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decided: June 3, 1988.


Appeal from the Orders of the Pennsylvania Public Utility Commission, in the case of Peoples Natural Gas Company v. Apollo Gas Company, No. C-850521, dated January 5, 1987.


Dennis J. Lewis, with him, Patricia Armstrong, Robert M. Lucas, Alder, Cohen & Grigsby, P.C. and William P. Boswell, for petitioner.

Frank B. Wilmarth, Assistant Counsel, with him, Mark C. Morrow, Assistant Counsel, Will C. Matthews, Deputy Chief Counsel, Daniel P. Delaney, Chief Counsel, for respondent.

Lawrence B. Nydes, for intervenor, Equitable Gas Company.

Norman James Kennard, Kenneth Zielonis, Tucker Arensberg, P.C., for intervenor, Apollo Gas Company.

Bernard A. Ryan, Jr., Dechert, Price & Rhoads, for intervenor, Eljer Plumbingware Division, Household Manufacturing, Inc.

Bruce Wiegand, with him, Walter A. Bunt, Jr., Nancy L. Krzton, Kirkpatrick & Lockhart, and Jay W. Dawson, for intervenor, T.W. Phillips Gas and Oil Company.

President Judge Crumlish, Jr., and Judges Craig, MacPhail, Colins, Palladino, McGinley, and Smith. Opinion by President Judge Crumlish, Jr. Judge Colins dissents.

Author: Crumlish

[ 116 Pa. Commw. Page 514]

Peoples Natural Gas Company (Peoples) appeals*fn1 a Pennsylvania Public Utility Commission (PUC) order dated January 5, 1987, adopting the recommended decision of Administrative Law Judge (ALJ) Michael A. Nemec and authorizing Apollo to serve the Eljer manufacturing plant in Ford City, Armstrong County, Pennsylvania.

Pursuant to a 1938 Certificate of Public Convenience (CPC)*fn2 and charter rights,*fn3 Peoples has the right to serve Ford City. The only other natural gas company

[ 116 Pa. Commw. Page 515]

    with service rights in the area was PPG, Inc. (PPG), which had a plant in Ford City. In 1971, PPG contracted to convey ownership of PPG's pipeline and other service equipment to Apollo, conditioned on Apollo's continuing obligation to supply PPG's needs. In conjunction with this agreement, Apollo applied to the PUC for authority to service PPG. The PUC granted a CPC on April 5, 1971, which stated, inter alia:

1. That applicant Apollo Gas Company shall confine and restrict its utility operations in the aforesaid areas to the furnishing of natural gas service to (1) the existing Ford City plant location of PPG Industries, Inc. . . .

2. That applicant, Apollo Gas Company, its successors and assigns, shall not furnish natural gas service to the general public within the aforesaid areas without the approval of the Commission first had and obtained.

(Emphasis added.)

In 1985, when Apollo agreed to serve Eljer, Eljer built a service line to connect with Apollo's pipeline at Ford City. Peoples filed a complaint with the PUC and subsequently obtained a preliminary injunction against Apollo in Armstrong County Common Pleas Court prohibiting the service until the PUC adjudicated the administrative complaint.

The ALJ recognized Apollo's right to serve Eljer, and the PUC agreed, ruling (1) that Apollo's 1971 application to serve PPG did not constitute an admission that it did not have independent rights in the territory; (2) that the prohibition against serving "the general public" in the 1971 CPC referred to the public as a whole, rather than a specific, additional consumer; and (3) that the ALJ did not confer a new service right but recognized a pre-existing right.

[ 116 Pa. Commw. Page 516]

On appeal, Peoples contends that the PUC abused its discretion and committed errors of law by interpreting the 1971 CPC to allow Apollo to provide service to Eljer as long as it did not provide nondiscriminatory service to the public in general.

Our scope of review is limited to a determination of whether constitutional rights have been violated, an error of law committed or whether findings, determinations or order are supported by substantial evidence. Equitable Gas Co. v. Pennsylvania Public Utility Commission, 113 Pa. Commonwealth Ct. 68, 536 A.2d 846 (1988). When reviewing an administrative agency decision involving an exercise of the agency's discretion, we may only overturn the decision where evidence of an abuse of that discretion exists. Guers Dairy, Inc. v. Milk Marketing Board, 90 Pa. Commonwealth Ct. 268, 494 A.2d 888 (1985). An agency's failure to interpret statutes, regulations or orders consistent with their clear and plain meaning constitutes an abuse of discretion. Monessen Southwestern Railway Co. v. Pennsylvania Public Utility Commission, 507 Pa. 586, 493 A.2d 666 (1985).

Here, the words of the 1971 CPC are clear: Apollo was directed to "confine and restrict" its utility operations to furnishing natural gas to three specific plant sites including the PPG plant in Ford City. The CPC also provided that Apollo could not expand its operation without PUC approval.*fn4 By allowing Apollo to serve the

[ 116 Pa. Commw. Page 517]

Eljer plant without prior approval, the PUC abused its discretion by failing to give binding effect to the express and plain meaning of its own CPC.

An administrative agency also abuses its discretion when it fails to follow its own regulations and procedures. See E-Z Parks, Inc. v. Philadelphia Parking Authority, 100 Pa. Commonwealth Ct. 303, 514 A.2d 318 (1986). In this case, the PUC failed to adhere to the express terms of the CPC in violation of Section 316 of the Code, which states in part:

Whenever the commission shall make any rule, regulation, finding, determination or order, the same shall be prima facie evidence of the facts found and shall remain conclusive upon all parties affected thereby, unless set aside, annulled or modified on judicial review.

Moreover, the PUC ignored Section 1103(a) of the Code which deems a CPC holder to have waived "any and all objections to the terms and conditions of such certificate." Apollo clearly exercised the authority granted by the CPC and hence waived any objection to its terms. By servicing Eljer without obtaining prior PUC approval, Apollo is in clear violation of the 1971 CPC and of PUC regulations. We hold therefore that the PUC abused its discretion by failing to apply and be bound by Sections 316*fn5 and 1103(a)*fn6 of the Code.

Accordingly, we reverse.*fn7

[ 116 Pa. Commw. Page 518]


The order of the Pennsylvania Public Utility Commission, No. 850521 dated January 5, 1987, is reversed.



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