No “Unintentional” Violation of Ethics Act Possible

Interpreting the “conflict of interest” provisions of Pennsylvania’s Ethics Act, the Supreme Court has ruled that “to violate the conflict of interest provision … a public official must be consciously aware of a private pecuniary benefit for himself, his family, or his business, and then must take action in the form of one or more specific steps to attain that benefit.”  Kistler v. State Ethics Comm’n,  __Pa. __, ___A. 2d ___ (2011) (59 MAP 2009, decided June 22, 2011).

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New Federal Insurance Office gets a Director, but will it get regulatory authority?


Michael McRaith officially began his new job earlier this month as the first Director of the Federal Insurance Office (FIO or Office) after serving for the past six years as Director of the Department of Insurance in President Obama’s home state of Illinois.  The FIO was established by the Dodd-Frank financial reform legislation of 2010 as an office within the U.S. Department of the Treasury, and represents a part of the Congressional response to concerns about the financial stability of certain large domestic insurers and their subsequent taxpayer bailouts in 2008 and 2009.  Director McRaith will report to Treasury Secretary Timothy Geithner.

At this time the FIO has only an advisory role and monitoring authority over the business of insurance, while regulatory authority remains vested at the state level.  However, the establishment of the Office has caused a great deal of speculation, both within the industry and among state regulators, regarding whether it represents a significant first step towards shifting insurance regulation to the federal level in the future.

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Commonwealth Court Upholds Commission Determination That Line Loss Costs Are Not Transmission-Related, Remands Carrying Charge Issue For Reconsideration

Last week, the en banc Commonwealth Court  upheld in Metropolitan Edison Co. v. Pa. Pub. Util. Comm’n, No. 532 C.D. 2010 (Jun. 14, 2011), the Pennsylvania Public Utility Commission’s (“Commission”) decision in two consolidated cases in which the Commission held that “marginal transmission losses” or “line losses” are generation-related costs and are not recoverable from ratepayers under the Companies’ Transmission Service Charge Riders.  In a surprising upset for the Commission, however, the court remanded the case in-part for further consideration on whether Companies should be permitted to collect carrying charges.

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PUC en banc Hearing: A Resounding Success

The PA PUC’s recent public hearing to explore the future of the competitive electricity markets in Pennsylvania was no less than a resounding success according to Chairman Robert Powelson of the Commission.

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On June 4, 2011, the PUC reduced its majority motion to a written order and has remanded the case to an Administrative Law Judge for a ruling on whether the service and terms of the partial settlement are in the public interest.  The Order essentially follows Commissioner Wayne E. Gardner’s Motion, which was joined by Chairman Robert F. Powelson and Vice-Chairman John F. Coleman, Jr. at the May 19, 2011 public meeting.  It accepted the position of Laser and other parties, such as the PUC’s Office of Trial Staff, that the service proposed by Laser will be public utility service because it will be open to any member of the public requiring service to the extent of capacity.

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FCC Clarifies Rural Telco Obligations under Sec. 251(a) and (b)

On May 26, 2011, the Federal Communications Commission (“FCC”) released an Order clarifying that telecommunications carriers with rural exemptions under the Telecommunications Act of 1996 (“Telecom Act”)  still have the obligation to  negotiate interconnection under Sec. 251(a) and (b) of the Telecom Act and that state commissions have jurisdiction to arbitrate disputes arising from those negotiations.   Specifically, the FCC reaffirmed that:

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PUC finds that Laser Northeast’s gas gathering service in the Marcellus Shale play is public utility service

On May 19, 2011, the Pennsylvania Public Utility Commission (“PUC”) voted 3-2 to approve a motion by Commissioner Wayne E. Gardner finding that Laser Northeast Gathering Company’s (“Laser”) proposed natural gas pipeline gathering service in Pennsylvania is a public utility service.

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Pennsylvania Environmental Hearing Board Determines that TMDLs are Not Subject to State Appeal

TMDLs Established by EPA, Not DEP

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PA PUC Soon to Revise Regulations to Streamline Procedures for Rate Increase Requests for Small Passenger Carriers

The Pennsylvania Public Utility Commission approved a Final Rulemaking Order at its December 2, 2010 Public Meeting that, upon implementation, will significantly streamline and simplify the record keeping and filing requirements associated with requests for rate increases by small intrastate passenger carriers.

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PUC Poised to Determine Expedited Procedure for Certain Changes to Energy Efficiency and Conservation Plans

The Pennsylvania Public Utility Commission has received comments and reply comments from various parties on its April 1, 2011 Tentative Order regarding changes to electric distribution companies’ (“EDCs”) energy efficiency and conservation plans (“EE&C Plan”) under Act 129.  See 66 Pa.C.S. § 2806.1.

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Former Insurance Department Counsel joins firm

Christopher KnightHawke McKeon and Sniscak LLP, is pleased to announce the expansion of its insurance regulatory practice, with Christopher J. Knight joining the firm as Of Counsel.

Chris spent nearly nine years as Counsel for the Pennsylvania Insurance Department as a member of the Governor’s Office of General Counsel, and will now use that experience and knowledge in his representation of insurance companies, producer licensees and other insurance-entity clients in regulatory, licensing and government compliance matters and related litigation.

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PUC Launches Investigation of Pennsylvania’s Retail Electricity Market

In a 4 to 1 vote, the Pennsylvania Public Utility Commission “officially launch[ed] the investigation of the competitiveness of the retail electric market with the goal of making recommendations for improvements to ensure a properly functioning and workably competitive retail electric market.”

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Natural Gas Pipeline Safety Bills Driven by Marcellus Shale Development In PA Move Forward

There are two natural gas pipeline safety bills pending before the Pennsylvania General Assembly: House Bill 344 and Senate Bill 325.  Each was met with overwhelming approval in the chamber in which it was proposed, and the passage of either would result in additional safety regulation of the natural gas industry in Pennsylvania by the Pennsylvania Public Utility Commission.

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Harness Racing Commission’s Denial of Intervention “Clearly Unreasonable”

Finding “clearly unreasonable” the Pennsylvania State Harness Racing Commission’s denial of flat track Philadelphia Park’s motion to intervene in harness track Harrah’s Chester’s telephone account wagering application, the en banc Commonwealth Court reversed the denial of intervention and also (in order to “right the wrong”) vacated the Commission’s order allowing Harrah’s Chester to commence operations of the new remote wagering system. Bensalem Racing Association, Inc.v. Pennsylvania State Harness Racing Commission, _A.3d ___(Pa. Cmwlth. 2011) (en banc) 1053 and 2710 C.D. 2010,
filed March 21, 2011) (Brobson, J.).

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PUC Stalls Met-Ed/Penelec Customer Education Plan

The Pennsylvania Public Utility Commission unexpectedly voted to delay implementation of the electricity shopping Customer Education Program for Metropolitan Edison Company and Pennsylvania Electric Company. The Commission was addressing an audit of the plans, which cost about $900,000 each, when it suspended implementation pending further comment from participants.  The Commission appears to be concerned that, due to lack of electric generation supplier participation in those territories, customer education about competitive alternatives may be premature.

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Pennsylvania Passes 1,000,000 Customer Mark in Competitive Electricity Market

It’s official - Pennsylvania has passed the 1 million customer mark in electricity shopping.  According to the latest weekly update on the Pa. Power Switch website (, the total number of customers switching to an electric generation supplier as of March 23, 2011, was 1,001,062.

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PUC “Opts Out” of Municipal Aggregation

The PUC has ruled unanimously that opt-out municipal aggregation programs violate the Commission’s regulations regarding the standards for changing a customer’s electricity generation supplier.

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Supreme Court Upholds Valley Forge Category 3 Slots License

Valley Forge Convention Center is a “well established resort hotel” that otherwise meets statutory licensing requirements for receipt of a Category 3 slots license, the Pennsylvania Supreme Court held in a 3-2 decision upholding the Gaming Board.

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Governor Forms Marcellus Shale Advisory Commission

Pennsylvania Governor Tom Corbett used his March 8, 2011 Budget address to announce creation of a Marcellus Shale Advisory Commission charged with developing a “comprehensive, strategic proposal for the responsible and environmentally sound development of Marcellus Shale” by July 22, 2011.

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PUC's Approval of Telephone Merger On Basis of Affirmative Public Benefits Upheld on Appeal

Rejecting a claim by Pennsylvania's  Small Business Advocate  that the PUC must treat every competitive effect of a merger "good, bad, or indifferent" as a negative to be weighed against demonstrated "affirmative public benefits," Commonwealth Court affirmed the PUC's approval of a merger that indirectly transferred control of Embarq Pennsylvania (an ILEC) and Embarq Communications (an interexchange toll reseller) to CenturyTel. Lloyd v. Pa. Pub. Utility Comm'n, __A. 3d __2011) (496 CD 2010, filed March 1, 2011) (Brobson, J.).

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