Member Article

In a somewhat surprising turn of events in the question of potential Pennsylvania Public Utility Commission ("Pa. PUC" or "Commission") regulation over midstream Marcellus Shale development entities, on September 8, 2011, Laser Northeast Gathering Company, LLC ("Laser") petitioned the Pa. PUC to withdraw its pending application for Certificate of Public Convenience to act as Public Utility. This surprise development follows the recent favorable ruling that Laser received from the Commission finding that Laser qualified as a "public utility" under the Pa. PUC regulations and remanding to the presiding Administrative Law Judge ("ALJ") the question of whether Laser's request for certification to operate as a public utility in Pennsylvania would be in the public interest.

In its petition to withdraw, Laser now claims that its operational intent in Pennsylvania has changed since the filing of its original application. According to Laser's petition, Laser now: (1) is "no longer willing to serve any and all potential customers"; (2) "will use contracts to select and serve a defined and limited group of customers"; and (3) "is no longer committed to expand its facilities to meet demand of the public as would a public utility." Rather, Laser now claims that it intends to operate "as a private pipeline" similar to "MarkWest, Laurel Mountain Midstream LLC and Superior Appalachian Pipeline, LLC." Laser's change of position on these essential conditions effectively negates the underlying findings that the Commission made when it determined that Laser qualified as a "public utility."

Assuming the Commission approves Laser's request, the petition to withdraw signals a temporary pause in the Pa. PUC's determination of whether it will exercise jurisdiction over midstream Marcellus Shale entities. This development does not, however, represent a final determination of these important regulatory questions, as a couple of prominent cases remain before the Pa. PUC that could still extend Commission regulatory jurisdiction over certain midstream entities. Of particular interest, in a proceeding initiated by Peregrine Keystone Gas Pipeline, LLC ("Peregrine"), the Commission remains poised to resolve very similar jurisdictional questions as those originally raised by Laser. This case will likely be resolved in the first few months of 2012, and could provide greater insight into the potential Pa. PUC regulatory landscape over the Marcellus Shale play (independent of any legislatively-mandated jurisdiction that might otherwise arise in the course of upcoming legislative sessions).