FERC gets inland LNG half right, for Puerto Rico, and maybe more soon 2021-03-18

FERC actually told New Fortress Energy (NFE) it has 180 days to file an application for authorization to operate its Puerto Rico liquid natural gas (LNG) facility. I’m happy to admit I did not expect this.

[FERC Order and WWALS LNG facilty map]
FERC Order and WWALS LNG facilty map

Yet FERC failed to tell NFE to shut down meanwhile: “We also find that allowing operation of the facility to continue during the pendency of an application is in the public interest.” Translation: it would cost a fossil fuel company income.

But the best part is in a concurring letter.

[174 FERC ¶ 61,207 ORDER ON SHOW CAUSE, New Fortress Energy LLC, Docket No. CP20-466-000]
174 FERC ¶ 61,207 ORDER ON SHOW CAUSE, New Fortress Energy LLC, Docket No. CP20-466-000

New FERC Chair Richard Glick and new Commission Allison Clements want to revisit the bad 2014 and 2015 abidication by FERC of oversight of inland LNG facilities, says their concurring letter on page 18:

  1. We concur in today’s order finding New Fortress Energy LLC’s (New Fortress Energy) liquefied natural gas (LNG) facility subject to the Commission’s jurisdiction under section3 of the Natural Gas Act (NGA). We write separately to explain our view that it is time to reconsider our precedent in Shell U.S. Gas & Power, LLC (Shell), which held that a facility must be connected to a pipeline to be a jurisdictional LNG terminal.1
  2. There is no such limitation in the plain language of the NGA. Section 3(e)(1) of the NGA states that “[t]he Commission shall have the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal.”2 NGA section 2(11), which was added to the NGA in 2005, defines an LNG terminal as: “all natural gas facilities located onshore or in State waters that are used to receive, unload, load, store, transport, gasify, liquefy, or process natural gas that is imported to the United States . . . , exported to a foreign country . . . , or transported in interstate commerce by waterborne vessel, but does not include— (A) waterborne vessels used to deliver natural gas to or from any such facility; or (B) any pipeline or storage facility subject to the jurisdiction of the Commission under [section 7].”3
  3. Nowhere does the statute say that a facility must be connected to a pipeline to qualify as an LNG terminal and, thus, come within the Commission’s jurisdiction under section 3. 4 We should revisit Shell to ensure that we are carrying out our statutory responsibilities under the letter of the law.

For these reasons, we respectfully concur.

1 Shell U.S. Gas & Power, LLC, 148 FERC ¶ 61,163, P 43 (2014).

2 15 U.S.C. § 717b(e)(1) (2018).

3 15 U.S.C. § 717a(11).

4 See Lomax v. Ortiz-Marquez, 140 S. Ct. 1721, 1725 (2020) (“[T]his Court may not narrow a provision’s reach by inserting words Congress chose to omit.”): Virginia Uranium, Inc. v. Warren, 139 S. Ct. 1894, 1900 (2019) (plurality opinion) (The Court’s “duty [is] to respect not only what Congress wrote but, as importantly, what it didn’t

[Time to reconsider our precedent: GLICK, Chairman, and CLEMENTS, Commissioner, concurring]
Time to reconsider our precedent: GLICK, Chairman, and CLEMENTS, Commissioner, concurring

The body of the Order also agonizes over Pivotal II, the 2015 FERC Order involving Pivotal LNG’s liquefaction facilities in Georgia, Alabama, and Tennessee, which have LNG bomb trucks rolling down I-75 across our Withlacoochee and Suwannee Rivers through Georgia and Florida to send to Puerto Rico via Jacksonville, Florida.12

12 See Pivotal LNG, Inc., 151 FERC ¶ 61,006 (2015) (Pivotal II) (finding that inland liquefaction facilities that transport ISO containers by truck to the point of export are not LNG terminals).

FERC now says that Pivotal II does not disqualify NFE’s Puerto Rico facility from FERC oversight; see page 7, paragraph 17:

  1. … In Pivotal II, the Commission determined that if certain inland liquefaction facilities produce LNG that would subsequently be exported, those inland facilities would not be jurisdictional LNG terminals.22 However, that case is distinguishable from New Fortress Energy’s facility because the facilities at issue in Pivotal II were located over one hundred miles from the point of export and LNG was not capable of being directly transferred from the facilities onto an ocean-going LNG tanker. Instead, the LNG would be transported to the ultimate point of export by truck or tanker.23 Here, New Fortress Energy’s waterside LNG facility connects directly to an LNG vessel via a hose.

22 Pivotal II, 151 FERC ¶ 61,006.

23 Id. P 12.

So riddle me this: if NFE’s Puerto Rico LNG facility is importing LNG, how is it that Pivotal LNG’s liquefaction facilities are not exporting LNG?

  1. We conclude that New Fortress Energy’s facility is located at the point of import and is unlike the inland facilities the Commission has previously found to be non-jurisdictional….

This paragraph could be bad news for Strom Inc.’s Crystal River LNG facility, which many have speculated could be planning to use small vessels to export via Duke’s old coal power plant barge canals:

  1. New Fortress Energy also asserts that LNG tankers are commonly understood to be of a particular size and the vessels used in its operation are much smaller.24 Thus, New Fortress Energy concludes that its facility is not capable of directly transferring LNG from an ocean-going, bulk-carrier LNG tanker.25 While the Commission has noted that it has thus far only exercised its jurisdiction over facilities located at the point of import or export such that LNG is directly transferred to or from an ocean-going, bulk-carrier LNG tanker, those statements were meant to distinguish dedicated LNG tankers from general use cargo ships that may transport LNG-filled ISO containers.26 New Fortress Energy’s assertion that an LNG carrier must be a certain size is without merit and contrary to the NGA, which, as stated above, contains no minimum size limits under the definition of LNG terminal27 or in section 3 or 7.

24 New Fortress Energy July 20, 2020 Answer at 35-38.

25 Id. at 38.

27 Section 2(11) of the NGA only uses the term waterborne vessel, and contrary to New Fortress Energy’s argument, a “pocket-sized” LNG vessel is still an ocean-going, bulk-carrier LNG tanker.

That paragraph and this one could be bad news for Eagle LNG’s Jacksonville facility, which uses a special barge to load LNG:

  1. Nor does the NGA exempt facilities that rely on a chain of transfers from ocean-going vessels to smaller ocean-going vessels to avoid the Commission’s jurisdiction.28 Adopting such an approach would undermine the NGA’s purpose of providing Commission oversight of the siting and construction of LNG terminals. For example, a developer could construct an LNG export terminal that includes liquefaction, storage, and other facilities typically found at LNG terminals, but avoid the Commission’s jurisdiction by building a dock capable of having two ships moored to it and routing LNG through one of the vessels before transferring it to the vessel that would ultimately export it.

28 As the NGOs note in their protest, the vessels used as FSUs are ocean-going LNG tankers. NGOs July 31, 2020 Protest at 23-24.

And maybe it’s time for FERC to finally send an ORDER TO SHOW CAUSE to NFE about its Miami LNG facility, which in response to WWALS FOIAs FERC has admitted it never contacted NFE about.

It’s interesting that FERC considered Puerto Rico as importing LNG, even though PR is part of the U.S. But what about NFE’s imports to Mexico, Nicaragua, and Jamaica? Who is this unnamed supplier that NFE sign with to get that LNG?

[Map: LNG export and import to islands]
Map: LNG export and import to islands
in the WWALS Map of LNG export opertions.

Yes, we are still accepting donations to our legal fund to get FERC to take up LNG export oversight.

 -jsq, John S. Quarterman, Suwannee RIVERKEEPER®

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