Equitrans, L.P. v. Public Service Commission of West Virginia, Ronald Hall, Ashton Hall, and Hope Gas, Inc, dba Dominion Energy West Virginia ( 2022 )

FILED
November 15, 2022
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALSOF
WEST VIRGINIA
No. 22-0293, Equitrans, L.P. v. Public Service Commission of West Virginia, Ronald
Hall, Ashton Hall, and Hope Gas, Inc., dba Dominion Energy West Virginia
ARMSTEAD, Justice, concurring in the result:
The present case involves a rather straightforward question of whether the
Public Service Commission (“PSC”) has jurisdiction over Equitrans’ decisions of whether
to provide or discontinue providing natural gas to individuals through taps, commonly
referred to as “farm taps,” on its gathering line facilities located in West Virginia. I believe
the answer to that question is that the PSC does, in fact, retain such jurisdiction, but I reach
that conclusion in different manner that would avoid the potential for widespread and
unintended consequences I fear will result from the majority’s reasoning. The majority’s
finding that the gathering line in question is not “solely dedicated to … gathering … of
natural gas,” because it is a “mixed-use” line has the potential to place the majority of
pipelines in this State under the PSC’s jurisdiction. 1 Further, to reach its conclusion, the
majority opinion has utilized an inapplicable definition to endow the PSC with jurisdiction
in this case. In sum, the majority opinion is simply a bridge too far. Therefore, while I
concur in the ultimate disposition reached by the Court that the PSC has jurisdiction over
1
Lucas Manfield, West Virginia Is Awash in Natural Gas, But Rural
Communities Are Losing Service, https://mountainstatespotlight.org/2020/09/21/rural-
residents-face-loss-of-natural-gas-service/ (last visited Nov. 13, 2022) (“Over 25,000 gas
customers in West Virginia receive their gas directly from local wells through what are
known as field taps.”).
1
the provision of natural gas service to tap consumers from the gathering line in question, I
reach such decision for different reasons than those cited by the majority.
The majority opinion relies heavily upon the provisions of West Virginia
Code § 24-3-3a (1983) and our prior holding in Syllabus Point 3 of Boggs v. Public Service
Commission, 154 W. Va. 146, 174 S.E.2d 331 (1970), to reach its conclusion that the PSC
has jurisdiction over Equitrans’ gathering lines. This argument fails for two reasons. First,
West Virginia Code § 24-3-3a on its face is inapplicable to this matter. That section
provides: “For reasons of safety, deliverability or operational efficiency the commission
may, in its discretion, by rule or order, exclude from the requirements of this section any
part of any pipeline solely dedicated to storage, or gathering, or low pressure distribution
of natural gas.” W. Va. Code § 24-3-3a(c). (emphasis added). The majority opinion
emphasizes the word “solely” but fails to consider that the language of the statute applies
only to the designated “section” contained within the statute. Indeed, to determine the
applicability of this statutory provision, one must first ascertain “the requirements of this
section.” Section 3a(b) answers that question:
(b) The commission may by rule or order, authorize and require
the transportation of natural gas in intrastate commerce by
intrastate pipelines, by interstate pipelines with unused or
excess capacity not needed to meet interstate commerce
demands or by local distribution companies for any person for
one or more uses, as defined by rule, by the commission in the
case of:
2
(1) Natural gas sold by a producer, pipeline or other seller to
such person; or
(2) Natural gas produced by such person.
W. Va. Code § 24-3-3a(b). Plainly, Section 3a only applies in specific situations. The first
such situation is found when an intrastate pipeline 2 is used to transport natural gas in
intrastate commerce. 3 The second instance in which the statute applies is when an
interstate pipeline 4 has excess capacity and is being used to transport 5 gas in intrastate
commerce. The record in this case does not indicate that the Equitrans gathering facilities
at issue fall within either of these two scenarios.
2
“‘Intrastate pipeline’ means (i) any utility or (ii) any other person, firm or
corporation engaged in natural gas transportation in intrastate commerce to or for another
person, firm or corporation for compensation.” W. Va. Code § 24-3-3a(a)(1).
3
“‘Intrastate commerce’ includes the production, gathering, treatment,
processing, transportation and delivery of natural gas entirely within this State.” W. Va.
Code § 24-3-3a(a)(4).
4
“‘Interstate pipeline’ means any person, firm or corporation engaged in
natural gas transportation subject to the jurisdiction of the FERC under the Natural Gas
Act or the Natural Gas Policy Act of 1978.” W. Va. Code § 24-3-3a(a)(1).
5
“‘Transportation’ includes exchange, backhaul, displacement or other
means of transportation.” W. Va. Code § 24-3-3a(a)(5).
3
Section 3a also applies when a local distribution company 6 transports natural
gas for any person “for one or more uses” as “natural gas sold by a producer, pipeline, or
other seller to such person” or “natural gas produced by such person.” Critically, the
majority opinion itself makes specific factual findings recognizing that Equitrans does not
provide gas distribution services:
Of note, Equitrans does not own the gas transported through its
lines, but it collects a fee for said transportation. Moreover,
Equitrans does not provide utility gas distribution services, but
other public utilities like Hope Gas and Mountaineer Gas tap
into Equitrans’ gathering lines, buy the gas, and distribute it
to their customers. The particular line at issue in this appeal, L.
No. H-13087, is used by Hope Gas to distribute natural gas to
rural consumers via main line farm taps.
(Emphasis added). The facts of this case do not convert Equitrans into a “local distribution
company.” Equitrans clearly does not sell “natural gas for ultimate consumption.” Instead,
it is such entities as Hope Gas and Mountaineer Gas, each of which meet the statutory
definition of a “local distribution company,” (“LDC”), that provide such service. Allowing
local distribution companies to provide gas to customers from taps located on the Equitrans
gathering line does not convert Equitrans into a “local distribution company.”
6
“‘Local distribution company’ means any person, other than any interstate
pipeline or any intrastate pipeline, engaged in transportation or local distribution of natural
gas and the sale of natural gas for ultimate consumption.” W. Va. Code § 24-3-3a(a)(3).
4
This Court is required to apply the plain language of the statute. “[A] statute
that is clear and unambiguous will be applied and not construed.” Syl. Pt. 1, in part, State
v. Elder, 152 W. Va. 571, 165 S.E.2d 108 (1968). “Where the language of a statute is free
from ambiguity, its plain meaning is to be accepted and applied without resort to
interpretation.” Syl. Pt. 2, Crockett v. Andrews, 153 W. Va. 714, 172 S.E.2d 384 (1970).
“We look first to the statute’s language. If the text, given its plain meaning, answers the
interpretive question, the language must prevail and further inquiry is foreclosed.”
Appalachian Power Co. v. State Tax Dep’t of West Virginia, 195 W.Va. 573, 587, 466
S.E.2d 424, 438 (1995).
The majority opinion fails to apply the clear meaning of the statutory
provisions governing PSC jurisdiction, but instead misinterprets the statutory provisions
governing the applicability of Section 3a. The majority incorrectly asserts that West
Virginia Code 24-3-3a(c) applies to Equitrans by finding that the gathering line is not
“solely dedicated to … gathering … of natural gas.” The mere allowance of farm taps on
a pipeline is insufficient to convert the line to a “mixed-use” line. As acknowledged by
the majority, it is actually a separate and distinct LDC, in this case Hope Gas, that serves
the natural gas customer in this case. Such LDCs clearly fall within the jurisdiction of the
PSC. Equitrans does not assume dual roles as a gathering line and an LDC simply because
it permits taps on a line which clearly serves as a gathering line. If such were the case, any
5
natural gas pipeline in West Virginia, regardless of its function, would suddenly fall within
the jurisdiction of the PSC as a “mixed-use” or service line simply by allowing a single tap
on such line. This is simply a misreading of the term “sole” contained in West Virginia
Code § 24-3-3a. Such term refers to the purpose of the line, i.e. transmission, storage,
gathering or distribution, and not whether the line contains incidental farm taps.
Secondly, the majority opinion incorrectly applies this Court’s prior holding
in Boggs. In that case, the “transmission line of a public utility” was historically used to
provide natural gas to customers, resulting in our holding that:
Where the transmission line of a public utility has been used
directly to serve retail rural consumers over a long period of
time, such use constitutes a dedication of that line to the public
service and such facility will continue to be so dedicated and
the owner thereof will continue to operate as a public utility
unless and until permission is obtained from the Public Service
Commission to terminate such status.
Syl. Pt. 3, Boggs. Here, we do not have a transmission line and Equitrans is not a public
utility. Thus, the majority opinion improperly relies on Boggs to reach the conclusion that
the PSC has jurisdiction over the gathering line’s provision of service to the tap customers
at issue. While I believe the majority’s reasoning is flawed, I nonetheless believe there is
a proper means by which the PSC legitimately has jurisdiction in this case.
6
The record in this case is replete with references to a prior PSC action in
which Equitrans and its related companies were allowed to reorganize. The record shows
that on January 4, 2007, Equitable Resources, Inc. (“Equitable Resources”), made
application to the PSC pursuant to the provisions of West Virginia Code § 24-2-12 (1984),7
“to modify its current corporate structure through the establishment of a holding company
with Equitable Gas operated through subsidiary ownership form.” That application further
stated that:
Equitable Gas ratepayers will continue to be subject to
the same regulatory jurisdiction of the Commission as to rates,
service, accounting and other general matters of utility
operations, as it is today.
....
After the merger, Equitable Resources will transfer
certain assets and liabilities to NewHoldCo that are more
appropriately held by the parent holding company. The assets
and liabilities to be distributed to NewHoldCo will not be the
regulated assets and liabilities of Equitable Gas.
NewHoldCo will also form a subsidiary, referred herein
to GasCoSub, LLC…, a Pennsylvania limited liability
company. Immediately following the transfer [noted above]
Equitable Resources will engage in a second merger, whereby
it will merge out of existence into GasCoSub…. The result of
the second merger is that the business of the Equitable Gas
Company division of Equitable Resources, Inc. will be
operated out of, and be the sole business of, GasCoSub.
….
7
This Code section will be discussed below.
7
No customers of Equitable Gas will be adversely
affected by the proposed reorganization.
(Emphasis added).
Following the application and a hearing, the PSC issued its order granting
the proposed reorganization, with conditions. Notably, the PSC order cites to two specific
provisions of West Virginia Code § 24-2-12 in its decision approving the reorganization:
The commission may grant its consent in advance or
exempt from the requirements of this section all assignments,
transfers, leases, sales or other disposition of the whole or any
part of the franchises, licenses, permits, plants, equipment,
business or other property of any public utility, or any merger
or consolidation thereof and every contract, purchase of stocks,
arrangement, transfer or acquisition of control, or other
transaction referred to in this section, upon proper showing that
the terms and conditions thereof are reasonable and that neither
party thereto is given an undue advantage over the other, and
do not adversely affect the public in this state.
....
Every assignment, transfer, lease, sale or other
disposition of the whole or any part of the franchises, licenses,
permits, plant, equipment, business or other property of any
public utility, or any merger or consolidation thereof and every
contract, purchase of stock, arrangement, transfer or
acquisition of control or other transaction referred to in this
section made otherwise than as hereinbefore provided shall be
void to the extent that the interests of the public in this state are
adversely affected, but this shall not be construed to relieve any
utility from any duty required by this section.
(Emphasis added).
8
From this language, two important facts are clear. First, there was no
question at the time that the application was filed in 2007 that the company that is now
Equitrans, and its affiliates seeking reorganization were properly before the PSC.
Secondly, the PSC’s jurisdiction over the merger/reorganization, as outlined in West
Virginia Code § 24-2-12, extended to ensuring that any such merger or reorganization, as
proposed by Equitrans’ predecessors and affiliates, was authorized by the PSC only to the
extent that it did “not adversely affect the public in this state” and was “void to the extent
that the interests of the public are adversely affected.” W. Va. Code § 24-2-12. Therefore,
to ensure that its customers would not be adversely affected by the merger and to obviate
PSC concerns about its customers, Randall Crawford, Equitable Resources’ senior vice
president and president of midstream, tendered an affidavit to the PSC which, as noted in
the majority opinion, stated in pertinent part:
Acceptance of the consent and approval granted in the Order
shall constitute an agreement by Equitable Resources, Inc.,
Equitable Gas Company . . . and any Equitable Resources
affiliates that neither they nor their successors shall discontinue
service to any distribution system customer served on any of
the isolated sections of the Equitable utility distribution system
in West Virginia, that are not connected to the interconnected
main system in Taylor, Marion and Harrison Counties, without
first obtaining the authority of the Public Service Commission
of West Virginia, and that they shall make service available to
all future applicants who would be entitled to natural gas or
transportation service from such isolated distribution facilities
under the statutes and applicable regulations to the same extent
as if a separation of properties had not taken place[.]
9
The affidavit of Mr. Crawford, thus, was considered by the PSC while
exercising its jurisdiction as conferred under the provisions of West Virginia Code § 24-2-
12. Equitrans is likely correct in its assertion that the parties may not, by agreement, confer
jurisdiction on the PSC. The powers and authority of the PSC are granted by statute.
However, it is not the affidavit agreeing to jurisdiction that vests jurisdiction within the
PSC. The PSC was empowered, by West Virginia Code § 24-2-12, to approve or reject
the proposed reorganization involving Equitrans and its affiliates. The PSC opted to
approve the reorganization, but clearly did so conditioned upon the representations made
in the Crawford Affidavit. The affidavit was designed to ensure that the
merger/reorganization would be approved by the PSC, which had stated concerns about the
proposal. Almost immediately after the affidavit was tendered, the PSC approved the
reorganization. The PSC exercised its statutory jurisdiction over Equitable Resources
Equitable Gas, its “affiliates,” and “successors” and approved the reorganization to the
extent that utility customers would not be “adversely affected” by the reorganization. A
company or its affiliates cannot simply make representations to the PSC in order to gain
the PSC’s approval of a proposed reorganization that was within the PSC’s authority to
approve or deny, and then deny any obligation to comply with such assurances under the
guise that the PSC has, as a result of the reorganization, lost jurisdiction. Indeed, the
question of whether a utility customer was “adversely affected” was squarely placed before
10
the PSC by a customer who complained to the PSC that he was refused a tap on the
gathering line at issue.
Although, for the reasons outlined herein, I find the majority’s specific
reliance on Boggs is misplaced, Syllabus Point 1 of Boggs, stands for the general
proposition that PSC jurisdiction is continuing in nature and, when read in conjunction
with West Virginia Code § 24-2-12, appears persuasive in this matter:
Jurisdiction of the Public Service Commission over a public
utility will not be considered to be terminated unless the action
of the Commission and the circumstances surrounding the case
demonstrate clearly and unequivocally its intent to relinquish
such jurisdiction.
Syl. Pt. 1, Boggs v. Pub. Serv. Comm'n, 154 W. Va. 146, 174 S.E.2d 331 (1970). The
PSC’s approval of the reorganization of Equitable Resources pursuant to West Virginia
Code § 24-2-12, included the continued jurisdiction to enforce the conditions imposed by
the PSC as part of such reorganization. The PSC has jurisdiction in this case because it
was endowed with jurisdiction by West Virginia Code § 24-2-12 and never lost such
jurisdiction.
Accordingly, I concur in the majority’s finding that the PSC has jurisdiction
over the provision or denial of service to tap customers from the gathering line at issue but
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would reach this conclusion on the alternate basis set forth herein and believe the reasoning
of the majority may have wide-ranging, unintended consequences.
12