PA Commission Denies Public Utility Status to Gathering and Midstream Company



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In prior alerts, we addressed developments in the Laser Northeast Gathering Company, LLC (?Laser?) proceeding involving Laser?s proposal to be a ?public utility? with eminent domain authority providing midstream and gathering services to producers.  Laser is a precedent-setting proceeding of great interest to landowners, natural gas producers and gathering and midstream companies operating in Pennsylvania.  The  Pennsylvania Public Utility Commission's ("PaPUC") orders in Laser are the subject of an appeal.  A second proceeding before the PaPUC is now unfolding and will likely also be precedent-setting. 

Peregrine Keystone Gas Pipeline, LLC (?Peregrine?), like Laser, proposed to construct a gathering system and provide midstream and gathering services in Pennsylvania initially to serve an affiliated producer.   It filed an application with the PaPUC seeking ?public utility? status under Pennsylvania law which, if granted, would have provided Peregrine with the power of eminent domain.  On May 23, 2012, an administrative law judge (?ALJ?) issued a thorough, 100-plus page Recommended Decision applying Laser and other precedent to the facts in Peregrine.  The ALJ recommends that Peregrine?s application to be a ?public utility? be denied.  Peregrine may now file Exceptions (an appeal) with the PaPUC to review the ALJ?s decision.

The ALJ?s Recommended Decision is consistent with PaPUC decisions in Laser holding that natural gas gathering services can meet the required threshold to be a ?public utility.?  However, the Recommended Decision appropriately recognizes that a greater level of factual detail and argument has been provided in the Peregrine proceeding; in fact, a level of detail the PaPUC sought to have developed and established in the Laser proceeding, on remand, before Laser was permitted to withdraw its application.   Further developments in Peregrine are worth watching. 

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