More legal wrangling ahead over flow of gasoline in Laurel Pipeline
The Texas-based owner of a petroleum pipeline that serves Western Pennsylvania is trying once again to move refined product in an easterly direction — to the continued chagrin of Giant Eagle, GetGo, Sheetz and other gasoline retailers.
Houston-based Buckeye Partners LP and its subsidiary, Laurel Pipe Line Co., which operates the east-to-west Laurel Pipeline through Pennsylvania, want the option to deliver fuel from west-to-east, but the retailers say that will reduce competition, eliminate jobs and drive up prices at the pump.
“Consumers benefit when fuel retailers have the option to choose between fuel supplies that are coming directly into our market,” said Dan Donovan, Giant Eagle spokesman.
Laurel Pipe Line originally sought reversal of the flow direction between Pittsburgh and Altoona when it filed an application with the Pennsylvania Public Utility Commission in 2016. Since 1957, the pipeline has been used to transport gasoline, diesel and home heating fuel westward from Philadelphia refineries to Central and Western Pennsylvania.
By petitioning the PUC, Laurel Pipe Line was seeking to change direction between Pittsburgh and Altoona and bring refined product eastward from Midwest refineries. The company said such a change would capitalize on America’s increasing energy independence and would benefit consumers.
A coalition of gasoline retailers fought the change — and continues to fight the change — using similar arguments about lack of choice driving up prices at the pump.
“What a reversal would have done is take away one of those two options,” Donovan said. “Folks like GetGo and Sheetz would lose that ability to leverage those two fuel sources (from west and east).”
In the short term, the retailers won. The PUC, affirming a decision by an administrative law judge, denied Laurel Pipe Line’s application in July 2018.
Anticipating an adverse decision, Buckeye Partners in April 2018 said it would instead seek bi-directional service on the Laurel pipeline by applying for a declaratory order and new tariff rates from the Federal Energy Regulatory Commission, or FERC.
Bi-directional service would allow a westward or eastward flow on the Laurel pipeline, depending on demand and the time of year. A FERC ruling on the Buckeye Partners petition is expected by June 8, and Buckeye said it is conducting tests in anticipation of bi-directional service starting in mid-2019.
“The new service will in no way impair historical east-to-west service, which uses only a fraction of the line’s capacity,” Buckeye and Laurel said in a FERC filing.
The retailers are once again intervening, accusing Buckeye Partners of seeking an end run around the state PUC. Their website, www.DenyBuckeye.com, lays out the case against Buckeye Partners.
“Buckeye is still pushing for full reversal,” Donovan said. “When you remove one of two fuel sources that uniquely benefit Western Pennsylvania, that’s a negative.”
Not so, says Buckeye Partners. The company insists that, in seeking an order and tariff rates from FERC, it is working within the parameters set by the PUC.
“Though the interveners attempt to warn the FERC away from interfering with the PaPUC’s jurisdiction, the reality is that, as configured, the project’s bi-directional service permits both the offering of the new Midwest-sourced service and the full maintenance of the existing service from the East, fully comporting with the state commission’s directives,” Buckeye said in its FERC filing.
Meanwhile, the PUC’s legal counsel has sent a letter to FERC asking that it “not take any action that would allow the tariffs filed at these dockets to go into effect until the complaint proceedings … have been concluded.”
Buckeye Partners has appealed the PUC’s 2018 denial to the Commonwealth Court of Pennsylvania.
What’s more, the gasoline retailers, in addition to intervening in the FERC case, have filed a separate complaint with the PUC.
The complaint asserts that Buckeye Partners’ plans to institute bi-directional service sidesteps needed oversight and approval from the PUC, and constitutes a partial abandonment of public utility service in violation of state law, Donovan said.
In making their case against Buckeye Partners, the gasoline retailers say they have bipartisan support in the General Assembly. But not all lawmakers agree.
A group of four Western Pennsylvania Republican senators said in a letter to the PUC last year that reversal of the Laurel pipeline would “enhance competition and provide Pennsylvania consumers with greater access to lower-cost, American-made fuels.”
The letter, signed by state Sens. Kim Ward, Camera Bartolotta and Elder Vogel and then-Sen. Guy Reschenthaler, went on to say the reversal “will also boost our region’s and the nation’s security by utilizing more energy sources and fuels produced and manufactured here at home, rather than continuing to rely on overseas imports.”
State Rep. Eric Nelson, R-Greensburg, said he, too, supports the pipeline’s reversal on free market grounds. A government agency, he said, should not interfere in a private business decision.
“I am supportive of (Buckeye Partners’) ability to have that option … to reinvest in their pipeline and have the option to flow east or west,” Nelson said.
Stephen Huba is a Tribune-Review staff writer. You can contact Stephen at 724-850-1280, [email protected] or via Twitter .