REGULATORY: FERC: FERC Authorizes Sabine Pass LNG Export Project; Vacates Authorization for Jordan Cove LNG Import Project by Neil L. Levy, David G. Tewksbury, and Stephanie S. Lim

by King & Spalding

On April 16, 2012, the Federal Energy Regulatory Commission (“FERC”) granted authorizations under the Natural Gas Act (the “NGA”) for Sabine Pass Liquefaction, LLC (“Sabine Pass Liquefaction”) and Sabine Pass LNG, L.P. (“Sabine Pass LNG”) to site, construct, and operate facilities to export liquefied natural gas (“LNG”) at Sabine Pass LNG’s existing LNG import terminal in Cameron Parish, Louisiana. This represents the first time that FERC has authorized a project that would export LNG from domestic production. [1] Concurrently, FERC issued an order vacating the authorization previously granted to Jordan Cove Energy Project, L.P. (“Jordan Cove”) for an LNG import terminal in Coos County, Oregon based on its understanding that Jordan Cove no longer intends to construct and operate an import terminal and is instead planning to use the facilities to export natural gas.

In authorizing the LNG export facilities at the Sabine Pass facility under Section 3 of the NGA, FERC rejected arguments that the export of domestically produced natural gas would harm consumers in the United States or otherwise adversely impact the public interest. FERC explained that any alleged harm would result from the export of natural gas, rather than the facilities at issue, and that FERC’s authority is limited to approving or disapproving applications for the construction and operation of export facilities while the Department of Energy has authority to regulate exports of the commodity itself. FERC also rejected arguments that a full environmental impact statement (“EIS”) was required, finding instead that an environmental assessment was adequate because the proposed facilities would be within the footprint of the existing Sabine Pass LNG terminal, which was previously the subject of an EIS and because there were only a small number of well-defined environmental issues that had to be considered.

With respect to questions about the impact of the export operations on import authorizations, FERC found no reason to believe that existing terminal customers would be harmed by the liquefaction project. To the extent disputes arise in the future, FERC suggested that those disputes should be resolved based on the terms of the existing customers’ terminal use agreements, and noted that allegations of undue discrimination or anticompetitive behavior could be brought to its attention through a complaint. As for questions about the jurisdictional implications of domestic natural gas being liquefied for export and then being regasified and delivered back into interstate pipelines for domestic use, FERC found it unnecessary to address such issues, because “neither Sabine LNG nor Sabine Pass Liquefaction has requested, or is being granted, authority to store interstate gas for reintroduction to the interstate market.” It emphasized that “[p]rior [FERC] authorization would be needed before the facilities could be operated in such a manner.”

In its concurrent order on the Jordan Cove project, FERC granted rehearing in part of its December 17, 2009 order granting authorization under Section 3 of the NGA for the siting, construction, and operation of Jordan Cove’s proposed LNG import terminal and issuing a certificate of public convenience and necessity under Section 7(c) of the NGA for construction and operation by Pacific Connector Gas Pipeline, LP (“Pacific Connector”) of an interstate natural gas pipeline from the outlet of the terminal to a point on the Oregon/California border. On rehearing, FERC vacated the Section 3 authorization and certificate of public convenience and necessity. FERC stated that, as a general matter, its review is focused on whether the benefits of the proposed project outweigh any potential adverse consequences, and that once FERC has determined that there are no substantial adverse impacts, “the market is allowed to determine which gas infrastructure projects will actually be constructed.” Nonetheless, FERC claimed that its “ability to rely on the usually valid assumption that a project sponsor will not go forward with construction of a project (in this case, an import terminal) for which there is no market is compromised here,” where the sponsor has “explicitly stated that it is not desirable under current market conditions to construct facilities necessary for the importation of natural gas.” FERC cited various statements by Jordan Cove indicating that it was now planning “to seek authorization to enable the use of the Jordan Cove terminal facilities for only the exportation of natural gas.” FERC also vacated the Section 7 certificate because Pacific Connector’s proposed pipeline was an integral part of the LNG import terminal proposal.

In a strongly worded dissent, FERC Commissioner Philip D. Moeller expressed concern that FERC’s order revoking Jordan Cove’s authorization three years into the five-year term of the authorization “could fundamentally change how the public views whether [FERC] will stand by its decision” and that the order is in conflict with FERC’s longstanding policy of “not ‘pick[ing] winners and losers.’” He took particular note of the concurrent order authorizing the Sabine Pass export project, stating that “[w]hile that five-year authorization is undeniably valuable, investors need certainty that [FERC] will not revoke the Sabine authorization if it later finds that the ‘facility is not viable under current market conditions.’”
[1] An existing LNG export terminal near Kenai, Alaska was built without authorization from FERC or its predecessor, the Federal Power Commission (the “FPC”), after the FPC dismissed an application relating to the construction, operation, and maintenance of the terminal as unnecessary. See Phillips Petr. Co., 37 FPC 777 (1967). FERC has since issued an order clarifying its jurisdiction over the Kenai facility. See ConocoPhillips Alaska Natural Gas Corp., 126 FERC ¶ 61,037 (2009).

  Neil L. Levy
  Washington, D.C.
  +1 202 626 5452

  View Profile »
    David G. Tewksbury
Washington, D.C.
+1 202 626 5454

View Profile »





  Stephanie S. Lim
  Washington, D.C.
  +1 202 626 8991

  View Profile


Written by:

King & Spalding

King & Spalding on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.