On December 22, 2011, Pennsylvania Governor Tom Corbett signed HB 344 into law as the Gas and Hazardous Liquids Pipeline Act, or "Act 127," which ascribes to the Pennsylvania Public Utility Commission ("Pa. PUC" or "Commission") regulatory authority over natural gas pipelines in the Commonwealth. Specifically, Act 127 mandates that the Pa. PUC will "establish and maintain a registry of all pipeline operations" and provides the Commission with authority to enforce Federal pipeline safety standards and regulations over all "pipeline operators" within the Commonwealth, which is defined as non-public utility owners or operators of "equipment or facilities . . . for the transportation of gas or hazardous liquids by pipeline or pipeline facility regulated under federal pipeline safety laws." Under this definition, Pa. PUC regulatory authority is expressly extended by the Act to include oversight of operators of "gathering" pipelines. 

Importantly, Act 127 limits the Pa. PUC's jurisdiction to the enforcement of pipeline safety regulations and expressly excludes any regulation over pipeline operators "for purposes of rates or ratemaking." The Act does, however, authorize the Pa. PUC to issue and collect assessments from pipeline operators for its enforcement of safety standards and regulations. These assessments are to be paid by pipeline operators within 30 days of their issuance by the Commission.

In order to facilitate the Commission's enforcement of pipeline safety regulations and the collection of assessments, Act 127 also establishes certain registration and reporting requirements for pipeline operators. Specifically, among other requirements, each pipeline operator now must annually report to the Commission, by March 31 of each year, the "total intrastate regulated transmission, regulated distribution and regulated onshore gathering pipeline miles in operation for the transportation of gas and hazardous liquids . . . during the prior calendar year." Pipeline operators must also report "the country of manufacture for all tubular steel products used in the exploration, gathering or transportation of natural gas or hazardous liquids."  

On January 12, 2012, the Pa. PUC issued a Tentative Implementation Order outlining the proposed requirements for registration by pipeline operators, the schedule for calculation and payment of annual assessments, and the Pa. PUC's proposed criteria for calculating annual assessments. Under the Tentative Implementation Order, pipeline operators must register with the Pa. PUC and pay a $250 registration fee no later than March 16, 2012, reporting the information listed above. The Tentative Implementation Order also establishes March 30, 2012, as the date for the issuance of the Pa. PUC's initial assessments, based on the "cost per mile" of Act 127 regulation, assigned on the basis of the number of jurisdictional miles owned by each pipeline operator. Payment by pipeline operators of this initial assessment is due no later than April 30, 2012. Thereafter, annual assessments will be issued and paid after the July 1 start of the Pa. PUC's fiscal year. 

More information on Act 127 and the Pa. PUC's regulation can be found here.

The Pa. PUC has provided an opportunity for interested parties to submit Comments on the Tentative Implementation Order. These Comments are due on February 1, 2012. There will also be a Q&A teleconference conducted by the Pa. PUC for interested parties on January 26, 2012, at 9:00 a.m. In order to participate, interested parties should request call-in information and submit questions for the call at ra-Act127@pa.gov by 5:00 p.m., January 23, 2012. 

We strongly recommend that all Marcellus Shale pipeline operators familiarize themselves with the Act 127 and Pa. PUC requirements and secure public utility counsel to assist with current and future registration, reporting, and assessment obligations.