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Appeals court urged to maintain federal regulatory jurisdiction over LNG terminal in San Juan


In March 2019, New York-based New Fortress Energy began constructing a new liquefied natural gas import terminal with the associated gas processing infrastructure and pipeline to the nearby San Juan power plant.

By The Star Staff


The environmental group Earthjustice is urging the D.C. Circuit Court of Appeals to maintain Federal Energy Regulatory Commission (FERC) jurisdiction over a New Fortress liquified natural gas (LNG) terminal in the San Juan Bay area.


Last week, the D.C. Circuit Court of Appeals heard oral arguments from New Fortress in its appeal of FERC’s order finding that the LNG terminal is subject to its jurisdiction and that New Fortress must retroactively apply for and comply with a permit.


“We hope that the D.C. Circuit will uphold the ruling and impress the importance of consulting with surrounding communities and conducting rigorous environmental and safety analyses before charging forward with more dangerous and unneeded fossil projects,” the entity said.


In March 2019, New York-based New Fortress Energy began constructing a new liquefied natural gas (LNG) import terminal with the associated gas processing infrastructure and pipeline to the nearby San Juan power plant.


Several community groups wrote a letter demanding that FERC take jurisdiction over “the illegally constructed and operated terminal.” FERC opened an investigation. Earthjustice represented local organizations and worked with the Electrical Industry and Irrigation Workers’ Union (UTIER by its Spanish acronym) to convince FERC to take jurisdiction over what they called an “unaffordable, unreliable terminal.” FERC agreed with the groups and New Fortress appealed FERC’s order finding jurisdiction over the terminal to the D.C. Circuit Court of Appeals.


New Fortress lawyer Shay Dvoretzky argued at a hearing last week that FERC’s ruling went against court precedent that allows the federal entity to take over if the project includes the construction of a pipeline. New Fortress said the facility’s 75-foot pipe is not a pipeline.


The facility imports LNG from a floating storage vessel through a hose; revaporizes it; and sends it next door through a 75-foot-by-10-inch pipe to a power plant owned and operated by the Puerto Rico Electric Power Authority (PREPA).


“Both industry and common usage, plus FERC’s own precedent, make clear that pipelines are large-scale systems designed to transport large quantities of gas long distances. Pipelines travel for miles, often hundreds. New Fortress’s pipe couldn’t make it to first base,” New Fortress argued.


Before New Fortress broke ground, lawyers said they consulted FERC staff about whether the facility would be an “LNG terminal” subject to FERC regulation under the Natural Gas Act.


“The answer was a resounding no,” lawyers said. “And because no gas at New Fortress’s proposed facility would move through a pipeline, FERC staff told New Fortress, PREPA, and the U.S. Coast Guard that the facility would not be subject to FERC jurisdiction. So New Fortress built the facility, contracted with PREPA, and began operating.”


FERC’s lawyer Robert Solomon argued that the Natural Gas Act declares that “Federal regulation in matters relating to the transportation of natural gas and the sale thereof in interstate and foreign commerce is necessary in the public interest.”


When that importation involves gas in a liquid state, FERC is vested with exclusive jurisdiction to review and “approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal,” FERC argued.


“Here, New Fortress’ facility receives liquefied natural gas from overseas and distributes it in liquid form via truck, and in a gaseous state through a pipeline running to the neighboring San Juan Power Plant,” the regulator argued. “Applying its established precedent, the Commission found that New Fortress’ facility constituted a FERC-jurisdictional LNG terminal.”

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