendee. This information should be provided electronically. Materials not submitted by this date may be excluded. If you have any questions, please do not hesitate to contact me. Sincerely, Kristin Baldwin Presiding Official cc: Ms. Ajoke Agboola, Counsel, Office of Pipeline Safety, PHMSA Ms. Melanie Lampton, Counsel, Office of Pipeline Safety, PHMSA#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 1Official PDFAugust 16, 2021 VIA ELECTRONIC MAIL TO: jhartz@ugies.com Mr. Joseph L. Hartz President of UGI Energy Services, LLC 1 Meridian Blvd. Wyomissing, PA 19610 CPF No. 1-2020-009-NOPSO Dear Mr. Hartz: Enclosed please find a Consent Order incorporating the terms of the Consent Agreement between the Pipeline and Hazardous Materials Safety Administration (PHMSA) and UGI Energy Services, LLC, (UGIES) which was executed on August 10, 2021. Service of the Consent Order and Consent Agreement by e-mail is deemed effective upon the date of transmission, or as otherwise provided under 49 C.F.R. § 190.5. Thank you for your cooperation in this matter. Sincerely, Alan K. Mayberry Associate Administrator for Pipeline Safety Enclosures: Consent Order Consent Agreement cc: Mr. Robert Burrough, Director, Eastern Region, Office of Pipeline Safety, PHMSA Ms. Mary McDaniel, Director, Southwest Region, Office of Pipeline Safety, PHMSA Mr. Frank Markle, Senior Counsel, UGI Corporation, marklef@ugicorp.com Mr. Keith Coyle, Babst Calland, Counsel for UGIES, kcoyle@babstcalland.com Ms. Brianne Kurdock, Babst Calland, Counsel for UGIES, bkurdock@babstcalland.com CONFIRMATION OF RECEIPT REQUESTED#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 2U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, D.C. 20590 ) In the Matter of ) ) UGI Energy Services, LLC, ) CPF No. 1-2020-009-NOPSO ) Respondent. ) ) CONSENT ORDER By letter dated September 4, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS or Agency), issued a Notice of Proposed Safety Order (Notice) to UGI Energy Services, LLC (UGIES). In accordance with 49 C.F.R. § 190.239, the Notice alleged that conditions exist on Respondent’s Temple LNG Peak Shaving Plant that pose a pipeline integrity risk to public safety, property, or the environment. The Notice also proposed that Respondent take certain corrective measures to remedy the alleged conditions and ensure that the public, property, and the environment are protected from the potential risk. In response to the Notice, Respondent requested an informal consultation. After two informal consultations were held, UGIES requested a hearing, which was held virtually on April 6, 2021. Following the hearing, PHMSA and UGIES reengaged in good-faith settlement discussions that have resulted in the Consent Agreement attached to this Consent Order that settles all of the allegations in the Notice. Accordingly, the Consent Agreement is hereby approved and incorporated by reference into this Consent Order. The Respondent is hereby ordered to comply with the terms of the Consent Agreement, effective immediately. Pursuant to 49 U.S.C. 60101, et seq., failure to comply with this Consent Order may result in the assessment of civil penalties of up to $200,000, as adjusted for inflation (see 49 C.F.R. § 190.223), for each violation for each day the violation continues or in referral to the Attorney General for appropriate relief in a district court of the United States. The terms and conditions of this Consent Order are effective upon service in accordance with 49 C.F.R. § 190.5. August 16, 2021 ________________________ ________________________ Alan K. Mayberry Date Associate Administrator for Pipeline Safety#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 3U.S. DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY WASHINGTON, DC 20590 ) In the Matter of ) ) UGI Energy Services, LLC, ) CPF No. 1-2020-009-NOPSO ) Respondent. ) ) CONSENT AGREEMENT On September 4, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety, issued a Notice of Proposed Safety Order (Notice) to UGI Energy Services, LLC, a subsidiary of UGI Corporation (UGIES or Respondent).1 PHMSA issued the Notice after it initiated an investigation into the safety of the liquefied natural gas (LNG) storage tank 1 at the Temple LNG Peak Shaving Plant (Temple 1). The Notice alleged two conditions exist with Temple 1 that pose a potential pipeline integrity risk to public safety, property, or the environment. Those two conditions were identified as deformation at various anchor strap locations along the circumference of Temple 1’s outer tank and natural gas migration between the tank floor and the foundation. The Notice proposed that Respondent take certain corrective actions to remedy the alleged conditions and ensure that the public, property, and the environment are protected from potential risk. On September 20, 2020, UGIES responded to the Notice by timely submitting a written response and a request for an informal consultation. Two informal consultations were held on October 28, 2020 and November 12, 2020. After the informal consultations, pursuant to 49 C.F.R. § 190.239(b)(3), UGIES requested a hearing on January 19, 2021. A hearing was held virtually on April 6, 2021 before a PHMSA Presiding Official. Following the hearing, PHMSA and UGIES (collectively, the Parties) reengaged in settlement discussions and have jointly determined that settlement of this proceeding will avoid further administrative proceedings or litigation and that entering into this Consent Agreement (Agreement) is the most appropriate means of resolving the issues raised in the Notice. Therefore, pursuant to 49 C.F.R. Part 190, without adjudication of any issue of fact or law, and upon consent and agreement of the Parties, UGIES and PHMSA agree to the terms and conditions set forth in this Agreement. 1 UGIES is a wholly owned subsidiary of UGI Corporation, an international energy distribution and services company. 1#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 4I. General Provisions 1. Respondent acknowledges that as the operator of Temple 1, Respondent is subject to the jurisdiction of the Federal pipeline safety laws, 49 U.S.C. § 60101, et seq., and the regulations and administrative orders issued thereunder. For purposes of this Agreement, Respondent acknowledges that it received proper notice of PHMSA's action in this proceeding and that the Notice states claims upon which relief may be granted pursuant to 49 U.S.C. 60101, et seq., and the regulations and orders issued thereunder. 2. Respondent agrees, for purposes of the Agreement, to address the integrity risks identified in the Notice by completing the actions specified in Section II of the Agreement (Corrective Measures) and to abide by the terms of this Agreement. This Agreement does not constitute a finding of violation of any Federal law or regulation and may not be used in any civil or administrative proceeding of any kind as evidence or proof of any fact, fault or liability, or as evidence of the violation of any law, rule, regulation or requirement, except in a proceeding to enforce the provisions of this Agreement. 3. After Respondent returns this signed Agreement to PHMSA, a PHMSA’s representative will present it to the Associate Administrator for Pipeline Safety recommending that the Associate Administrator adopt the terms of this Agreement by issuing an administrative order (Consent Order) incorporating the terms of this Agreement. The terms of this Agreement constitute an offer of settlement until accepted by the Associate Administrator. Once accepted, the Associate Administrator will issue a Consent Order incorporating the terms of the Agreement. 4. Respondent consents to the issuance of the Consent Order, and hereby waives any further procedural requirements with respect to its issuance. Respondent waives all rights to contest the adequacy of notice, or the validity of the Consent Order or this Agreement, including all rights to administrative or judicial hearings or appeals, except as set forth herein. 5. This Agreement shall apply to and be binding upon PHMSA, and upon UGIES, its officers, directors, and employees, and its successors, assigns, or other entities or persons otherwise bound by law. Respondent agrees to provide a copy of this Agreement and any incorporated work plans and schedules to all of UGIES' officers, employees, and agents whose duties might reasonably include compliance with this Agreement. 6. For all transfers of ownership or operating responsibility of the Temple LNG Peak Shaving Plant, Respondent will provide a copy of this Agreement to the prospective transferee at least 30 days prior to such transfer and simultaneously provide written notice of the prospective transfer to the PHMSA Southwest Region Director (Director), with a copy to the Eastern Region Director, who issued the Notice.2 7. This Agreement constitutes the final, complete and exclusive agreement and understanding between the Parties with respect to the subject matter of the Notice and the settlement embodied in this Agreement. The Parties acknowledge that there are no representations, agreements or 2 2 Although PHMSA Eastern Region Director issued this Notice for this matter, for the purposes of this Agreement, Director is defined as PHMSA Southwest Region Director.#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 5understandings relating to settlement other than those expressly contained in this Agreement, except that the terms of this Agreement may be construed by reference to the Notice. 8. Nothing in this Agreement affects or relieves Respondent of its responsibility to comply with all applicable requirements of the Federal pipeline safety laws, 49 U.S.C. § 60101, et seq., and the regulations and orders issued thereunder. Nothing in this Agreement alters PHMSA's right of access, entry, inspection, and information gathering or PHMSA's authority to bring enforcement actions against UGIES pursuant to the Federal pipeline safety laws, the regulations and orders issued thereunder, or any other provision of Federal or State law. 9. This Agreement does not waive or modify any Federal, State, or local laws or regulations that are applicable to Respondent's LNG or pipeline systems. This Agreement is not a permit, or a modification of any permit, under any Federal, State, or local laws or regulations. UGIES remains responsible for achieving and maintaining compliance with all applicable Federal, State, and local laws, regulations and permits. 10. This Agreement does not create rights in, or grant any cause of action to, any third party not party to this Agreement. The U.S. Department of Transportation is not liable for any injuries or damages to persons or property arising from acts or omissions of Respondent or its officers, employees, or agents carrying out the work required by this Agreement. UGIES agrees to hold harmless the U.S. Department of Transportation, its officers, employees, agents, and representatives from any and all causes of action arising from any acts or omissions of Respondent or its contractors in carrying out any work required by this Agreement. 11. Upon issuance of the Consent Order, UGIES agrees to perform the Corrective Measures set forth below in Section II. II. Corrective Measures 12. Temporary Gas Detection. Within 15 days of the Effective Date of the Consent Order, UGIES shall begin to implement and follow of its Alarm Response LNG Tank Gas Detection Procedure, including ordering any necessary gas detection equipment. See Appendix A. The gas detection equipment must be installed no later than 15 days after receipt of the equipment and must be continuously operated in place until approval is given by the Director for removal. UGIES must comply with the notification requirements in paragraph 16 if a gas leak is discovered at Temple 1. UGIES must obtain the Director’s approval under paragraph 21 to modify the procedures referenced in Appendix A. 13. Heater Cable Replacement Project. Within 30 days of the Effective Date of the Consent Order, UGIES must begin installing the heater cable replacement project as described in the Conduit Cleaning and Heater Tube Installation Procedure. See Appendix B. UGIES must complete the heater cable replacement project within 120 days of initiating the work. UGIES must comply with the notification requirements in paragraph 16 when the heater cable replacement project is initiated, if issues (including unexpected events, such as the presence of natural gas, broken equipment or facilities, a fire, or inability to follow its procedures) are encountered during the project or while the facilities are readied for service. UGIES must also comply with the 3#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 6notification requirements in paragraph 16 if any of the following events occur during the heater replacement project: (i) conduits 1, 3, 4, 6, 8, 10, 12, 14, 16, 17, or 19 are sealed and abandoned, (ii) more than 50 percent of the total number of conduits are sealed and abandoned, (iii) any adjacent conduits are sealed and abandoned, or (iv) additional engineering approval is sought from Matrix PDM to proceed with the project. UGIES will not use any of the facilities installed as part of the heater cable replacement project for more than five years from the in-service date. UGIES must obtain the Director’s approval under paragraph 21 to modify the procedures referenced in Appendix B. 14. Shell Deformation. Upon the Effective Date of the Consent Order, UGIES will implement and follow the provisions in the MP-65, LNG Tank Foundation Settlement Inspection and MP- 108, LNG Tank Shell Deformation Assessment. See Appendix C. UGIES must conduct an inspection of Temple 1 for foundation settlement and shell deformation at least once each calendar year, but at intervals not to exceed fifteen months. UGIES must comply with the notification requirements in paragraph 16 to provide the annual inspection results to PHMSA. UGIES must obtain the Director’s approval under paragraph 21 to modify the procedures referenced in Appendix C. 15. Long-Term Remediation Plan. UGIES will promptly commence development of a plan to either: (i) temporarily remove Temple 1 from service in order to conduct an internal inspection of Temple 1, identify the root cause of the gas migration problem, and complete remediation; or (ii) decommission Temple 1, in which case UGIES may replace the LNG storage and/or deliverability of Temple 1 with other assets to be constructed at the Temple LNG Terminal or another location (Long-Term Remediation Plan). UGIES will complete the necessary analysis, select an option, and obtain management approval for the recommended (i) remediation or (ii) decommission and replacement, and provide the Director with the Long-Term Remediation Plan within twelve months of the Effective Date of the Consent Order. UGIES must include an implementation schedule in the Long-Term Remediation Plan that requires the completion of all necessary activities by no later than July 1, 2025. If UGIES elects to perform an internal tank inspection, the implementation schedule must require Temple 1 to be temporarily removed from service for the performance of that inspection by no later than July 1, 2023. The terms of the Long-Term Remediation Plan, except for provisions related to the replacement of Temple 1 or the construction of new LNG facilities, will be subject to the Director’s approval. The replacement of Temple 1 or construction of any new LNG facilities would be governed by applicable law, including 49 C.F.R. Part 193. UGIES must comply with the notification requirements in paragraph 16 upon completion of the provisions in the Long-Term Remediation Plan. 16. events: Notification. UGIES must notify the Director within 48 hours of any of the following (1) a gas leak of any concentration discovered at Temple 1; (2) the heater cable replacement project is initiated in accordance with the procedures referenced in Appendix B; (3) any issues are encountered during the heater cable replacement project performed under the procedures referenced in Appendix B; 4#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 7(4) conduits 1, 3, 4, 6, 8, 10, 12, 14, 16, 17, or 19 are sealed and abandoned, more than 50 percent of the total number of conduits are sealed and abandoned, any adjacent conduits are sealed and abandoned, or additional engineering approval is sought from Matrix PDM to proceed with the project under the procedures referenced in Appendix B; (5) the facilities installed as part of the heater cable replacement project are ready for service under the procedures referenced in Appendix B; (6) the results of an annual foundation settlement or shell deformation inspection performed under the procedures referenced in Appendix C are complete; or (7) implementation of the Long-Term Remediation Plan referenced in paragraph 15 is complete. 17. Quarterly Reports. UGIES will submit quarterly reports to the Director that: (1) include analysis of all available data and results of the testing and evaluations required by this Agreement; and (2) describe the progress of the repairs and other remedial actions being undertaken as required by this Agreement. The first report will be due 45 days from the Effective Date of the Consent Order. 18. Referenced Procedures. UGIES must provide copies of the procedures referenced in this Agreement not previously provided to the Director for review and acceptance. No Corrective Measure shall be performed pursuant to a procedure referenced in this Agreement that has not be reviewed and accepted by the Director. 19. Extensions of Time. The Director may grant an extension of time for compliance with any of the terms of the Agreement upon a written request timely submitted demonstrating good cause for an extension. The Director shall respond in writing to any such request. 20. Appeals. Respondent may appeal any decision of the Director to the Associate Administrator for Pipeline Safety. Decisions of the Associate Administrator will be final. III. Review and Approval Process 21. With respect to any submission under Section II (Corrective Measures) of this Agreement that requires the approval of the Director, the Director may: (a) approve, in whole or in part, the submission, (b) approve the submission on specified, reasonable conditions, (c) disapprove, in whole or in part, the submission, or (d) any combination of the foregoing. If the Director approves, approves in part, or approves with conditions, UGIES will take all action as approved by the Director, subject to Respondent's right to invoke the dispute resolution procedures in Section IV with respect to any conditions the Director identifies. If the Director disapproves all or any portion of the submission, the Director will provide UGIES with a written notice of the deficiencies. Respondent will correct all deficiencies within the time specified by the Director and resubmit it for approval. IV. Dispute Resolution 22. The Director and UGIES will informally attempt to resolve any disputes arising under this Agreement. If Respondent and the Director are unable to informally resolve the dispute within 15 5#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 8days of submittal of Respondent's invoking dispute resolution, UGIES may request in writing, within 10 days thereafter, a written determination resolving the dispute from the Associate Administrator for Pipeline Safety providing all information that Respondent believes is relevant to the dispute. If the request is submitted as provided herein, the Associate Administrator will issue a final determination in writing. The existence of a dispute and PHMSA's consideration of matters placed in dispute will not excuse, toll, or suspend any term or timeframe for completion of any work to be performed under this Agreement during the pendency of the dispute resolution process except as agreed by the Director or the Associate Administrator in writing. V. Enforcement 23. This Agreement, as adopted by the Consent Order, is subject to all the enforcement authorities available to the PHMSA under 49 U.S.C. § 60101, et seq., and 49 C.F.R. Part 190. All procedures set forth or referenced in Section II will be automatically incorporated into this Agreement and are enforceable in the same manner. VI. Recordkeeping and Information Disclosure 24. Unless otherwise required in this Agreement, UGIES agrees to maintain records demonstrating compliance with all requirements of this Agreement for a period of at least five years following completion of all work to be performed. For any reports, plans, or other deliverables required to be submitted to PHMSA pursuant to this Agreement, UGIES may assert a claim of business confidentiality or other protections applicable to the release of information by PHMSA, covering part or all of the information required to be submitted to PHMSA pursuant to this Agreement in accordance with 49 C.F.R. Part 7. UGIES must mark the claim of confidentiality in writing on each page, and include a statement specifying the grounds for each claim of confidentially. PHMSA determines release of any information submitted pursuant to this Agreement in accordance with 49 C.F.R. Part 7, the Freedom of Information Act, 5 U.S.C. § 552, DOT and PHMSA policies, and other applicable regulations and Executive Orders. VII. Effective Date 25. The term "Effective Date," as used herein, is the date on which the Consent Order is issued by the Associate Administrator incorporating the terms of this Agreement. Unless specified to the contrary, all deadlines for actions required by this Agreement run from the Effective Date of this Consent Order. VIII. Modification 26. The terms of this Agreement may be modified by mutual agreement of the Parties. Such modifications must be in writing and signed by both parties. IX. Termination 27. This Agreement shall remain in effect until the Corrective Measures set forth in Section II are satisfied, as determined by the Director, or after UGIES decommissions Temple 1. Nothing in 6#

12020009NOPSO_Consent Agreement and Order_08162021_(20-187254)_text.pdf, page 9this Agreement prevents UGIES from completing any of the obligations earlier than the deadlines provided for in this Agreement. X. Ratification 28. The Parties' undersigned representatives certify that they are fully authorized to enter into the terms and conditions of this Agreement and to execute and legally bind such party to this document. 29. The Parties hereby agree to all conditions and terms of this Agreement. For Respondent: ___________________________________ Joseph L. Hartz President of UGI Energy Services, LLC ___________________________________ Date For PHMSA: ___________________________________ Robert Burrough Director, Eastern Region, Office of Pipeline Safety ___________________________________ Date 7#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 1Official PDFNOTICE OF PROPOSED SAFETY ORDER OVERNIGHT EXPRESS DELIVERY September 4, 2020 Joseph Hartz Vice President, Asset Management UGI Energy Services 1 Meridian Blvd Wyomissing, PA 19610 CPF 1-2020-009-NOPSO Dear Joseph Hartz: Enclosed is a Notice of Proposed Safety Order (Notice) issued in the above-referenced case. The Notice proposes that you take certain measures with respect to UGI Energy Services’ (UGIES or Respondent) Temple LNG Peak Shaving Plant’s (LNG Plant) storage tank 1 (Tank 1) to ensure pipeline safety. Your options for responding are set forth in the Notice. Your receipt of the Notice constitutes service of that document under 49 C.F.R. § 190.5. We look forward to a successful resolution to ensure pipeline safety. Please direct any questions on this matter to me at (609) 771-7809. Sincerely, Robert Burrough Director, Eastern Region Pipeline and Hazardous Materials Safety Administration Enclosure: Notice of Proposed Safety Order Copy of 49 C.F.R. § 190.239#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 2DEPARTMENT OF TRANSPORTATION PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION OFFICE OF PIPELINE SAFETY EASTERN REGION WEST TRENTON, NJ 08628 _________________________________________ ) In the Matter of ) ) UGI Energy Services ) a subsidiary of UGI Corporation, ) CPF No. 1-2020-009-NOPSO ) ) Respondent. ) _________________________________________ ) NOTICE OF PROPOSED SAFETY ORDER Pursuant to Chapter 601 of Title 49, United States Code, the Pipeline and Hazardous Materials Safety Administration (PHMSA), U.S. Department of Transportation, has initiated an investigation into the safety of UGI Energy Services’ (UGIES or Respondent) Temple LNG Peak Shaving Plant’s (LNG Plant) storage tank 1 (Tank 1). UGIES is a wholly owned subsidiary of UGI Corporation, an international energy distribution and services company.1 The investigation was prompted following a discussion of a Federal Energy Regulatory Commission’s (FERC) inspection conducted in August 2018. FERC reported that the south-east portion of Tank 1’s shell was buckling and gas was migrating between the tank floor and the heating conduits beneath the tank. FERC also informed PHMSA that UGIES had applied a weather seal to act as a vapor barrier around the entire base of Tank 1. On August 31, 2018, PHMSA requested information on the gas migration beneath the tank from UGIES. The Respondent provided a May 2018 tank inspection report conducted by Matrix PDM entitled Project No. 5308-1103 Temple 1 LNG Tank Inspection Report (Matrix PDM Report) and information on the multi-layer epoxy weather proofing seal that was applied to the base of Tank 1. Over the course of 18 months, UGIES has attempted to mitigate the detected vapor leaks by applying a seal to the circumference of the chime and horizontal plane of Tank 1’s concrete foundation. UGIES also sleeved the heater conduits with stainless steel tubing upon discovering 1 UGI Corporation Website, About UGI, available at https://www.ugicorp.com/company/corporate- information/about-ugi/default.aspx, (last accessed August 19, 2020).#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 3that they were exposed to natural gas vapor in the tank’s annular space. Work on the heater conduits is ongoing. Background and Purpose: On July 29, 2020, PHMSA conducted an onsite inspection of Tank 1 to continue its investigation of the natural gas vapor migration in Tank 1. During the inspection, PHMSA observed that the shell was deformed around the entire circumference of Tank 1 and the area that had the greatest deformation was the south-east area of the tank. PHMSA also observed UGEIS constructing a new truck loading station adjacent to Tank 1. As a result of the preliminary investigation, it appears conditions exist at your liquefied natural gas (LNG) facility that pose an integrity risk to public safety, property, or the environment. Pursuant to 49 U.S.C. § 60117(l), PHMSA, Office of Pipeline Safety (OPS), issues this Notice of Proposed Safety Order (Notice), notifying you of the preliminary findings of the investigation, and proposing that you take certain measures to ensure that the public, property, and the environment are protected from this integrity risk. For the purposes of this Notice: "Director" means the Director, Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety, Eastern Region. The Director’s address is 840 Bear Tavern Road, Suite 300, West Trenton, NJ 08628. Preliminary Findings:  The UGIES LNG Plant is located in Temple, Pennsylvania. UGIES’ LNG Plant has a storage capacity of 15 million gallons of LNG and a maximum daily deliverability of 205,200 dekatherms (Dth). The LNG Plant has a liquefaction capacity of 120,000 gallons per day (10,000 Dth).  UGIES Temple LNG Tank 1 is one of two LNG tanks located in the UGIES LNG Plant. Tank 1 is a single containment, double-wall tank with a flat bottom, suspended deck, and dome outer roof. The inner tank has a diameter of 75 feet and the outer tank has a diameter of 87 feet. Tank 1 has a height of 93 feet and a nominal capacity of 73,000 barrels (bbls). From January 2015 until July 2020, Tank 1 has stored approximately 34,000± bbls of LNG each year. Tank 1 was constructed in 1972 and is equipped with an impressed current cathodic protection system.  The LNG Plant site is 6.62 acres of fenced-in industrial land, with open grass areas along with 1.56 acres of existing pipeline right of way. The LNG Plant is located north of the City of Reading in Berks County, Pennsylvania. Reading encompasses 10 square miles and has a population density of 8,993 people per square mile. Between 2016 and 2017 the population of Reading, Pennsylvania grew from 87,899 to 88,275, a 0.428% increase. The#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 4LNG Plant is located adjacent to US Highway 222, which serves as the state's principal artery between the Lancaster and Reading areas.  Deformation was observed at various anchor strap locations along the circumference of UGIES Tank 1 with the most severe instance occurring in the southeast area -- approximately 10 feet long and 6 feet in height.  UGIES Tank 1 is experiencing natural gas vapor migration between the tank floor and the foundation.  The primary source of the vapor seepage in the heater conduit remains unknown. Natural gas vapor in the heater system presents an identifiable ignition hazard.  The migration and seepage of Tank 1’s natural gas vapors in conjunction with the construction activities adjacent to the tank present an increased risk of accidental ignition.  To date, UGIES has not be able to demonstrate to PHMSA that the remediation measures it has performed complies with the repair requirements of Part 193 to ensure the integrity and operational safety of Tank 1. See 49 C.F.R. § 193.2617. Proposed Issuance of Safety Order: Section 60117(1) of Title 49, United States Code, provides for the issuance of a safety order, after reasonable notice and the opportunity for a hearing, requiring corrective action, which may include physical inspection, testing, repair, replacement, or other action, as appropriate. The basis for making the determination that a pipeline facility has a condition or conditions that pose a pipeline integrity risk to public safety, property, or the environment is set forth both in the above referenced statute and 49 C.F.R. § 190.239, a copy of which is enclosed. After evaluating the foregoing preliminary findings of fact and considering the hazardous nature of the product, the characteristics of the geographical area where the LNG facility is located, the ongoing construction at the LNG facility which may result in an increased risk of accidental ignition of the migrating gas, the unknown factors that resulted in the buckling of Tank 1, and the likelihood that the issues could affect the safety of other areas of the LNG facility, it appears that continued operation of the affected LNG Plant without corrective measures may pose an integrity risk to public safety, property, or the environment. Accordingly, PHMSA issues this Notice of Proposed Safety Order to notify Respondent of the proposed issuance of a safety order and to propose that Respondent take measures specified herein to address the potential risk Proposed Corrective Actions:#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 5Pursuant to 49 U.S.C. § 60117(l) and 49 C.F.R. § 190.239, PHMSA proposes to issue to UGIES a safety order incorporating the following remedial requirements with respect to its Temple LNG Peak Shaving Plant’s Tank 1: 1. 2. 3. 4. Limit Capacity. UGIES shall immediately limit the operations of Tank 1 to a liquid level no greater than 35,000 bbls or 50% of the tank capacity. If UGIES determines that a different level is necessary for safe operation, it must provide all information used in calculating this level to the Director. The liquid level reduction must remain in place until approval to resume normal operations of Tank 1 is given by the Director. Gas Detection. UGIES shall immediately install temporary gas detection around Tank 1. The gas levels should be monitored and recorded. The temporary gas detection must be installed so that it will alert the control center and plant personnel of a natural gas vapor leak in the vicinity of the Tank 1 chime area. The gas detection must remain in place until approval is given by the Director for removal. Records Inventory. Within 30 days of the date of the Safety Order, UGIES must submit to the Director a complete inventory of all design and construction records for Tank 1. This inventory of records for Tank 1 must include, but is not be limited to, tank metallurgical and mechanical records of the shell plates and bottom plates; shell plate and bottom plate welding records; non-destructive examination records; tank design specifications and all loading conditions; all tank hydrotest records; all leak surveys; inspection records of the heating conduits; and settlement surveys for the life of the tank. Additionally, the inventory must include all geotechnical investigations and geotechnical updates conducted at the LNG Plant. Fitness-for-Service Assessment. Within 90 days of the date of the Safety Order, UGIES must complete a fitness-for-service assessment in accordance with API RP 579-1 / ASME FFS-1, Fitness-for-Service (3rd edition), issued in June 2016. All flaw types or damage mechanisms needed to determine if Tank 1 is fit for service must be evaluated. The fitness- for-service assessment must follow the eight-step process outlined in Section 2.1.3 (FFS Assessment Procedure) of API RP 579-1/ASME FFS-1. 5. Remedial Work Plan. Within 30 days following completion of the fitness-for-service assessment, UGIES must submit a Remedial Work Plan (RWP) to the Director for approval. The RWP must include actions to remedy any issues identified by the Records Inventory and Fitness-for-Service Assessment, described above, as well as any other identified risk conditions determined by the investigation of the deformation of the shell plates and migrating natural gas vapors in the foundation heater conduits. Identified risk conditions may include, but is not limited to: (1) the continued presence of natural gas vapors in the foundation slots that contain the heater conduits; (2) evidence of differential#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 6circumferential settlement of the tank foundation that exceeds design criteria; (3) geotechnical evidence that would require additional assessment and/or remediation to sufficiently support the tank; and (4) out-of-roundness and localized distortions and buckles that impair structural integrity of the tank. a. The Director may incrementally approve parts of the RWP without approving the entire RWP. b. Once approved by the Director, the approved RWP increments or entire RWP is considered incorporated by reference into this Safety Order or Consent Agreement. c. The RWP must specify the tests, inspections, assessments, evaluations, and remedial measures UGIES will use in order to remedy issues identified. d. The RWP must include the following steps: i. Integrate the results of the Fitness-For-Service Assessment, and other corrective actions required by this Safety Order with all relevant preexisting operational and assessment data for the identified risk conditions. Pre- existing operational data includes, but is not limited to, construction, operations, maintenance, testing, repairs, prior metallurgical analyses, and any third-party consultation information. ii. Determine if conditions similar to those found when assessing Tank 1 are likely to exist elsewhere within the plant. iii. Conduct additional field tests, inspections, assessments, and/or evaluations to determine whether, and to what extent, the conditions similar to those found when assessing Tank 1 are likely to be present elsewhere in the plant. At a minimum, this process must consider evidence of differential settlement and the presence of natural gas found from an unknown source and specify the use of tests, inspections, assessments, and evaluations appropriate for these conditions. UGIES may use the results of previous tests, inspections, assessments, and evaluations, if approved by the Director, provided the results of the tests, inspections, assessments, and evaluations are analyzed with regard to the factors found on Tank 1. iv. Describe the inspection and repair criteria UGIES will use to prioritize, evaluate, and repair anomalies, imperfections, and other identified integrity threats. Include a description of how any defects will be graded and a schedule for repairs or replacement. v. Based on the known history and condition of the tank and components included in the identified risk condition, describe the methods UGIES will#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 76. use to repair, replace, or take other corrective measures to remediate the conditions associated with Tank 1, and to address other known integrity threats discovered at the plant. The repair, replacement, or other corrective measures must be completed in accordance with 49 C.F.R. § 193.2617. vi. Implement continuing long-term periodic inspection and integrity verification measures to ensure the ongoing safe operation of the tank and plant, considering the results of the analyses, inspections, evaluations, and corrective measures undertaken pursuant to the Safety Order. e. Include a proposed schedule for completion of the RWP and update as required. f. UGIES must revise the RWP as necessary to incorporate new information obtained during remedial activities, to incorporate the results of actions undertaken pursuant to this Safety Order, and/or to incorporate modifications required by the Director. i. Submit any plan revisions to the Director for prior approval. ii. The Director may approve plan revisions incrementally. g. Implement the RWP as it is approved by the Director, including any revisions to the plan. Reporting. Commencing on the date of the Safety Order, UGIES shall promptly report to the Director any unanticipated or sustained operation of other components of the plant outside their design parameters including but not limited to: alarms by the temporary gas detection; rollover; geysering; cold spots on the storage tank(s); storage tank vibrations and/or vibrations in associated cryogenic piping; leaking or inoperative isolation valves; significant equipment or instrumentation malfunctions or failures; non-scheduled maintenance or repair (and reasons therefore); relative movement of the inner tank; vapor or liquid releases; negative pressures (vacuum) within the storage tank; and higher than predicted boil-off rates. Additionally, UGIES must submit monthly reports to the Director that: (1) include all results of the evaluations required by this Order; and (2) describe the progress of the repairs or other remedial actions being undertaken. With respect to each submission under the final Safety Order that requires the approval of the Director, the Director may: (a) approve, in whole or part, the submission; (b) approve the submission on specified conditions; (c) modify the submission to cure any deficiencies; (d) disapprove, in whole or in part, the submission, directing that Respondent modify the submission; or (e) any combination of the above. In the event of approval, approval upon conditions, or modification by the Director, Respondent shall take all required actions in the submission as approved or modified by the Director. If the Director disapproves all or any portion of the submission, Respondent shall correct all deficiencies within the time specified by the#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 8Director, and resubmit it for approval. If a resubmitted item is disapproved in whole or in part, the Director may again require Respondent to correct the deficiencies in accordance with the foregoing procedure, and the Director may otherwise proceed to enforce the terms of the final Safety Order. The Director may grant an extension of time for compliance with any of the terms of the final Safety Order upon a written request timely submitted demonstrating good cause for an extension. UGI Energy Services may appeal any decision of the Director to the Associate Administrator for Pipeline Safety. Decisions of the Associate Administrator shall be final. The actions proposed by this Notice are in addition to and do not waive any requirements that apply to Respondent's pipeline system under 49 C.F.R. Parts 190 through 199, under any other order issued to Respondent under authority of 49 U.S.C. § 60101 et seq., or under any other provision of Federal or state law. After receiving and analyzing additional data in the course of this investigation, PHMSA may identify other corrective measures that need to be taken. In that event, Respondent will be notified of any additional measures required and amendment of the final Safety Order will be considered. To the extent consistent with safety, Respondent will be afforded notice and an opportunity for a hearing prior to the imposition of any additional corrective measures. Response to this Notice: In accordance with § 190.239, you have 30 days following receipt of this Notice to submit a written response to the Director. If you do not respond within 30 days, this constitutes a waiver of your rights to contest this Notice and authorizes the Associate Administrator for Pipeline Safety to find facts as alleged in this Notice without further notice to you and to issue a final Safety Order. In your response, you may indicate that you intend to comply with the terms of the Notice as proposed, or you may request that an informal consultation be scheduled (you will also have the opportunity to request an administrative hearing before a final Safety Order is issued). Informal consultation provides you with an opportunity to explain the circumstances associated with the risk conditions alleged in the Notice and, as appropriate, to present a proposal for a work plan or other remedial measures, without prejudice to your position in any subsequent hearing. If you and PHMSA agree within 30 days of informal consultation on a plan and schedule for you to address each identified risk condition, the parties may enter into a written consent agreement, in which case PHMSA would then issue an administrative Consent Order incorporating the terms of the agreement. If a consent agreement is not reached, or if you have elected not to request informal consultation, you may request an administrative hearing in writing within 30 days following receipt of the Notice or within 10 days following the conclusion of an informal consultation that did not result in a consent agreement, as applicable. Following a hearing, if the Associate Administrator finds the facility to have a condition that poses a pipeline integrity risk to#

12020009NOPSO_Notice of Proposed Safety Order_09042020_(20-187254)_text.pdf, page 9the public, property, or the environment in accordance with § 190.239, the Associate Administrator may issue a final Safety Order. Be advised that all material submitted in response to this enforcement action is subject to public availability. If you believe that any portion of your responsive material qualifies for confidential treatment under 5 U.S.C. § 552(b), along with the complete original document, you must provide a second copy of the document with the portions you believe qualify for confidential treatment redacted and an explanation of why you believe the redacted information qualifies for confidential treatment under 5 U.S.C. § 552(b). In your correspondence on this matter, please refer to CPF No. 1-2020-009-NOPSO, and for each document you submit, please provide a copy in electronic format whenever possible. ____________________________ _____________________ Robert Burrough Date Issued Director, Eastern Region Pipeline and Hazardous Materials Safety Administration#