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11 N.J.A.R. 583

SunOlin Chemical Co. and the B.F. Goodrich Co.; South Jersey Gas Co. v
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Citation: 11 N.J.A.R. 583
Decision Date: 1982
Agency: BOARD OF PUBLIC UTILITIES
Synopsis: South Jersey Gas Company applied to the Board of Public Util- ities for injunctive relief prohibiting SunOlin from selling manufac- tured gas to a Goodrich plant in New Jersey. The matter was trans- mitted to the Office of Administrative Law as an investigation, pursuant to N.J.S./I. 5214F-5(o), rather than as a contested case. SunOlin is a Delaware corporation which delivers refinery prod- ucts to New Jersey by pipeline. It contracted with Goodrich to provide manufactured gas, a product that is used in industry but is not suitable for residential purposes. Goodrich had been obtaining natural gas from South Jersey Gas Company. South Jersey contended that the sale of gas by SunOlin to Goodrich constituted the provision of a public utility service, but SunOlin had not obtained municipal con- sents as required by N.J.S./I. 48:2-14 and 48:9-17. Further, South Jersey argued that SunOlin should be restrained from providing gas to Goodrich because that service diverted sales from South Jersey, thus lowering revenues and leading to the possibility of increased costs for South Jersey ratepayers. The main issue in the investigation before the Office of Adminis- trative Law was whether SunOlin should be considered a public utility within the meaning of N.J.S./I. 48:2-13 and therefore subject to regu- lation by the Board of Public Utilities. SunOlin contended its service was private and limited to only one customer. The administrative law judge assigned to the matter disagreed, concluding that SunOlin was in fact a public utility within the meaning of the law. The test was not how many customers SunOlin served, but rather the purposes of the Legislature in enacting laws to regulate public utilities. SunOlin's service to Goodrich would affect the public, since lost revenues to South Jersey would lead to higher rates as well as loss of tax revenues to the State. The judge recommended that SunOlin be considered a service for public use and therefore a public utility subject to regu- lation by the Board. Upon review, the Board of Public Utilities agreed with the rec- ommendations of the administrative law judge. The determination as to whether SunOlin was subject to the Board's jurisdiction should be made in light of its overall operations in New Jersey and the extent to which the public interest would be affected. Contracts like the one between SunOlin and Goodrich affect the public convenience and necessity by diverting revenue from regulated public utilities such as South Jersey Gas Company. The Board has authority to restrict such competition in order to protect the public interest. The Board ordered SunOlin to cease sales to Goodrich until such time as appropriate municipal consents have been approved. In the event that SunOlin obtains municipal consents, the question of whether SunOlin should be restrained from providing service to Goodrich would be determined in the context of a proceeding before the Board to approve the municipal consents. The Appellate Division affirmed. Ira G. Megdal, Esq. for South Jersey Gas Company (Davis, Reberken- ny & Abramowitz, attorneys) Michael T, Mishkin, Esq., member of Washington, D.C. bar, admitted pro hac vice, for SunOlin Chemical Company and the B.F. Goodrich Company (Squire, Sanders & Dempsey, attorneys) Attorney of Record: Richard C. Cooper, Esq. Allen Washington, Deputy Attorney General, for the Staff of the Board of Public Utilities (W. Cary Edwards, Attorney General of the State of New Jersey, attorney) Claude E. Salomon, Deputy Attorney General, for the Department of Commerce and Economic Development (W. Cary Edwards, At- torney General of the State of New Jersey, attorney) James M. Hirshborn, Esq., and Menasha J. Tausner, Esq., for the Department of the Public Advocate, Division of Rate Counsel (Alfred A. Slocum, Public Advocate, attorney) James R. Lacey, Esq., and Shawn P. Leyden, Esq., for Public Service Electric & Gas Company Mary Patricia Keefe, Esq., and Paul J. Chymiy, Esq., for Eliza- bethtown Gas Company State of New Jersey 585 Kenneth P. Westreich, Esq., for New Jersey Natural Gas Company (Conway, Reisman, Mattia & Sharp, attorneys) William R. Watkins, Esq., for New Jersey Industrial Energy Users (Lindabury, McCormick & Estabrook, attorneys) Keith R. McCrea, Esq., for the Industrial Customer Group (Squire, Sanders & Dempsey, attorneys)
Statute(s) Cited: 48:2-13 48:2-14 48:9-17 
Citation Tracker adopted-Bd. of Public Utilities; affirmed -226 N.J. Super. 327 (App. Div. 1988); affirmed -l16 N.J. 251 (1989) [Updated through 1991]