BEFORE THE

PENNSYLVANIA PUBLIC UTILITY COMMISSION

Application of Pentex Pipeline Company :

for Approval to Amend its Existing :

Certificate of Public Convenience to Begin :

to Offer, Render, Furnish, or Supply Natural : Docket No. A-2011-2230314

Gas Gathering or Conveying Services by :

Pipeline to its Existing Customer and to the :

Public in the Townships of Wyalusing, :

Herrick, Terry, Tuscarora, Stevens and :

Wilmot in Bradford County, Pennsylvania :

ORDER DENYING PRELIMINARY OBJECTION

This Order denies the Preliminary Objection that Pentex Pipeline Company (Pentex or Applicant) filed with the Pennsylvania Public Utility Commission (Commission) on April 29, 2011, asking that the Protest of Laurel Mountain Midstream, LLC (Laurel Mountain) be dismissed for failure to establish standing.

On March 8, 2011, Pentex filed an Application for approval to amend its certificate of public convenience so as to add natural gas gathering services to the services that it already performs for an existing transportation customer, Cargill Meat Solutions Corporation, and for local natural gas producers in Wyalusing, Herrick, Terry, Tuscarora, Stevens and Wilmot Townships in Bradford County, Pennsylvania.

On April 11, 2011, Laurel Mountain filed a Protest to Pentex’s Application asking for full party status, that hearings be scheduled in this matter, and that the Application be denied.

On April 29, 2011, Pentex filed a Preliminary Objection to the Protest of Laurel Mountain.

On May 9, 2011, Laurel Mountain filed an Answer to the Preliminary Objection.

DISCUSSION

The Commission's Rules of Practice and Procedure permit parties to file preliminary objections. The grounds for preliminary objections are limited to those set forth in 52 Pa Code

§ 5.101(a) as follows:

(1) Lack of Commission jurisdiction or improper service of the pleading initiating the proceeding.
(2) Failure of a pleading to conform to this chapter or the inclusion of scandalous or impertinent matter.
(3) Insufficient specificity of a pleading.
(4) Legal insufficiency of a pleading.
(5) Lack of capacity to sue, nonjoinder of a necessary party or misjoinder of a cause of action.
(6) Pendency of a prior proceeding or agreement for alternative dispute resolution.


Commission preliminary objection practice is analogous to Pennsylvania civil practice regarding preliminary objections. Equitable Small Transportation Intervenors v. Equitable Gas Company, 1994 Pa PUC LEXIS 69, Docket No. C-00935435 (July 18, 1994).


Preliminary objections in civil practice requesting dismissal of a pleading will be granted only where the right to relief is clearly warranted and free from doubt. Interstate Traveller Services, Inc. v. Pa. Dept. of Environment Resources, 406 A.2d 1020 (Pa. 1979); Rivera v. Philadelphia Theological Seminary of St. Charles Borromeo, Inc., 595 A.2d 172 (Pa. Super. 1991). The Commission follows this standard. Montague v. Philadelphia Electric Company, 66 Pa. PUC 24 (1988).

The Commission may not rely upon the factual assertions of the moving party but must accept as true for purposes of disposing of the motion all well pleaded, material facts of the nonmoving party, as well as every inference from those facts. County of Allegheny v. Commonwealth of Pennsylvania, 490 A. 2d 402 (Pa. 1985); Commonwealth of Pennsylvania v. Bell Telephone Co. of Pa., 551 A.2d 602 (Pa. Cmwlth. 1988).

Standing to participate in proceedings before an administrative agency is primarily within the discretion of the agency. Pa. National Gas Association v. T.W. Phillips Gas and Oil Co., 75 Pa. P.U.C. 598, 603 (1991). Generally, in order to have standing, a party must have an interest which is substantial, direct, and immediate:

A “substantial” interest is an interest in the outcome of the litigation which surpasses the common interest in procuring obedience to the law. A “direct” interest requires a showing that the matter complained of caused harm to the party’s interest. An “immediate interest involves the nature of the causal connection between the action complained of and the injury to the party challenging it and is shown where the interest the party seeks to protect is within the zone of interest sought to be protected by the statutes or the constitutional guarantee in question. George v. Pa. Publ. Util. Comm’n, 735 A.2d 1282, 1286 (Pa. Cmwlth. Ct. 1999).

In this case, Pentex cites the Commission’s regulations at 52 Pa. Code § 5.52 and has moved for the dismissal of Laurel Mountain’s Protest on the basis of lack of standing, contending that Laurel Mountain has not shown a direct, immediate and substantial interest in the subject matter of this proceeding. Specifically, the Preliminary Objection argues that Laurel Mountain’s stated interests do not confer standing because Laurel Mountain operates its gathering facilities in Washington County, Pennsylvania, not in Bradford County where Pentex’s proposed service territory is located. Preliminary Objections at 5, ¶ 11. Pentex also argues that a determination that Pentex’s service is being offered “to or for the public” does not necessarily mean that Laurel Mountain’s service would be provided “to or for the public.” Preliminary Objections at 6, ¶ 12. In the event that Laurel Mountain is permitted to participate in this case as a Protestant, Pentex asks that such participation be limited to the issue of whether natural gas gathering service is a “public utility” service within the Commission’s jurisdiction. Pentex also requests that Laurel Mountain be precluded from addressing any other issue in discovery, testimony and evidentiary hearings. Preliminary Objections at 7, ¶¶ 14-15.

In its Answer, Laurel Mountain responds that if the Commission grants Pentex’s Application, then Laurel Mountain and other companies that engage in the same activities as Pentex would require certification by the Commission. As this would have a “definite adverse impact on Laurel Mountain’s existing operations, Laurel Mountain has an interest which is more than sufficiently substantial, direct and immediate to confer standing to protest.” Answer at 1. Laurel Mountain also argues that Pentex’s request for a service territory is contrary to Laurel Mountain’s interest with respect to its current “midstream” business but also with respect to future expansion of operations in Pennsylvania. Answer at 2.

Both Pentex and Laurel Mountain argue about the applicability of a Prehearing Order in Application of Peregrine Keystone Gas Pipeline, LLC(Peregrine), Docket No. A-2010-2200201 (Order issued December 16, 2010), with Laurel Mountain citing the Order for support and Pentex seeking to limit that Order’s applicability. While I understand that both Parties are avidly searching for authority in what is a new area of litigation before the Commission (i.e. “natural gas gathering cases”), I note that Peregrine is still an active case, as is the case of Application of Laser Marcellus Gathering Company, LLC for Approval to Begin to Offer, Render, Furnish, or Supply Natural Gas Gathering and Transporting or Conveying Service by Pipeline to the Public in Certain Townships of Susquehanna County, Pennsylvania, Docket No. A-2010-2153371 (Laser Marcellus) in which another Order with respect to the issue of standing was issued on April 18, 2010. Laser Marcellus was, however, remanded to the Office of Administrative Law Judge (OALJ) for further proceedings on May 19, 2011. Though I happen to agree with the analysis of the Judge in both of those prehearing Orders, until such time as the Commission provides definitive guidance with respect to the issue of standing, as it keeps arising in these proceedings, each case in which the standing of a Party is objected to will have to be viewed within the factual context of the specific case and resolved in accord with established precedent.

In this case, does Laurel Mountain have an interest which is substantial, direct, and immediate as set forth in the George case? I find that Laurel Mountain does have such an interest. Laurel Mountain convincingly argues that:

Laurel Mountain has standing to protest because it will be harmed by the Commission’s approval of the Application, which will immediately create a new regulatory construct to which Laurel Mountain’s existing gathering operations may be subject, and which would dramatically change the competitive natural gas gathering industry in Pennsylvania.

Answer at 5, ¶8

* * *

Pentex does not exist in a vacuum. To the contrary, if the Commission determines that it is appropriate to award Pentex a service territory, it will likely award service territories to other natural gas gatherers as well. The administrative granting of service territories to natural gas gatherers will dramatically transform the natural gas gathering business in Pennsylvania, which currently operates on a competitive basis with market forces governing participant’s behavior, including the siting of natural gas gathering pipelines and other related facilities. Accordingly, the Application threatens Laurel Mountain’s interest in the future of its existing midstream business, as well as its interest in the expansion of existing operations in Pennsylvania.

Answer at 7, ¶11.

While the scope of the Laser Marcellus decision by the Commission with respect to jurisdiction over gathering services and the consequences related thereto may not be susceptible of precise definition at this time, that decision, in its final form, will most definitely alter the regulatory paradigm.[1] For any business which is currently unregulated to now realize that it is within a class that will be regulated is significant given the uncertainty that will be engendered and which must have an impact on that business’ plans. Laurel Mountain most certainly does have a substantial, direct and immediate interest in the outcome of this case.

With respect to Pentex’s request to limit the participation of Laurel Mountain in this case to the issue of whether natural gas gathering service is a “public utility” service within the Commission’s jurisdiction, the only support that Pentex offers for that request is to claim that Laurel Mountain failed to reserve any other issue. That is not a correct characterization of the Protest. On the contrary, the Protest encompasses issues of fact as well as law and raises a substantial policy issue of considerable complexity. Pentex has failed to show why Laurel Mountain’s participation in this case should be limited. Pentex’s request to limit Laurel Mountain’s participation in this proceeding is denied.

ORDER

THEREFORE,
IT IS ORDERED:

1. That the Preliminary Objection filed by Pentex Pipeline Company seeking dismissal of the Protest filed by Laurel Mountain Midstream, LLC is denied.

Date: May 26, 2011 ______

Dennis J. Buckley

Administrative Law Judge

2

A-2011-2230314 - APPLICATION OF PENTEX PIPELINE COMPANY
BRIAN J CLARK ESQUIRE
BUCHANAN INGERSOLL & ROONEY PC
213 MARKET STREET THIRD FLOOR
HARRISBURG PA 17101
BRIAN J KNIPE ATTORNEY
BUCHANAN INGERSOLL & ROONEY PC
17 NORTH SECOND STREET 15TH FLOOR
HARRISBURG PA 17101-1503
717-237-4820
JAMES A MULLINS ATTORNEY
OFFICE OF CONSUMER ADVOCATE
FORUM PLACE 5TH FLOOR
555 WALNUT STREET
HARRISBURG PA 17101-1923
717-783-5048
REP TINA PICKETT LEGAL COUNSEL
321 MAIN STREET
TOWANDA PA 18848
(570) 265-3124

2

[1] Pentex’s attempt to quash Protests by geographical limitation (i.e. by effectively contending that a party situated outside of Bradford County has no viable interest in this case) is not convincing. The broader policy ramifications inherent in this proceeding go far beyond the borders of a single county. The recent decision of the Commission in Laser Marcellus makes the scenarios posed by Laurel Mountain, under which Laurel Mountain’s business would be substantially, directly and immediately impacted by a case such as this, more likely rather than less likely regardless of location.