On June 18, 2020, FERC issued an order directing New Fortress Energy LLC (“New Fortress Energy”) to show cause, within 30 days, why the liquified natural gas (“LNG”) handling facilities it constructed adjacent to the San Juan Combined Cycle Power Plant in San Juan, Puerto Rico, are not subject to FERC’s jurisdiction under section 3 of the Natural Gas Act (“NGA”).

FERC became aware that New Fortress Energy constructed a facility that includes a receiving pier for an LNG carrier; skid mounting regasification units; an LNG hose that connects to the LNG carrier; a truck loading facility; and potentially, small capacity onshore LNG storage. Additionally, the order explains that the facilities are likely to include piping from the regasification units to deliver natural gas to the adjacent power plant and that LNG carriers will likely dock at the facility for several days, while supplying LNG directly, or with limited onshore buffer storage, to trucks and the power plant through regasification units.

Section 3(e)(1) of the NGA grants FERC “the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal,” as defined by section 2(11) of the NGA. In its order, the Commission explains that, for purposes of determining its jurisdiction, the facilities that it has viewed as “LNG terminals” have been:  (1) connected to a pipeline that delivers gas to and from the facility; and (2) located at the point of import or export, allowing LNG to directly transfer to and from an ocean-going, bulk-carrier LNG tanker. The order finds that New Fortress Energy’s facilities appear to meet these criteria and are similar to other LNG import facilities that the Commission has exercised its jurisdiction, including two facilities in Puerto Rico.

FERC noted that New Fortress Energy’s facilities are different from those FERC has concluded were non-jurisdictional. It also determined that New Fortress Energy’s facilities do not fit into any of the categories of facilities that are explicitly excluded from the definition of an “LNG terminal” under NGA section 2(11), including: (1) facilities where LNG is subsequently shipped via vessel, truck, or train, in lieu of a pipeline; (2) inland LNG facilities that are unable to directly load LNG onto ocean-going bulk carriers for transfer; or (3) proposals where there are no dedicated LNG facilities.

The order explains that, because New Fortress Energy’s newly constructed facilities in San Juan directly offload LNG from tankers, regasify the LNG, and transport the natural gas to an adjacent power plant, likely via a short pipeline, these facilities are subject to FERC jurisdiction. As a result, FERC directed New Fortress Energy to show cause within 30 days why its facilities are not required to comply with the prior authorization requirement in NGA section 3.

Click here to read the order.