United States: Trump Administration Pronouncements On Authorization Of Jordan Cove LNG Project Could Raise Issues Before The Senate And In The Courts

Since the resignation of Federal Energy Regulatory Commission (FERC) Chairman Norman Bay in early February, FERC has been without a quorum of three commissioners and, as a result, has not been able to issue orders and take other actions where a vote of the commission is required. On May 25, the Senate Energy Committee will hold a hearing to consider President Donald Trump's nominations to two of the three open Republican seats on FERC: Neil Chatterjee, an energy policy advisor to Senator Mitch McConnell (R-KY), and Robert F. Powelson, a commissioner on the Pennsylvania Public Utilities Commission and current President of the National Association of Utility Regulatory Commissioners. Senate confirmation of these prospective FERC commissioners could be complicated by recent statements by Gary Cohn, director of the National Economic Council, with respect to FERC approval of the proposed Jordan Cove LNG Project, consisting of a liquefied natural gas (LNG) export terminal in Coos Bay, Oregon (Jordan Cove LNG Terminal) and an approximately 232-mile interstate natural gas pipeline originating at the Oregon/California border and terminating at the Jordan Cove LNG Terminal (Pacific Connector Pipeline).

Speaking last month at the Institute of International Finance, Cohn signaled the Trump Administration's intention to "permit an LNG export facility in the Northwest," which "[has] been turned down twice already." Observers of the energy sector recognized this statement as referencing the Jordan Cove LNG Project and FERC's decision in 2016 to deny the application for authorization of the project under Sections 3 and 7(c) of the Natural Gas Act (NGA).

FERC denied the applications of Jordan Cove Energy Project, L.P. (JCEP) to site, construct and operate the Jordan Cove LNG Terminal and Pacific Connector Gas Pipeline, LP (PCGP) to construct and operate the Pacific Connector Pipeline.[1] FERC found that PCGP, which would use the Pacific Connector Pipeline to supply natural gas from western Canada and the US Rocky Mountain region to the Jordan Cove LNG Terminal, failed to demonstrate a need for the Pacific Connector Pipeline outweighing the potential harm to the economic interests of landowners whose property rights might be taken by PCGP's exercise of eminent domain under Section 7 of the NGA. Having denied PCGP's application, FERC also denied JCEP's application to construct the Jordan Cove LNG Terminal because it not feasible without a pipeline to supply it with natural gas. FERC denied requests for rehearing of its order, indicating that its denial is "without prejudice to [JCEP] and/or [PCGP] submitting a new application . . . should the companies show a market need for these services in the future." JCEP and PCGP subsequently announced in a press release that they will file a new application for the Pacific Connector Pipeline and the Jordan Cove LNG Terminal. In preliminary documents filed with FERC, JCEP and PCGP indicated that they plan to file a new application for the Jordan Cove LNG Project by the end of August.

Cohn's statements concerning approval of the Jordan Cove LNG Project, while underlining the Trump Administration's support for projects to export US-produced natural gas in the form of LNG, could provide a reason to object to President Trump's FERC nominees, as well as an additional argument for judicial review of any future FERC orders authorizing the Jordan Cove LNG Project.

The two new prospective commissioners nominated by President Trump must be voted out of the Senate Committee on Energy and Natural Resources (Senate Energy Committee), and confirmed by the full Senate. Prior statements by members of the Trump Administration, such as those by Gary Cohn with respect to the Jordan Cove LNG Project, could make the confirmation hearing for these nominees more complicated and potentially contentious. Committee members may ask the nominees about Cohn's statements and whether they would come to the job of FERC commissioner feeling pressure to approve the Jordan Cove LNG Project based on those comments. Earlier this month, Oregon's two democratic Senators, Ron Wyden and Jeffrey A. Merkely, wrote to President Trump, expressing concern about Gary Cohn's statements, reminding the President that FERC, an independent agency, has the responsibility for deciding whether to authorize the Jordan Cove LNG Project under the NGA, and urging the Trump Administration "to avoid any step that could be interpreted as political interference in FERC's deliberative permitting process in Oregon and nationwide." Senator Wyden is a member of the Senate Energy Committee.

In addition, in the event that FERC approves the Jordan Cove LNG Project, opponents seeking judicial review of FERC's order could argue that FERC's order was not the product of reasoned decision-making supported by the record, as required by the NGA, but rather, was a political decision directed by the President. Recent court decisions staying Trump Administration executive orders blocking federal funds from cities that do not cooperate with enforcement of federal immigration laws and restricting travel from specified countries referenced public statements by President Trump and other administration officials as evidence of the intent behind those executive orders.

Footnote

[1] Jordan Cove Energy Project, L.P. and Pacific Connector Gas Pipeline, LP, "Order Denying Applications for Certificate and Section 3 Authorization," 154 FERC ¶ 61,190 , reh'g denied, 157 FERC ¶ 61,194 (2016).

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