FERC Declares Shell’s NGV-Related Sales to Be Non-Jurisdictional

On Thursday, the Federal Energy Regulatory Commission (FERC) granted Shell U.S. Gas & Power LLC’s petition seeking a declaratory order that the company’s activities relating to LNG are not subject to FERC jurisdiction. Shell’s 2013 petition requested a declaratory order regarding its plans to import LNG from Canada and set up a number of receiving facilities and also establish fueling facilities to refuel on-road vehicles, rail and marine vessels and other off- road equipment. Shell also plans to establish liquefaction facilities in the U.S. to produce and distribute LNG in interstate commerce. The Energy Policy Act of 1992 amended the Natural Gas Act to exclude most activities related to vehicular natural gas from FERC’s jurisdiction in cases where a company is “not otherwise a natural gas company” or is subject to state regulatory oversight. Shell’s petition relied heavily upon the language in the Energy Policy Act of 1992 to argue that its activities are not subject to FERC’s jurisdiction. FERC’s decision, however, focuses mostly on the fact that historically its authority and regulations mostly have to do with oversight of pipeline companies and the transport of natural gas via pipeline. Since Shell’s activities largely do not in any way rely on transportation of natural gas using pipelines, FERC reasoned that the LNG activities are not subject to its jurisdiction.