FERC Rules on LNG Jurisdictional Questions

FERC has issued an order on Pivotal LNG’s request that FERC rule that Pivotal’s and its affiliates’ liquefaction of natural gas and sales for resale of LNG that will be delivered solely by non-pipeline modes of transportation to end users will not constitute FERC jurisdictional transportation or sales of natural gas and that their LNG facilities will not be deemed LNG terminals.  FERC ruled that: (1) Pivotal’s described transportation of LNG by non-pipeline means will not be subject to its jurisdiction; (2) certain of Pivotal’s sales for resale may be subject to its jurisdiction, and if so, would be authorized under FERC’s automatic blanket sales certificate; and (3) Pivotal’s LNG liquefaction and storage facilities will not become “LNG terminals” subject to FERC’s jurisdiction as a result of sending out LNG by surface vehicle that is subsequently transferred to and transported by waterborne vessel to another state.

FERC also issued an order on Shell U.S. Gas & Power’s (Shell) request that, pursuant to the exemption in section 1(d) of the Natural Gas Act (NGA) for the transportation and sale of natural gas that will be used as vehicular fuel, Shell will not be subject to FERC’s NGA jurisdiction as a result of its importing LNG from Canada, liquefying domestic gas, and transporting Canadian and domestic LNG by non-pipeline modes between states for the purpose of selling the LNG for use as vehicular fuel, with any excess LNG being sold as fuel for non-vehicular uses.  FERC ruled that Shell’s transportation and sales of LNG will not be subject to FERC’s jurisdiction under NGA section 7 since that section covers sales and transportation only by interstate pipeline or under section 3 since the import facilities would not involve pipeline facilities.