United States: FERC Denies The Applications For Certificate And Section 3 Authorization Pertaining To The Pacific Connector Pipeline And Jordan Cove LNG Terminal

In an order issued March 11, 2016, FERC denied the application of Pacific Connector Gas Pipeline, LP ("Pacific Connector") for an NGA Section 7 certificate that would have authorized the construction and operation of a 232-mile-long, 36-inch-diameter interstate pipeline in Oregon terminating at the proposed Jordan Cove LNG Terminal. FERC held that Pacific Connector had presented little or no evidence of need for the proposed pipeline, and that its generalized allegations of need did not outweigh the potential adverse impact on landowners and communities. With respect to the Jordan Cove LNG Terminal, FERC noted that while its Certificate Policy Statement does not specifically apply to facilities authorized to be constructed to export natural gas or LNG under NGA section 3, FERC is still required to conclude that authorization of such facilities will not be inconsistent with the public interest. Because the proposed Pacific Connector Pipeline was the sole proposed source of natural gas for the Jordan Cove LNG Terminal, and FERC had just denied the application relating to it, FERC also denied Jordan Cove Energy Project, L.P.'s ("Jordan Cove's") NGA Section 3 application, holding that "without a pipeline connecting it to a source of gas" the project "provide[d] no benefit to the public to counterbalance any of" the impacts associated with its proposed construction.

Jordan Cove submitted its NGA Section 3 application on May 21, 2013, seeking authorization to construct and operate an LNG export terminal and associated facilities on the North Spit of Coos Bay in Oregon. Pacific Connector submitted its NGA Section 7 application on June 6, 2013, seeking authorization to construct and operate a 232-mile-long interstate pipeline from interconnects in Oregon with pipelines operated by Ruby Pipeline LLC and Gas Transmission Northwest LLC to the Jordan Cove LNG Terminal. The pipeline project was designed to deliver up to 1.06 Bcf/d of natural gas to the Jordan Cove LNG Terminal for liquefaction and export.

On May 7, 2014, FERC staff sent Pacific Connector a data request asking the current status of (1) Jordan Cove's negotiations for liquefaction contracts and (2) Pacific Connector's actions to conduct an open season and enter into precedent agreements for pipeline capacity. Pacific Connector responded on May 15, 2014, stating that Jordan Cove had entered into non-binding Heads of Agreements with various Asian companies for liquefaction and transportation capacity, and that such Heads of Agreements generally provided for precedent agreements to be executed with Pacific Connector by October 2014, upon which Pacific Connector would conduct an open season in the October-November 2014 timeframe.

On December 5, 2014, FERC staff sent a follow-up data request. Pacific Connector responded on December 10, 2014, stating that Jordan Cove was still negotiating under the non-binding Heads of Agreements, the terms of which had been extended by parties into early 2015, and that the Heads of Agreements generally provided for pipeline precedent agreements to be executed in the first or second quarters of 2015 by those shippers choosing to make binding commitments.

On May 20, 2015, FERC staff sent a third data request. In this request, FERC staff stated that while the Commission no longer requires an applicant to present contracts for any specific percentage of proposed new capacity, contracts or precedent agreements always serve as important evidence of project demand. Pacific Connector responded on June 1, 2015, stating that it would not hold an open season in the second quarter of 2015, but would do so upon the execution of pipeline precedent agreements for at least 90 percent of the pipeline's design capacity, which it anticipated would occur prior to the end of 2015. Pacific Connector also observed that the U.S. Department of Energy ("DOE") had authorized Jordan Cove's export of LNG to free trade agreement and non-free trade agreement nations, as consistent with the public interest. Pacific Connector concluded that, because the Pacific Connector Pipeline is an integral component of the Jordan Cove LNG Terminal, the pipeline's "public benefits encompass all the public benefits of the Jordan Cove Terminal."

Finally, on October 14, 2015, FERC staff sent a fourth data request seeking updates. Pacific Connector responded on November 4, 2015, stating that negotiations between Jordan Cove, Pacific Connector and prospective customers are "active and ongoing," and that it "remains confident that these customers will enter into binding long-term [agreements]" with Jordan Cove and Pacific Connector. Pacific Connector affirmed that it would obtain executed service agreements prior to commencing construction, but did not provide an estimated date for finalizing agreements. Pacific Connector did provide information indicating that it had obtained easements for 5 percent and 3 percent, respectively, of its necessary permanent and construction rights of way.

On December 10, 2015, a representative of six intervening landowners who would be directly impacted by the pipeline filed a letter requesting that the Commission deny authorization of the pipeline given "that it does not have a single confirmed customer and has only obtained 4.7 [percent] of the right-of-way easement acreage and 2.8 [percent] of the construction easement acreage." The letter noted that if FERC authorized the pipeline, Pacific Connector could use the power of eminent domain over approximately 630 landowners, and requested that FERC weigh these impacts against Pacific Connector's failure to execute a single contract for transportation capacity. Various intervenors also requested a full evidentiary hearing to determine the pipeline project's impacts and whether its construction would be in the public interest.

In its March 11, 2016 order, the Commission found that Pacific Connector met the threshold requirement of there being no subsidization from existing pipeline customers, because it was a new pipeline and had no existing customers. With respect to the next step – analysis of the pipeline project's impact on (i) existing customers and services, (ii) competing existing pipelines, and (iii) landowners and surrounding communities, it met (i) because, again, it had no existing customers or services, and met (ii) because it would not replace firm transportation service on any other pipelines in the market.

With respect to the impact on landowners and surrounding communities, FERC found that while 41 percent of the pipeline was adjacent to existing powerlines, roads and other pipelines, 59 percent would be constructed within newly created right-of-way through forest, agricultural land and rangeland. FERC noted that the focus under its Certificate Policy Statement is on the project's impact on the relevant interests balanced against the project's benefits. "This is a proportional approach, where the amount of evidence required to establish need will depend on the potential adverse effects of the proposed project." Where sponsors of a new company proposing to serve a new market were able to acquire all necessary rights of way by negotiation, "such a project would not need any additional indicators of need . . . since landowners would not be subject to eminent domain proceedings."

FERC found that in this case the proposed pipeline would impact 157.3 miles of privately-owned lands, held by approximately 630 landowners (54 of whom had intervened), who raised claims of negative economic impacts. Pacific Connector had "presented little or no evidence of need ...." It had not "entered into any precedent agreements ...." The Commission rejected the argument that it "rely on DOE's finding that authorization of the commodity export is consistent with the public interest as sufficient to support a finding by the Commission that the Pacific Connector pipeline is required by the public convenience and necessity ...." The Commission noted that while it could bar construction from commencing under a certificate until executed contracts existed, the issuance of a certificate would allow Pacific Connector to proceed with eminent domain proceedings "in what we find to be the absence of a demonstrated need for the pipeline." FERC concluded that "the generalized allegations of need proffered" did not "outweigh the potential for adverse impact on landowners and communities."

Having denied the pipeline application, FERC concluded with respect to the Jordan Cove LNG Terminal project that "without a pipeline connecting it to a source of gas to be liquefied and exported, the proposed [project] can provide no benefit to the public to counterbalance any of the impacts which would be associated with its construction." The Commission also observed that it "has not previously authorized LNG export terminal facilities without a known transportation source of natural gas" and concluded that, in these circumstances, "authorizing [the terminal's] construction would be inconsistent with the public interest."

A copy of the order is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
Akin Gump Strauss Hauer & Feld LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Shearman & Sterling LLP
Akin Gump Strauss Hauer & Feld LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions