New Fortress Energy Inc. v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 10, 2022 Decided June 14, 2022
No. 21-1122
NEW FORTRESS ENERGY INC.,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
Consolidated with 21-1157
On Petitions for Review of Orders
of the Federal Energy Regulatory Commission
Shay Dvoretzky argued the cause for petitioner. With him
on the briefs were John S. Decker, John N. Estes III, William
R. Barksdale, Parker A. Rider-Longmaid, and Kyser Blakely.
Robert H. Solomon, Solicitor, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on the
brief were Matthew R. Christiansen, General Counsel, and
Robert M. Kennedy, Senior Attorney.

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Raghu Murthy was on the brief for amici curiae El Puente
de Williamsburg, Inc.- Enlace Latino de Accion Climatica, et
al. in support of respondent.
Before: TATEL*, MILLETT, and PILLARD, Circuit Judges.
Opinion for the court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: Can a 75-foot pipe be a pipeline?
The Federal Energy Regulatory Commission thinks so.
Because petitioner has given us no basis to question that
judgment, we deny the petitions for review.
I.
The Natural Gas Act (NGA) vests the Commission with
broad authority to regulate the transportation and sale of natural
gas. 15 U.S.C. § 717 et seq. Section 7 prescribes a regulatory
framework for natural gas facilities engaged in interstate
commerce. See id. § 717f; Minisink Residents for
Environmental Preservation and Safety v. FERC, 762 F.3d 97,
101 (D.C. Cir. 2014) (discussing the Commission’s “broad
authority to regulate the transportation and sale of natural gas
in interstate commerce”). Section 3 governs the import and
export of natural gas, as well as the construction and operation
of certain liquefied natural gas (LNG) facilities. See 15 U.S.C.
§ 717b; Sierra Club v. FERC, 827 F.3d 36, 40–41 (D.C. Cir.
2016) (describing the Commission’s authority over natural gas
facilities and the Department of Energy’s authority over natural
gas as a commodity).
As relevant here, section 3 gives the Commission
“exclusive authority to approve or deny an application for the
* Judge Tatel assumed senior status after this case was argued and
before the date of this opinion.

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siting, construction, expansion, or operation of an LNG
terminal.” 15 U.S.C. § 717b(e)(1). The Act defines “LNG
terminal[s]” 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 from a foreign country,
exported to a foreign country from the United States,
or transported in interstate commerce by waterborne
vessel.
Id. § 717(a)(11). Notwithstanding this “broad definition,”
the Commission has interpreted its jurisdiction over LNG
terminals to extend only to natural gas facilities “that receive
[or] send out gas by pipeline,” not those that receive or send
out gas by “waterborne vessels, trucks, [or] trains.” Shell U.S.
Gas & Power, LLC, 148 FERC ¶ 61,163, P 43 (2014); see
Pivotal LNG, Inc., 151 FERC ¶ 61,006, P 11 (2015) (LNG
terminals “must be . . . connected to a pipeline that delivers gas
to or sends gas from the facility.”); Emera CNG, LLC, 148
FERC ¶ 61,219, P 13 (2014) (same). This pipeline requirement,
the Commission explained in Shell U.S. Gas & Power, stems
from the Act’s “legislative history,” which “indicates that
Congress recognized pipelines as the only method of
transporting gas in 1938 when it enacted the NGA, that
Congress did not then foresee the transportation of gas by
means other than pipeline, and that Congressional intent in the
NGA was to regulate pipelines, not all modes of transporting
gas.” 148 FERC ¶ 61,163 at P 40; see United Distribution Cos.
v. FERC, 88 F.3d 1105, 1122 (D.C. Cir. 1996) (per curiam)
(“Federal regulation of the natural gas industry [was] . . .
designed to curb pipelines’ potential monopoly power over gas
transportation.”).

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This case concerns the Commission’s application of its
pipeline requirement to an LNG handling facility in San Juan,
Puerto Rico. New Fortress Energy LLC (Original Order), 174
FERC ¶ 61,207, P 1 (2021); New Fortress Energy LLC
(Rehearing Order), 176 FERC ¶ 61,031, P 1 (2021). The
facility, constructed and operated by New Fortress Energy
LLC, receives LNG from a floating storage unit moored at San
Juan Harbor which, in turn, receives LNG from shuttle vessels
that deliver LNG imports from ocean-going, bulk-carrier
tankers. Original Order, 174 FERC ¶ 61,207 at P 3. The
facility gasifies a portion of this imported LNG and then sends
it to the abutting San Juan Power Plant via a 75-foot, 10-inch-
diameter pipe. Id. at PP 4–5. The facility also transports LNG
to industrial customers via truck. Id. at P 4.
While constructing the facility, New Fortress received
“informal advice” from Commission staff suggesting the
Commission would not assert jurisdiction. See 18 C.F.R.
§ 388.104. Under Commission regulations, such “opinion[s]”
do “not represent the official views of the Commission,” id.,
and shortly after the facility began operating, the Commission
issued an order to show cause why the facility is not subject to
Commission jurisdiction as an LNG terminal operating in
foreign commerce. In response, New Fortress argued among
other things that the 75-foot pipe is not a “pipeline,” but the
Commission disagreed, finding the facility “connected to a
pipeline” because the pipe “sends out gas” to San Juan Power
Plant. Original Order, 174 FERC ¶ 61,207 at PP 22, 28.
Commissioner Danly dissented, arguing that the Commission’s
decision nullifies its pipeline requirement and replaces it with
an “‘any type of piping’” requirement. Id. at PP 7–8 (Danly,
Comm’r, dissenting). The Commission denied rehearing by
operation of law due to its inaction, and New Fortress
petitioned for review. The Commission then issued an order
addressing and rejecting each of New Fortress’s rehearing

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arguments. Rehearing Order, 176 FERC ¶ 61,031 at PP 6–23.
New Fortress again petitioned for review, and we consolidated
the petitions.
II.
New Fortress mounts several challenges to the
Commission’s decision, most of which boil down to a single
argument: the Commission engaged in arbitrary-and-
capricious decisionmaking by rewriting Shell’s pipeline
requirement without “acknowledg[ing] its departure from
precedent” or “provid[ing] a reasoned explanation for the
departure.” Pet’r’s Br. 40; see 5 U.S.C. § 706(2)(A).
When an agency deviates from its own precedent, it must
“‘display awareness that it is changing position,’ show ‘the
new policy is permissible under the statute,’ and ‘show that
there are good reasons for the new policy.’” Baltimore Gas &
Electric Co. v. FERC, 954 F.3d 279, 286 (D.C. Cir. 2020)
(quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502,
515–16 (2009)). Here, however, the Commission’s decision is
perfectly consistent with its case law. As required by the
Administrative Procedure Act, the Commission adequately
justified its application of “existing policy” by “explain[ing]
how [its decision] coheres with previous decisions.” Id.; see
Automated Power Exchange, Inc. v. FERC, 204 F.3d 1144,
1146 (D.C. Cir. 2000) (rejecting arbitrary-and-capricious
challenge where the Commission “explained why its decision”
was “in harmony with its relevant precedent”).
In Shell, the flagship Commission decision articulating the
pipeline requirement, the Commission explained that “its
section 7 jurisdiction over gas in interstate commerce is limited
to gas transported by pipeline, and consequently [it] has only
asserted section 7 jurisdiction over pipeline facilities used to
transport gas in interstate commerce and facilities used to store

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gas . . . that is being transported in interstate commerce by
pipeline.” Shell, 148 FERC ¶ 61,163 at P 38. “Similarly,” the
Commission continued, “[it] has only exercised its section 3
authority over the siting of facilities used for imports or exports
. . . when gas is being moved by pipeline.” Id. at P 39. The
Commission concluded that it lacked section 3 jurisdiction over
Shell’s LNG import facility because it included “no pipeline
interconnections” and, instead, used ships, trucks, and trains to
transport natural gas. Id. at P 43. Following Shell, the
Commission reiterated that an LNG import or export facility,
in order to be subject to section 3 jurisdiction, must be
“connected to a pipeline that delivers gas to or sends gas from
the facility.” Pivotal, 151 FERC ¶ 61,006 at P 11; accord
Emera, 148 FERC ¶ 61,219 at P 13.
In determining whether New Fortress’s LNG handling
facility constitutes an “LNG terminal,” the Commission
discussed Shell at length and explained why exercising
jurisdiction in this case comports with Shell. Original Order,
174 FERC ¶ 61,207 at PP 22–24; Rehearing Order, 176 FERC
¶ 61,031 at PP 14–15, 19–20. In Shell, the Commission
recounted, the import facility “would not connect to a pipeline
(or piping) of any type; [it] would receive LNG by ship and
subsequently transport the imported LNG by ship, truck, or
train.” Rehearing Order, 176 FERC ¶ 61,031 at P 14. Thus, the
Commission’s “finding . . . that the [import facility] was non-
jurisdictional . . . was based on the absence of piping of any
kind that would enable the [import facility] to receive natural
gas for liquefaction or to send out natural gas as revaporized
LNG.” Id. Because New Fortress’s LNG handling facility
“sends out gas” via pipe, the Commission explained, it bears
little resemblance to the import facility in Shell over which the
Commission lacked jurisdiction. Original Order, 174 FERC
¶ 61,207 at PP 22, 28.

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New Fortress insists that the short “pipe” connecting its
facility to San Juan Power Plant is not a “pipeline,” observing
that in Shell, the Commission declined to exercise jurisdiction
over a domestic liquefaction facility in Louisiana that moved
gas to adjacent industrial customers using “‘short segments of
pipe.’” Pet’r’s Br. 38 (quoting Shell, 148 FERC ¶ 61,163 at
P 26). As to the domestic Louisiana facility, the Commission
did not address its Section 3 authority over LNG facilities that
“transport . . . natural gas that is imported to the United States
from a foreign country” or “exported to a foreign country from
the United States.” 15 U.S.C. § 717a(11); see Shell, 148 FERC
¶ 61,163 at P 44. Rather, the Commission considered its
Section 7 authority over interstate commerce, as well as its
Section 3 authority over LNG facilities that “transport
. . . natural gas that is . . . transported in interstate commerce by
waterborne vessel.” 15 U.S.C. § 717a(11); see Shell, 148 FERC
¶ 61,163 at PP 44, 46. Thus, as the Commission explained in
its order denying rehearing, the jurisdictional status of the
Louisiana facility turned “not . . . on the physical
characteristics of any piping connected to the facility,” but
rather on “the fact that the facility . . . would not contribute to
the further transportation of gas in interstate commerce.”
Rehearing Order, 176 FERC ¶ 61,031 at P 20 (emphasis
added); see Shell, 148 FERC ¶ 61,163 at PP 46–47 (Because
the Louisiana facility “will not liquefy gas in order for it to be
transported to a downstream pipeline, . . . [the facility] will not
be transporting gas in interstate commerce” subject to the
Commission’s section 3 or section 7 jurisdiction). The pipe that
delivered gas to industrial customers “related only to this
consideration, which is irrelevant to whether New Fortress[’s]
facility is an LNG terminal operating in foreign commerce.”
Original Order, 174 FERC ¶ 61,207 at P 25 (emphasis added).
Relatedly, New Fortress argues that the Commission’s
section 3 pipeline requirement is identical to its section 7

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requirement, which, according to New Fortress, limits
Commission jurisdiction to facilities connected to larger
pipeline “system[s]” or “grid[s].” Pet’r’s Br. 41–42 (internal
quotation marks omitted); see id. at 58–59. As the Commission
explained, however, sections 3 and 7 are not interchangeable.
Rehearing Order, 176 FERC ¶ 61,031 at P 18. Because section
7 applies only to facilities operating in interstate commerce,
jurisdiction thereunder requires interconnection with an
“interstate pipeline.” Shell, 148 FERC ¶ 61,163 at P 38; see
Rehearing Order, 176 FERC ¶ 61,031 at P 11 (noting that the
Commission has declined to exercise section 7 jurisdiction
when “none of the [facility’s] regasified LNG would be
reintroduced into an interstate pipeline”). Section 3, as applied
to import and export facilities, requires only that the facility
“connect[s] to piping which enables the facility to receive . . .
or send out [natural gas].” Rehearing Order, 176 FERC
¶ 61,031 at P 15; accord Pivotal, 151 FERC ¶ 61,006 at P 11;
Emera, 148 FERC ¶ 61,219 at P 13. Moreover, the
Commission made quite clear that its prior references to
“pipeline grid[s]” should not be construed as “placing
particular emphasis on the importance of the physical . . .
characteristics of the facility’s connection to piping.”
Rehearing Order, 176 FERC ¶ 61,031 at P 15. Indeed, the
Commission has stated that, even under section 7, “[t]he length
of pipe . . . is irrelevant in determining whether [a] facility is
jurisdictional.” Shell, 148 FERC ¶ 61,163 at P 38 n.71; see id.
at P 28 (emphasizing that Section 7 jurisdiction requires the
“flow of natural gas in an interstate pipeline system”).
New Fortress mounts several other unsuccessful
challenges to the Commission’s decision. First, it argues that
the Commission failed to consider New Fortress’s and
dissenting Commissioner Danly’s proposal to “treat pipes and
pipelines differently.” Pet’r’s Br. 49. The Commission,
however, reasonably rejected this proposal. Rehearing Order,

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176 FERC ¶ 61,031 at P 10. Reiterating that the pipeline
requirement for LNG facilities operating in foreign commerce
turns on whether piping “enables the facility to receive . . . or
send out [natural gas],” the Commission explained that the
“distinctions between pipeline and piping” are immaterial to
this determination. Id. at P 15 (first quote); id. at P 10 (second
quote). The physical characteristics of piping are merely “a
function of the volume of LNG to be imported or exported and
the relative distance between the LNG terminal and the
ultimate end-user.” Original Order, 174 FERC ¶ 61,207 at
P 23. The Commission also pointed out that it “has never
considered” a pipeline’s physical characteristics when
determining whether a facility is an LNG import or export
terminal. Id.; accord Rehearing Order, 176 FERC ¶ 61,031 at
P 10. Such a formulation of the pipeline requirement, the
Commission cautioned, “could lead to the result that the
Commission’s jurisdiction would not attach to a large-scale
LNG export terminal that receives natural gas directly from
nearby production and gathering facilities or an import facility
directly connected to a large local distribution company.”
Original Order, 174 FERC ¶ 61,207 at P 23.
Next, New Fortress asserts that “labeling a 75-foot pipe as
a pipeline” is “at odds with industry usage, precedent, and
ordinary English,” which, in its view, describe pipelines as
miles-long, large-scale transportation systems. Pet’r’s Br. 60–
61. This argument, however, simply reprises New Fortress’s
contention that the pipeline requirement turns on the physical
characteristics of the piping, an interpretation that the
Commission reasonably rejected.
New Fortress then claims that Shell engendered reliance
interests that the Commission failed to consider before
“changing its policy.” Pet’r’s Br. 35, 46–48. But because the
Commission’s orders reasonably applied Shell, rather than

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departing from it, the Commission had no obligation to
consider reliance interests. See MediNatura, Inc. v. FDA, 998
F.3d 931, 940 (D.C. Cir. 2021) (explaining that, “[w]hen an
agency changes policy,” it must consider reliance interests
engendered by its prior policy).
Finally, New Fortress contends that the Commission’s
“new ‘any type of piping’ test” is “too broad . . . to be
plausible” and “‘offers no meaningful guidance’” on the scope
of jurisdiction over regulated parties. Pet’r’s Br. 38 (first
quote); id. at 62 (second quote); id. at 55 (third quote) (quoting
U.S. Postal Service v. Postal Regulatory Commission, 787 F.3d
740, 754 (D.C. Cir. 2015)). Once again, the Commission
created no new test, instead applying its well-established
requirement that LNG import and export terminals must be
connected to a pipeline that “delivers gas to or sends gas from
the facility.” Pivotal, 151 FERC ¶ 61,006 at P 11; accord
Emera, 148 FERC ¶ 61,219 at P 13; Rehearing Order, 176
FERC ¶ 61,031 at P 15. Contrary to New Fortress’s assertions,
this standard does not bring “every” LNG facility within the
Commission’s jurisdiction. Pet’r’s Br. 62. It simply establishes
jurisdictional boundaries based on the pipeline’s role in
transporting gas to or from the facility rather than the pipeline’s
physical characteristics.
III.
Several environmental, community, and labor
organizations filed an amicus brief urging that we deny New
Fortress’s petitions on the grounds that, under the “plain
meaning of the [NGA],” jurisdiction “does not turn on the
presence of a pipeline.” Amicus Br. 10–11. But this issue was
not raised by New Fortress, “the only petitioner before the
Court,” Edison Electric Institute v. OSHA, 849 F.2d 611, 625
(D.C. Cir. 1988), nor meaningfully addressed by either party as

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their principal briefs preceded amici’s. If amici wished to
challenge the validity of the pipeline requirement under the
statute, they “should have done so by filing a petition for
review properly raising the issue.” Id.
IV.
For the foregoing reasons, we deny the petitions for
review.
So ordered.

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