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In re Petition of South Jersey Gas Company Against Sunolin Chemical Company

Decided: July 6, 1988.

IN MATTER OF THE PETITION OF SOUTH JERSEY GAS COMPANY AGAINST SUNOLIN CHEMICAL COMPANY AND THE B.F. GOODRICH COMPANY


On appeal from the New Jersey Board of Public Utility Commissioners.

Furman, Brody and Scalera. The opinion of the court was delivered by Scalera, J.A.D.

Scalera

This case involves a consideration of the right of the New Jersey Board of Public Utility Commissioners (Board) to assume jurisdiction to regulate as a public utility the activities of a supplier of methane-rich fuel in this State.

SunOlin Chemical Company (SunOlin) and B.F. Goodrich (Goodrich) are appealing the decision of the Board holding that SunOlin is a public utility because it is providing such product "for public use." We affirm.

SunOlin is a chemical company that processes refinery "off gasses" into industrial gasses like hydrogen and ethylene. In so doing, it also produces a methane-rich gas that can be burned as fuel in place of natural gas. In 1986 SunOlin entered into a contract to sell this type of fuel to Goodrich. As a result, on February 13, 1987, South Jersey Natural Gas (So. Jersey) filed a petition with the Board seeking to restrain this sale to

Goodrich, to which So. Jersey had previously sold natural gas as a fuel.

The Board transmitted the matter to the Office of Administrative Law for a determination of whether SunOlin was a public utility subject to the jurisdiction of the Board. Intervenor status was accorded to several public utilities as well as others, including the rate counsel from the Public Advocate, the Department of Commerce and Economic Development, New Jersey Industrial Energy Users, the Industrial Customer Group, Public Service Electric and Gas Company (PSE & G), New Jersey Natural Gas Company (N.J. Natural Gas) and Elizabethtown Gas Company (Elizabethtown).

SunOlin stipulated before the Administrative Law Judge (ALJ) both that it "owns, operates, manages or controls pipeline or gas system, plant or equipment in the State of New Jersey" and further that it "operates under privileges granted by this state or a political subdivision thereof" as provided by N.J.S.A. 48:2-13. Thus, the only remaining issue became whether its activities amounted to a "public use" as required by that statute for the Board to acquire jurisdiction. On June 10, 1987, the ALJ issued his initial report in which he recommended that the Board treat SunOlin as a public utility within the meaning of N.J.S.A. 48:2-13.

The Board followed this recommendation commenting that SunOlin's activities were "clothed in the public interest to such an extent as to require" its regulation and ordered SunOlin to cease and desist from sales of such methane-rich fuel in New Jersey without Board approval. This appeal follows and involves the participation of various parties as noted by their appearances above.

So. Jersey is a regulated public utility engaged in natural gas distribution in all or part of the seven southern counties of the State, serving 180,000 customers, of which 16 are large-volume industrial customers. Its total gas sales revenue for 1986 was

approximately $220 million and its net income for that year was approximately $10 million.

Goodrich's Pedricktown plant, which manufactures polyvinyl chloride resins and acrylic latexes, is located within So. Jersey's franchised territory. The plant has been purchasing gas from So. Jersey for use in its process dryers on a non-interruptible basis under a large-volume tariff and also uses interruptible gas in its boilers.

SunOlin operates its facility in Claymont, Delaware, adjacent to the Sun Refining and Marketing Company's Marcus Hook, Pennsylvania refinery. It processes refinery off-gasses into ethylene, ethylene oxide, hydrogen, carbon monoxide and carbon dioxide. Incident thereto, it also harvests a quantity of salable methane-rich material, the subject of the present controversy. SunOlin also owns a pipeline system consisting of eight lines running across the Delaware river into New Jersey, one of which was a spare six-inch stainless steel line. This pipe now carries the methane-rich fuel to Goodrich and ...


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