BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Application of Laurel Pipe Line Company, L.P. : For approval to change direction of petroleum : A-2016-2575829 products transportation service to delivery : points west of Eldorado, Pennsylvania : Affiliated Interest Agreement between : G-2017-2587567 Laurel Pipe Line Company, L.P. and : Buckeye Pipe Line Company, L.P. : RECOMMENDED DECISION NON-PROPRIETARY VERSION Before Eranda Vero Administrative Law Judge TABLE OF CONTENTS I. INTRODUCTION ...............................................................................................................1 II. HISTORY OF THE PROCEEDING ...................................................................................1 III. FINDINGS OF FACT..........................................................................................................7 IV. DISCUSSION ....................................................................................................................38 A. Burden of Proof......................................................................................................38 B. Federal Preclusion of Commission Jurisdiction ....................................................38 1. Federal Preemption ....................................................................................39 Laurel’s Position .....................................................................................39 The Indicated Parties’ Position ...............................................................42 Disposition ..............................................................................................50 2. The Dormant Commerce Clause ................................................................52 Laurel’s Position .....................................................................................52 The Indicated Parties’ Position ...............................................................56 Disposition ..............................................................................................62 C. Certificate of Public Convenience .........................................................................64 Laurel’s Position .....................................................................................64 The Indicated Parties’ Position ...............................................................70 Disposition ..............................................................................................76 D. Standard of Review ................................................................................................78 Laurel’s Position .....................................................................................78 The Indicated Parties’ Position ...............................................................80 Disposition ..............................................................................................83 E. Whether the Abandonment of Service Standard Has Been Met ............................84 a. The extent of loss to the utility ..............................................................................84 Laurel’s Position .....................................................................................84 The Indicated Parties’ Position ...............................................................88 Conclusion ..............................................................................................98 b. The prospect of the system being used in the future ............................................101 Laurel’s Position ...................................................................................101 The Indicated Parties’ Position .............................................................104 Conclusion ............................................................................................115 c. The loss to the utility balanced with the convenience and hardship to the public upon discontinuance of such service .........................................................118 Laurel’s Position ...................................................................................118 Pennsylvania Consumers ..........................................................118 Altoona/Central Pennsylvania Market ......................................127 Pittsburgh Market......................................................................128 The Indicated Parties’ Position .............................................................140 Harm to the Pittsburgh Market .................................................140 Harm to Eastern Pennsylvania Refineries .................................152 Harm to Philadelphia ................................................................155 Other Harms ..............................................................................156 Conclusion ............................................................................................160 Pennsylvania Consumers ..........................................................160 i Pittsburgh Market......................................................................167 Eastern Refineries .....................................................................168 Other .........................................................................................169 d. The availability and adequacy of any service to be substituted ...........................171 Laurel’s Position ...................................................................................171 Pittsburgh Market......................................................................171 Eastern Refineries .....................................................................176 Indicated Parties’ Position ....................................................................189 Pittsburgh Market......................................................................189 Conclusion ............................................................................................193 Pittsburgh Market......................................................................193 Eastern Refineries .....................................................................195 e. Whether a reasonable rate increase can cure the utility’s loss .............................198 Laurel’s Position ...................................................................................198 Indicated Parties’ Position ....................................................................199 Conclusion ............................................................................................199 Disposition ............................................................................................199 F. Capacity Agreement Between Laurel and Buckeye ............................................200 Laurel’s Position ...................................................................................201 Indicated Parties’ Position ....................................................................202 Disposition ............................................................................................204 G. Stipulation in Settlement Between Laurel and I&E .............................................206 V. CONCLUSIONS OF LAW .............................................................................................209 VI. RECOMMENDED ORDER ............................................................................................211 ii I. INTRODUCTION This Recommended Decision recommends denial of Laurel Pipe Line Company, L.P.’s (Laurel, or Applicant, or Company) Application because Laurel failed to prove by a preponderance of the evidence that it is entitled to the relief sought. This Recommended Decision also recommends that the Affiliated Interest Agreement between Laurel and Buckeye Pipe Line Company, L.P., be denied because Laurel failed to satisfy the Commission’s standard of review for abandonment of utility service. II. HISTORY OF THE PROCEEDING On November 14, 2016, Laurel Pipe Line Company, L.P. filed with the Pennsylvania Public Utility Commission (PUC or Commission) an Application requesting all necessary authority, approvals and Certificates of Public Convenience from the Commission to the extent required, authorizing Laurel to change the direction of its petroleum products transportation service over a portion of its system west of Eldorado, Pennsylvania. By Secretarial letter dated November 16, 2016, the Commission acknowledged receipt of the Application and directed Laurel to publish notice of the Application in a newspaper of general circulation in the area involved and file proof of publication with the Commission by December 19, 2016. The Secretarial letter also confirmed that the Commission would publish notice of the Application in the Pennsylvania Bulletin on December 3, 2016 with formal protests and petitions to intervene due to the Commission by December 19, 2016. On November 22, 2016, Gulf Operating, LLC filed a Petition to Intervene and a Motion to Extend the Deadline for filing Protests in this matter. On December 6, 2016, the Commission issued a second Secretarial letter extending the deadline for filing formal protests and petitions to intervene in this proceedings to February 1, 2017. 1 Notice of Laurel’s Application was published in the Pennsylvania Bulletin on December 17, 2016, with formal protests and petitions to intervene due no later than February 1, 2017. By the February 1, 2017 deadline the following Petitions to Intervene were filed in this matter: (1) Gulf Operating LLC (Gulf), (2) Philadelphia Energy Solution Refining and