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FERC rebuffs New Fortress challenge to jurisdiction over Puerto Rico LNG plant

July 16, 2021

S&P Global Market Intelligence ($):

The Federal Energy Regulatory Commission upheld its ruling that required New Fortress Energy Inc. to apply for a federal permit for an LNG import terminal that is already in operation in Puerto Rico, paving the way for a pending challenge by the developer to proceed at a federal appeals court.

During its monthly open meeting July 15, FERC denied a rehearing request the developer filed to the commission’s March 19 order that asserted jurisdiction over the import terminal. The July 15 document was not immediately released, but FERC Chairman Richard Glick said the order came to the same determination articulated in the original order (CP20-466).

“The majority of the commissioners still believe the project is jurisdictional to the commission under the language of the Natural Gas Act,” Glick said.

The order had directed New Fortress to file a permit application within 180 days under Section 3 of the Natural Gas Act, which gives FERC authority over LNG terminals. But commissioners declined to shut down the facility either temporarily or for good, determining that it was in the public interest to allow operations to continue during the permitting process. The lone dissenting vote was Republican Commissioner James Danly. Danly was again the only commissioner to dissent in the July 15 vote.

New Fortress Energy on May 24 petitioned the U.S. Court of Appeals for the District of Columbia Circuit to review the order. On June 29, the appeals court granted a request by FERC to suspend the appeal for 90 days or until 10 days after FERC issued a further order on rehearing, whichever happened sooner.

FERC had issued a rare show-cause order in 2020 to New Fortress that demanded an explanation for why the developer did not seek agency approval before building the facility in Puerto Rico. The developer said FERC staff had previously taken the position that the facility did not need agency approval, and it presented a series of legal and technical arguments for why the facility was not what FERC normally considered to be an LNG terminal under its jurisdiction.

The government-owned Puerto Rico Electric Power Authority signed a contract in March 2019 with New Fortress subsidiary NFEnergía LLC for converting two power generation units from running on diesel to natural gas supplied by the import facility in an estimated $1.5 billion deal. New Fortress said in regulatory filings that it expects to supply the units, which have a combined capacity of about 440 MW, with an amount of gas equivalent to about 860,000 gallons of LNG per day, or about 70,000 MMBtu per day.

[Corey Paul]

More: FERC maintains position on Puerto Rico LNG terminal amid legal challenge

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