Gathering and Transporting Marcellus and Utica Shale Natural Gas to the Market and the Regulation of Midstream Pipeline Companies - The Case for a Uniform Federal and State Definition of "Gathering" in the Context of Economic and Siting Regulation

Much has been written about the major natural gas reserves in the Marcellus and even Utica Shale formations located in West Virginia, Pennsylvania, and Ohio. But much of the focus has been on the law and regulation around producing the gas-drilling and getting it out of the ground. Related, but serving a very different function, is the role of pipeline companies in their various business models to transport that gas to market. This is a different and equally robust and growing segment of the natural gas industry where large amounts of shale exploration take place.

In fact, without pipelines and regulatory certainty for those constructing pipelines, natural gas has no value as it cannot be transported to the market place in any practical manner without pipelines. When planning to construct or acquire natural gas pipelines, a major question to consider is, "Will the pipelines be regulated?" For purposes of this Article, "regulated" refers to regulation of the siting and construction of pipeline facilities as well as economic regulation of the prices (or rates) charged and the terms and conditions (or tariffs) for services offered to customers (or shippers) transporting on those pipelines. Depending upon the physical configuration of the pipelines, the manner in which they are used to transport natural gas, and the type of customer transporting the gas on the pipeline, the correct answer could be (1) no regulation, (2) regulation by a state or commonwealth public service or utility commission, or (3) possible regulation by the Federal Energy Regulatory Commission ("FERC"). Moreo- ver, with respect to state or commonwealth regulation, as one might imagine, the extent of that regulation varies by state or commonwealth.