Mcnees Wallace & Nurick Llc
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McNees Wallace & Nurick llc Adcolu A. Bakare 100 Pine SUiitit • PO Box 116G 0 HarrisOuici. PA 17108-1160 Direct Dial: 717.237.5290 Direct F:a\: 717.260.1712 Tel: 717.232.8000 ° Fax: 71 7.237.5300 ahakarc^/lmcneeslaw.com December 4. 2017 Rosemary Chiavetta, Secretary VIA HAND DELIVERY Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor Harrisburg, PA 17120 RE: Application of Laurel Pipe Line Company, L.P. for All Necessary Authority, Approvals, and Certificates of Public Convenience To Change the Direction of Petroleum Products Transportation Service to Delivery Points West of Eldorado, Pennsylvania; Docket No. A-2016-2575829 Affiliated Interest Agreement between Laurel Pipe Line Company, L.P. and Buckeye Pipe Line Company, L.P.; Docket No. G-2017-2587567 Dear Secretary Chiavetta: Enclosed for filing with the Pennsylvania Public Utility Commission are the both HIGHLY CONFIDEN TIAL and PUBLIC versions of the Main Brief of the Indicated Parties on behalf of Gulf Operating, LLC. Philadelphia Energy Solutions Refining & Marketing, LLC, Sheetz, Inc., Monroe Energy. LLC, and Giant Eagle. Inc., in the above-referenced proceeding. As shown by the attached Certificate of Service, all parties to this proceeding are being duly served. Thank you. Respectfully submitted. McNEES WALLACE & NURICK LLC rO Adeolu A. Bakare C3 m 70 <-> m i o Counsel to Gulf Operating. LLC XT m and Sheetz, Inc. -o < zs. m Enclosure CO o c: Administrative Law Judge Eranda Vero (via E-Mail and First-Class Mail) 3> CD Certificate of Service cr www.McNeesLaw.com Harrisburg, PA • Lancaster, PA • Scranton, PA • State College, PA • Columbus, OH • Frederick, MD 8 Washington, DC PUBLIC BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Application of Laurel Pipe Line Company, : L.P. for All Necessary Authority, Approvals, : and Certificates of Public Convenience To : Docket No. A-2016-2575829 Change the Direction of Petroleum Products : Transportation Service to Delivery Points : West of Eldorado, Pennsylvania : : Laurel Pipe Line Company, L.P. - Pipeline : Capacity Agreement with Buckeye Pipe Line : Docket No. G-2017-2587567 Company, L.P. : MAIN BRIEF OF THE INDICATED PARTIES Robert A. Weishaar, Jr. (Pa. I.D. No. 74678) McNEES WALLACE & NURICK LLC 1200 G Street, NW, Suite 800 Washington, DC 20005 Phone: (202) 898-0688 Fax: (717) 260-1765 [email protected] Susan E. Bruce (Pa. I.D. No. 80146) Adeolu A. Bakare (Pa. I.D. No. 208541) Kenneth R. Stark (Pa. I.D. No. 312945) McNEES WALLACE & NURICK LLC 100 Pine Street P. O. Box 1166 Harrisburg, PA 17108-1166 Phone: (717) 232-8000 Fax: (717) 237-5300 [email protected] [email protected] [email protected] Counsel to Gulf Operating, LLC and Sheetz, Inc. PUBLIC Alan M. Seltzer (I.D. #27890) John F. Povilaitis (I.D. 28944) Buchanan Ingersoll & Rooney PC 409 North Second Street, Suite 500 Harrisburg, PA 17101-1357 Phone: 717 237 4800 Fax: 717 233 0852 E-mail: [email protected] E-mail: [email protected] Counsel to Philadelphia Energy Solutions Refining and Marketing LLC Kevin J. McKeon (PA ID 30428) Todd S. Stewart (PA ID 75556) Whitney E. Snyder (PA ID 316625) Hawke McKeon & Sniscak LLP 100 North Tenth Street Harrisburg, PA 17101 Phone: (717) 236-1300 Fax: (717) 236-4841 [email protected] [email protected] [email protected] Counsel to Monroe Energy, LLC Jonathan D. Marcus (PA ID No. 312829) Daniel J. Stuart (PA ID No. 321011) MARCUS & SHAPIRA LLP One Oxford Centre, 35th Floor 301 Grant Street Pittsburgh, PA 15219 Phone: (412) 471-3490 Fax: (412) 391-8758 [email protected] [email protected] Counsel to Giant Eagle, Inc. December 4, 2017 PUBLIC TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... iv I. STATEMENT OF THE CASE ..................................................................................................1 A. Introduction ..........................................................................................................................1 B. Background of Indicated Parties ..........................................................................................2 1. Gulf 2 2. Sheetz .............................................................................................................................3 3. Giant Eagle.....................................................................................................................4 4. Monroe Energy ..............................................................................................................6 5. PESRM ..........................................................................................................................7 II. STATEMENT OF THE QUESTIONS INVOLVED ..............................................................21 A. Whether Disposition of the Relief Requested in the Application Requires the Exercise of Commission Jurisdiction? ...............................................................................21 B. If the Exercise of Commission Jurisdiction Is Required, Has Laurel Met Its Burden of Proof Entitling It to the Relief Requested in the Application? ......................................21 III. BURDEN OF PROOF .............................................................................................................21 IV. SUMMARY OF ARGUMENT ...............................................................................................22 V. ARGUMENT ...........................................................................................................................27 A. Whether Commission Approval Is Required For The Proposed Reversal ........................27 1. Laurel's 1957 Application And CPC Support Only East To West Flows Along The Laurel Pipeline ......................................................................................................29 2. What Constitutes Service .............................................................................................34 B. If Commission Approval Is Required, What Standard Should Apply In Evaluating The Proposed Reversal ......................................................................................................39 1. The Abandonment Of Service Test Is The Standard Applicable To Laurel's Application ...................................................................................................................39 2. The Alternative Standards Proposed By Laurel Do Not Apply ...................................45 a. The City Of York Substantial Affirmative Benefit Standard Does Not Apply ...45 b. The Just And Reasonable Standard Applicable To Tariff Revisions Does Not Apply............................................................................................................48 C. Has The Standard Applicable To This Case Been Met? ....................................................49 1. Laurel Has Not Met The Abandonment Of Service Standard .....................................49 a. Laurel Has Not Demonstrated Any Loss To The Utility ....................................49 PUBLIC b. Laurel Has Not Demonstrated That The Public Will Not Use The Utility Service In The Future..........................................................................................51 c. The Loss Of Convenience And Substantial Hardship To The Public Upon Discontinuance Of Service Outweigh, On Balance, Any Loss To The Utility ..................................................................................................................77 (1) Laurel Has Not Demonstrated Any Loss To The Utility ....................................... 78 (2) The Harms To The Public Are Substantial ............................................................ 78 (a) The Pittsburgh Market Will Be Harmed ..............................................79 i) Impact On Availability Of Supply And Gasoline Prices In Pittsburgh ......................................................................................79 ii) The Proposed Reversal Adversely Impacts The Availability and Price of Low-RVP Gasoline In Pittsburgh ..........................100 (b) Eastern Pennsylvania Refineries Will Be Harmed ............................108 i) The Philadelphia Refineries Currently Ship Substantial Volumes On The Laurel Pipeline West Of Eldorado And Desire To Continue Doing So ....................................................111 ii) Impact Of Laurel Pipeline Reversal On Economics Of Refineries ....................................................................................113 iii) Reversing The Laurel Pipeline Eliminates A High Margin Market That Has No Realistic Substitute ...................................116 iv) Reversing The Laurel Pipeline At Eldorado Will Severely Harm The Refineries ..................................................................119 (c) Trucking Obstacles And Safety Impacts............................................120 (d) Other Harms .......................................................................................129 d. Laurel Has Not Demonstrated The Availability And Adequacy Of Any Service To Be Substituted .................................................................................129 (1) Trucking .............................................................................................................. 130 (a) Trucking Petroleum Products From Local Refineries In The Pittsburgh Area Cannot Suitably Replicate The Benefits Of Service Currently Provided By The