[00:00:01] Speaker 00: Case number 22-1251, Public Citizen Inc. [00:00:05] Speaker 00: Petitioner for the Federal Energy Regulatory Commission. [00:00:08] Speaker 00: Mr. Joshi for the petitioner, Mr. Glover for the respondent, Ms. [00:00:12] Speaker 00: Key for the intervener. [00:00:15] Speaker 03: Good morning. [00:00:17] Speaker 03: Good morning. [00:00:18] Speaker 03: Please report. [00:00:19] Speaker 03: This case challenges a pair of orders from the Federal Energy Regulatory Commission in which the commission concluded that it does not have jurisdiction or export facilities that deliver liquefied natural gas to ships by truck. [00:00:34] Speaker 03: That decision was wrong. [00:00:36] Speaker 03: Congress gave the commission exclusive jurisdiction over all natural gas export facilities, both located onshore or in-state waters. [00:00:44] Speaker 03: The only export facilities excluded from the commission's jurisdiction are deep water ports, which Congress expressly carved out from the scope of the Natural Gas Act. [00:00:55] Speaker 03: In the commission's view, however, onshore in the Natural Gas Act does not mean on land, the way it does in every other oil and gas statute. [00:01:04] Speaker 03: But if onshore doesn't mean on land, the commission never coherently explains what else it could mean. [00:01:10] Speaker 03: It cannot mean near the coast because even the commission agrees that it would be arbitrary to set, excuse me, to regulate export facilities differently based on their distance from the coastline. [00:01:22] Speaker 03: But the statutory text allows for no other options. [00:01:26] Speaker 03: It must mean on land. [00:01:28] Speaker 03: What the commission has done instead is to say that onshore doesn't refer to facilities physical location at all, but to the way gas is transferred from two ships for export. [00:01:41] Speaker 03: If by pipeline, the facilities are onshore, if by truck, there are inland facilities that fall under the state's authority. [00:01:49] Speaker 03: Congress, however, did not write the statute that way, and this court should not read it that way. [00:01:54] Speaker 03: Onshore refers to a facility's physical location, and history and context make clear that that physical location is a location on land. [00:02:02] Speaker 06: Let's just start with the word onshore. [00:02:06] Speaker 06: This case is a little unusual. [00:02:08] Speaker 06: Usually, [00:02:10] Speaker 06: Parties throw dictionary definitions at us, and each side is saying the text is crystal clear the way we want to read it. [00:02:21] Speaker 06: Here, there's actually agreement on both sides that the word is ambiguous. [00:02:26] Speaker 06: Onshore can mean at the coastline or it can mean anywhere on land. [00:02:34] Speaker 03: right. [00:02:35] Speaker 03: So I would take issue that we think the word is ambiguous simply because it has to possible dictionary definitely just starting with. [00:02:43] Speaker 03: Dictionary say what you say and that's a set out the universe I think of what the commission can use to determine whether something is what meaning of on short is however [00:02:54] Speaker 03: I think everyone agrees at this point on shore really can't mean near the coast in terms of a distance measurement, because that would result in utterly arbitrary decision-making. [00:03:05] Speaker 03: A facility, a liquefaction facility, one mile from the coast may be in, two miles from the coast may be out. [00:03:11] Speaker 03: The commission does not carve up the world that way. [00:03:13] Speaker 03: It regulates facilities hundreds of miles inland. [00:03:17] Speaker 06: Put aside your arbitrary and capricious point. [00:03:21] Speaker 06: And just in terms of what the words can mean, [00:03:25] Speaker 06: At or near the coastline is a perfectly accepted coherent meaning of the word onshore. [00:03:33] Speaker 03: In the abstract, I think that's right. [00:03:34] Speaker 03: In the context and history of the Natural Gas Act, I don't think that's right. [00:03:39] Speaker 03: Historically, section three of the act gave the condition jurisdiction over facilities as derived from section three's regulation of imports and exports [00:03:54] Speaker 03: the activities themselves. [00:03:56] Speaker 03: That's what this court held in district gas. [00:03:58] Speaker 03: Even if facilities are located entirely in one state, which are normally carved out from the commission's jurisdiction, importer export facilities, they are all within the commission's jurisdiction. [00:04:08] Speaker 03: That was border pipeline from 1949. [00:04:10] Speaker 03: That was district gas. [00:04:12] Speaker 03: That was the backdrop on which Congress acted in 2002 when it carved out the border facilities. [00:04:18] Speaker 03: And then three years later, when it enacted this definition, [00:04:22] Speaker 03: report. [00:04:24] Speaker 03: Commission officials testify to Congress. [00:04:26] Speaker 03: This is the way the world is carved up. [00:04:29] Speaker 03: Deepwater facilities are subject to the Department of Transportation's jurisdiction under the Deepwater Court Act and basically other importer export facilities at the time it was imported primarily, but they are subject to the Commission's jurisdiction historically. [00:04:45] Speaker 06: If we move from text to structure and context, right, which we all agree [00:04:51] Speaker 06: You know, we do that as part of Chevron step one. [00:04:56] Speaker 06: The context is there are three categories of facilities. [00:05:04] Speaker 06: There are the ones that are in the deep water. [00:05:06] Speaker 06: There are the ones that are in, I'll just call it the shallow water, the water that's within state jurisdiction. [00:05:14] Speaker 06: And there are the facilities that are onshore, right, whatever that means. [00:05:20] Speaker 06: doesn't the water based focus of that scheme suggest that onshore means at the shoreline? [00:05:30] Speaker 06: I don't say, you know, I might be in deep water. [00:05:33] Speaker 06: I might be in shallow water. [00:05:34] Speaker 06: I might be onshore, right? [00:05:36] Speaker 06: That doesn't mean I might be in Nebraska. [00:05:40] Speaker 03: I don't see that connection. [00:05:42] Speaker 03: I think Congress was primarily concerned with exports and imports by ship. [00:05:46] Speaker 03: So in the words they used in the definition suggests that was its focus. [00:05:53] Speaker 03: But the commission, for example, doesn't say there's only certain facilities in state waters are subject to jurisdiction. [00:06:00] Speaker 03: state waters or state waters. [00:06:02] Speaker 03: I think the same is true with onshore. [00:06:04] Speaker 03: I mean, I think for your, to go to your question, it gets back to the arbitrariness of setting a distance measurement from the shoreline. [00:06:12] Speaker 03: Nebraska is too far, but maybe Louisiana, central Louisiana is close enough. [00:06:16] Speaker 03: I don't think anyone thinks that's a coherent scheme, regulatory scheme. [00:06:24] Speaker 03: That's certainly not. [00:06:26] Speaker 03: It would be the first time, I think, if what you're saying is suggesting it would be correct, Congress in 2005 meant for the first time to take facilities used for foreign commerce and natural gas and give them to the states to regulate the ban to determine whether they get built or how they get built. [00:06:48] Speaker 03: actually the opposite purpose Congress had in 2005, which was to preempt the states. [00:06:53] Speaker 03: In that situation, California was contesting the commission's jurisdiction. [00:06:59] Speaker 03: So the words of the statute really talk about the function of the facility. [00:07:05] Speaker 03: The words onshore or in-state waters are to make clear [00:07:08] Speaker 03: that the commission's jurisdiction not extended deport reports. [00:07:13] Speaker 01: I think one other contextual clue here might be, and just keeping in mind that I think your burden is to show that it unambiguously has your meaning, again, putting aside the arbitrary and capricious challenge. [00:07:26] Speaker 01: In addition to what Judge Katz points to, the statute also references [00:07:35] Speaker 01: Transported in interstate commerce by waterborne vessel? [00:07:39] Speaker 01: Isn't that another indication that we're focused on water, the shore? [00:07:44] Speaker 01: It doesn't say transported in interstate commerce by any means. [00:07:49] Speaker 03: Well, traditionally, the commission had jurisdiction over interstate commerce under Section 7. [00:07:55] Speaker 03: And under Section 7, historically, it has read the different wording of that provision to exclude non-platform transport. [00:08:05] Speaker 03: So what Congress did when it enacted Section 3 was not only strengthen the commission's jurisdiction over imports and exports, for example, by amending Section 1, but also to expand Section 3 to include this sort of interstate component. [00:08:17] Speaker 03: that had historically been the commission had not historically regulated under section seven and once again the congress may have been concerned with exports by ship but not whether the facilities themselves were located at this certain shoreline most facilities are because if you're going to export or import you by ship you're going to want to be near the shoreline for cost reasons but whether the [00:08:45] Speaker 03: The jurisdiction analysis, whether the Commission of the States should regulate a particular facility, doesn't coherently make sense in terms of it. [00:08:55] Speaker 03: In fact, the Commission does not adopt it at all. [00:08:58] Speaker 03: It says we won't do that. [00:09:00] Speaker 03: What we're going to look at is method of delivery of gas to the ship. [00:09:04] Speaker 03: I think that's the red flag that the Commission [00:09:07] Speaker 03: cannot come up with a coherent interpretation of onshore, that means near the water, but it has to substitute a whole different test to provide some type of alternative regulatory scheme that it can apply to different areas. [00:09:25] Speaker 01: How are you asking us to think about this? [00:09:28] Speaker 01: You're addressing now your challenge to the direct transfer test. [00:09:32] Speaker 01: Essentially, are you asking us to think about that as essentially an arbitrary and capricious issue or is it a statutory interpretation issue? [00:09:40] Speaker 03: So I think it's more of a statutory interpretation issue. [00:09:43] Speaker 03: We don't ask the court to determine what we think the facility would be close enough if there were a distance measurement. [00:09:52] Speaker 03: It's pretty close at quarter mile from the coast. [00:09:55] Speaker 03: But ultimately, it's the commission that has to decide that if the court thinks. [00:09:59] Speaker 03: The court disagrees with us that onshore means on land. [00:10:02] Speaker 03: Unambiguously, the court should [00:10:07] Speaker 03: include that the commission's interpretation that treats onshore as a method of delivery as opposed to a geographic area is not a plausible demand. [00:10:19] Speaker 03: So the commission can come up with a distance measurement if it sticks to that interpretation. [00:10:25] Speaker 06: In your rehearing petition, [00:10:29] Speaker 06: really focused on the argument that onshore means anywhere on land. [00:10:38] Speaker 06: And then you maybe have a fallback. [00:10:44] Speaker 06: You have a somewhat cursory rhetorical line that if the precedents require a more direct capability of transferring LNG than the quarter mile process here, [00:10:59] Speaker 06: They are contrary to the plain language of the statute. [00:11:04] Speaker 06: That's a statutory argument. [00:11:08] Speaker 06: That's not an arbitrary and capricious argument. [00:11:12] Speaker 03: I think our focus, both for the commission and here, is a statutory one. [00:11:18] Speaker 03: So if, for example, the commission. [00:11:21] Speaker 06: I think that probably entitles you to make a statutory argument that the direct connection test can't be reconciled with the statute, the onshore as used in the statute construed in context. [00:11:40] Speaker 06: I'm not sure it entitles you to make an argument that [00:11:45] Speaker 06: Assuming that's a permissible statutory construction, the commission didn't adequately explain it. [00:11:52] Speaker 06: Right, and I don't think we make a lack of reason to explanation. [00:11:57] Speaker 06: You don't think you make the latter. [00:12:00] Speaker 06: Other than the idea. [00:12:01] Speaker 06: But you're sort of trying to smuggle it in when you say that onshore can't mean on or near the shore because the commission says it would be arbitrary [00:12:14] Speaker 06: to determine onshoreness by just an absolute amount of distance. [00:12:24] Speaker 03: So let me be clear. [00:12:26] Speaker 03: Our primary argument for the commission here is onshore means on land. [00:12:30] Speaker 03: Right. [00:12:31] Speaker 03: I got that. [00:12:33] Speaker 03: So if the court disagrees with that and reaches the second argument, we [00:12:41] Speaker 03: The only thing the Commission's alternative interpretation of onshore, where it says it means near the coast, but doesn't actually apply a near the coast test, is what satisfy Chevron's second step. [00:12:54] Speaker 03: Now, the Court has set the Chevron's second step analysis similar to an arbitrary infectious analysis. [00:13:00] Speaker 03: So in that sense, you can say it's an arbitrary challenge. [00:13:03] Speaker 03: But we don't contend that this court should decide that the commission has determined that 0.25, I mean, a quarter mile is too close or not close enough. [00:13:14] Speaker 03: The commission did not engage in that analysis because it substituted geography for a completely different standard that looks to method of delivery. [00:13:24] Speaker 03: And so in that sense, even if the court were to give the commission deference, [00:13:29] Speaker 03: It really didn't exercise that difference in any sort of way that the statutory text would permit. [00:13:38] Speaker 05: Why is your primary argument the onshore argument as opposed to the argument about the FERC says that LNG terminals must be capable of transferring LNG onto waterborne vessels? [00:13:51] Speaker 05: And where's the statutory support for that? [00:13:54] Speaker 05: I don't understand why this wouldn't be your primary argument when it's so much [00:13:59] Speaker 05: I think stronger to show that this is not consistent with the statutory text structure context 10. [00:14:08] Speaker 03: Well, we focus on the meaning of onshore as online because we think that's the better. [00:14:14] Speaker 03: We think that clears up a lot of confusion as I do think we make that second argument that you do. [00:14:22] Speaker 05: I'm just wondering about the emphasis. [00:14:26] Speaker 03: Yes. [00:14:26] Speaker 03: No, I think if the court were not to conclude in this case, onshore means on land. [00:14:33] Speaker 03: The court may face these questions over and over again. [00:14:37] Speaker 03: So this could be just move further back if the commission has to come up with a distance measure. [00:14:43] Speaker 05: Do you have a sense of how many facilities we're talking about? [00:14:46] Speaker 05: Like is this proliferating? [00:14:48] Speaker 05: It appears that this is a [00:14:49] Speaker 05: kind of new technology, at least since 2015. [00:14:52] Speaker 05: So when the statute was written, this type of facility was not in use. [00:14:58] Speaker 05: And so it's a novel technology. [00:15:01] Speaker 05: And how many facilities are we talking about if you have a sense of order of magnitude that you're saying FERC should be regulating, but it is not? [00:15:09] Speaker 03: So for export or import facilities, I want to say they're in the 20 to 25 range. [00:15:18] Speaker 03: maybe the commission would have a better number. [00:15:20] Speaker 03: And most of those, at least by volume, I shouldn't say most, but in terms of by volume, most of those will be the types of facilities that the commission says it can regulate, which are delivering, directly transferring liquefied natural gas to ship. [00:15:34] Speaker 05: My question was about the ones that are putting the LNG into containers that are then trucked to the ports. [00:15:41] Speaker 03: That's a little harder to determine because the commission has not [00:15:45] Speaker 03: not regulated them. [00:15:47] Speaker 03: So we only know about them because of these declaratory rulings are having too many recently. [00:15:52] Speaker 03: Um, the other, the other thing that makes it difficult, uh, it may be the commission statistics, but, um, you can have these facilities that operate domestically and so they could be located anywhere. [00:16:05] Speaker 03: And so I don't have a precise number. [00:16:08] Speaker 03: Thank you. [00:16:10] Speaker 06: If my understanding is, um, [00:16:14] Speaker 06: If an LNG facility loads liquid gas into the container and then puts it on the truck, that's what we're talking about. [00:16:28] Speaker 06: If the truck then just drives across the border, FERC's position is that the truck is not an export facility. [00:16:37] Speaker 06: Do you disagree with that? [00:16:39] Speaker 03: So I guess we don't disagree or agree because for says that that has not pointed to a prior commission or that goes undertakes the analysis and we haven't been able to find that ourselves. [00:16:49] Speaker 03: So it's sort of a suggestion that it's not backed by anything since those do not involve ships perhaps. [00:16:56] Speaker 06: Well, I mean, we're figuring out the consequences of your theory. [00:17:00] Speaker 06: So [00:17:00] Speaker 03: Right, and I don't think those facilities are very numerous, but it's a little hard to argue in the abstract one way or the other to differentiate or not differentiate that situation because we have not seen any analysis by FERC explaining why, whether, for example, those exporters need an export license from the Department of Energy, why those facilities are excluded if they are [00:17:28] Speaker 03: So it's a little hard to sort of differentiate that. [00:17:31] Speaker 03: We have here a definition that Congress enacted, obviously, that we can sink our teeth into and interpret. [00:17:39] Speaker 06: We don't have anything to commission the truck transport across the board. [00:17:45] Speaker 06: I mean, if you accept that, [00:17:49] Speaker 06: The truck driving the natural gas across the border is not an export facility. [00:17:58] Speaker 06: And FERC says this facility is sort of like that, right? [00:18:02] Speaker 06: Once the gas is put on the truck, that's the end of the facility. [00:18:06] Speaker 06: The truck leaves and it might be destined for a ship. [00:18:12] Speaker 06: It might be destined for the border. [00:18:14] Speaker 06: That's kind of downstream from the facility. [00:18:18] Speaker 03: I don't think it said that in this order. [00:18:20] Speaker 03: And if it had, we might have. [00:18:22] Speaker 06: Well, it said that in pivotal. [00:18:24] Speaker 03: Pivotal, yes. [00:18:24] Speaker 03: Well, pivotal involved the situation where the facility was putting LNG into containers and then its customers were either going to be domestic customers or people who [00:18:37] Speaker 03: entities that exported the gas. [00:18:42] Speaker 03: So it did say that. [00:18:43] Speaker 03: I think it mentioned that in Shell, did not rely on that reasoning here. [00:18:47] Speaker 03: But once again, neither of those orders cite any prior commission order that talks about truck. [00:18:54] Speaker 06: So I guess I'm wondering, it might have something to do with FERC's idea that [00:19:05] Speaker 06: Pipelines are different, might have something to do with FERC's idea that dedicated facilities are different. [00:19:15] Speaker 06: And you're saying, don't worry, our theory won't upset the apple cart too much because those are guardrails in place and we're not challenging them. [00:19:26] Speaker 06: But I guess I'm wondering if your theory will put all of that in doubt. [00:19:32] Speaker 03: Well, I wouldn't say that necessarily. [00:19:36] Speaker 03: It might. [00:19:36] Speaker 03: I mean, FERC still has to follow the statute. [00:19:39] Speaker 03: FERC does, I do, I am aware FERC has a history, as I mentioned earlier, of construing section seven because of the particular language that section seven uses regarding interstate [00:19:53] Speaker 03: commerce in natural gas. [00:19:55] Speaker 03: Say that only regulates pipelines. [00:19:58] Speaker 03: It does not regulate interstate truck delivery of LNG. [00:20:01] Speaker 03: And but that was a longstanding interpretation by the Federal Power Commission from 1973. [00:20:09] Speaker 03: So that was regulatory backdrop at Congress. [00:20:15] Speaker 03: would not I don't think has ever applied to until recently has ever applied to exports imports. [00:20:22] Speaker 06: Yeah I didn't I didn't go back and read Shell directly but as we described as we described it in new fortress it treated that aspect of section seven and that aspect of section three. [00:20:37] Speaker 03: And FERC found in this case that this facility does satisfy the pipeline connection requirement that's why we [00:20:44] Speaker 03: It's not before the court because of that. [00:20:46] Speaker 03: So to the extent that FERC is concerned about pipeline focus, it has an element in its three-part test that looks at that, and this facility satisfies that element. [00:20:58] Speaker 03: So the question then is the second element of the three-part test. [00:21:05] Speaker 03: What geographic area does FERC have jurisdiction over? [00:21:11] Speaker 03: What geographic area does the state have jurisdiction over? [00:21:14] Speaker 03: And our position is Congress intended to give federal jurisdiction over policy. [00:21:27] Speaker 03: Except for people. [00:21:31] Speaker 01: Just briefly, this case has the odd feature that we've been talking about, a facility the company says it doesn't plan to build. [00:21:39] Speaker 01: And on mootness, one of the main concerns you express in your brief is essentially that if we were to conclude the case is moot, then maybe no Petro would change course, and you would then be time barred from challenging these orders again. [00:21:58] Speaker 01: But we, of course, have the authority, if we believe the case was moved, to vacate those orders. [00:22:03] Speaker 01: So wouldn't that address whatever lingering concern you have about this facility? [00:22:08] Speaker 03: No, we addressed that in our brief. [00:22:09] Speaker 03: It's court certainly should, if it finds the case moved to vacate the orders. [00:22:14] Speaker 03: But Perk's policy at this point is pretty clear. [00:22:17] Speaker 03: As long as no Petro uses trucks, they are not going to be subject to Perk's action. [00:22:25] Speaker 03: And so they don't have to go back [00:22:28] Speaker 03: to get another declaratory ruling. [00:22:30] Speaker 01: Right. [00:22:31] Speaker 01: They'd be running a pretty significant risk that FERC would change course or that you all would go and file another petition somehow to bring it in front of FERC and secure a review. [00:22:45] Speaker 01: I mean, that's why they come and get a declaratory order in the first place, right? [00:22:49] Speaker 03: I'm sure they wanted the certainty that declaratory ruling provides, but having received the declaratory ruling, Perks setting out its position, the fact that the court has on paper vacated the order does not change Perks policy. [00:23:04] Speaker 03: And I don't know that. [00:23:08] Speaker 03: they have much, no Petra would have much risk of a FERC enforcement action. [00:23:13] Speaker 03: Especially given that FERC is saying this is a long standing policy that we've consistently applied to other facilities, FERC to then change its position to no Petra's detriment on its own, I think would be very odd for an Asian. [00:23:28] Speaker 06: That's what happened in district S. It does, it does happen. [00:23:33] Speaker 03: That was a long time ago. [00:23:34] Speaker 03: And new focus, I believe. [00:23:37] Speaker 03: Yeah. [00:23:37] Speaker 03: Yeah, but in terms of the mutinous standard, the courts are pretty watchful that plaintiffs or petitioners do receive the relief they asked for. [00:23:52] Speaker 03: And then if they're going to dismiss the cases, it's really absolutely clear that they won't be harmed by a change in voluntary action later down the road. [00:24:04] Speaker 03: I think that all of the cases beside the relief [00:24:10] Speaker 02: Thank you. [00:24:10] Speaker 02: Thank you. [00:24:11] Speaker 02: We'll give you rebuttal. [00:24:30] Speaker 07: And please the court. [00:24:31] Speaker 07: I'm Matthew Gulliver and I represent respondent, the Federal Energy Regulatory Commission. [00:24:36] Speaker 07: I think I'll start with some of the questions you had for opposing counsel as to the interpretation of onshore. [00:24:42] Speaker 07: Why don't you start with moodness? [00:24:43] Speaker 06: Is it jurisdictional? [00:24:45] Speaker 06: Yeah. [00:24:46] Speaker 06: We asked you for views on whether this case was moot and you gave us precious little. [00:24:53] Speaker 07: fair. [00:24:53] Speaker 07: Unfortunately, I think this is one of those circumstances that I learned early in my time in government, where sometimes the government isn't taking a firm position on something, and it may be disappointing to the court. [00:25:05] Speaker 07: But I have a couple points. [00:25:06] Speaker 07: Do we have to deal with it? [00:25:07] Speaker 07: What is the commission's position? [00:25:09] Speaker 07: So we don't have a definitive position on whether this is moved, but a couple of points in response. [00:25:15] Speaker 07: First of all, we've said repeatedly that these are case-by-case determinations when we issue these jurisdictional determinations. [00:25:21] Speaker 07: I think it's footnote 12 at page 43 we made clear to no petro that this is only as to the project specified here in the declaratory order sorry and I think at footnote 33 we also note that you know if you had a different facility that was loading lng pieces onto trucks but you know you were loading it at a dedicated lng facility we're not around our truck sorry containers onto ships we're not addressing that here [00:25:43] Speaker 07: so this is going to be very limited to what no petro is doing we weren't clear from their letter their interest in kind of the precedential value i don't think could keep this case not being moved so it becomes a question of how likely are they to construct this facility no petro themselves i think as petitioners are pointed out in their [00:26:04] Speaker 07: we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is we're going to do is [00:26:32] Speaker 07: the ongoing policy concern, I don't think they can sustain that. [00:26:36] Speaker 07: I mean, I looked at Del Monte Fresh, a case from this circuit talking about when you seek a declaratory order challenging an ongoing policy, you need standing to challenge that ongoing policy. [00:26:45] Speaker 07: All of their standing declarations are about people in Port St. [00:26:48] Speaker 07: Joe about this specific facility. [00:26:51] Speaker 07: So, you know, and I apologize if we had more clarity from no Petro saying. [00:26:55] Speaker 07: I understand that. [00:26:58] Speaker 06: You on the. [00:27:01] Speaker 06: case by case, you say at points in your order that these jurisdictional determinations are made on their facts, but that's really not your reasoning. [00:27:14] Speaker 06: I mean, when the rubber meets the road, what you say is onshore means on or close to the shoreline, and on or close to the shoreline means capable of directly connecting to the tanker. [00:27:29] Speaker 06: And that's a pretty clear rule of law. [00:27:32] Speaker 06: And unless you change your mind, it will govern a large swath of future cases. [00:27:40] Speaker 06: I've said the decision has to be, the controversy has to be predictably repeatable. [00:27:47] Speaker 06: It seems like this one will be when and if they try to construct something. [00:27:53] Speaker 07: I think I would just have two points on that. [00:27:55] Speaker 07: Yes, you know, we've said and we do believe here we were following our previous precedence. [00:28:00] Speaker 07: But when we're issuing a declaratory order, it's an informal adjudication as to that, those parties and those facts. [00:28:05] Speaker 07: And so I'm not disputing that, you know, in the next case, you know, if no Petro decided to try a different facility, a different facility, file the new section three petition, you know, the presumption would be the commission would continue applying the same three criteria it's been applying the commission. [00:28:21] Speaker 07: Obviously, given that our interpretation is the statute is ambiguous and we've picked the best interpretation, but we haven't stated this is the only interpretation or this is sort of [00:28:29] Speaker 07: the only required aspect of the statute. [00:28:32] Speaker 07: We've left ourselves room that a future commission could change its position. [00:28:35] Speaker 07: In that sense, you know, you're sort of like challenging a court precedent. [00:28:39] Speaker 07: You know, you're asking for a declaration that that precedent is no longer good or that it wouldn't be applied in the next case. [00:28:44] Speaker 07: Except, you know, we don't have the LaShawn A versus Barry that you're faced with where you need an unbonded court or an iron's footnote to change your precedent. [00:28:51] Speaker 07: We are an agency. [00:28:53] Speaker 07: As to the remedy in mootness, I think Northern California Power Agency versus Nuclear Regulatory Commission confronted a situation where a party other than the petitioner, it was a petition for review from the Nuclear Regulatory Commission, a party other than the petitioner caused the case to become moot through a bankruptcy agreement. [00:29:13] Speaker 07: And the court said, you know, in that case, the normal remedy is vacatur. [00:29:16] Speaker 07: If you were to vacate these orders, you know, [00:29:18] Speaker 07: No, Petro would be proceeding at their own risk, given that they wouldn't have an order as to this facility. [00:29:24] Speaker 07: And in terms of the presidential value for any future facility, again, you could take the new fortress approach. [00:29:30] Speaker 07: New fortress did not seek a declaratory order. [00:29:33] Speaker 07: They started construction on their facility. [00:29:35] Speaker 07: We issued them a show cause saying, gee, this seems to look like a jurisdictional facility. [00:29:39] Speaker 06: Suppose we vacate the order on mutinous grounds. [00:29:44] Speaker 06: Petro changes course, they decide to take their chances and they start building the facility. [00:29:53] Speaker 06: Would public citizen have any means of securing judicial review at that point? [00:30:00] Speaker 07: I think they could ask, I should check once more this morning because I looked last week at our declaratory order regulation. [00:30:07] Speaker 07: I think they could ask for a declaratory order to remove uncertainty. [00:30:11] Speaker 07: That's one of our grounds for a declaratory order. [00:30:14] Speaker 07: If it was the same facility in the same place, they would have the same members. [00:30:17] Speaker 07: They would have, you know, standing and would you have to adjudicate that or is that discretionary? [00:30:21] Speaker 07: It is discretionary for us to adjudicate that. [00:30:24] Speaker 07: Sometimes we dismiss them. [00:30:26] Speaker 07: Even when we dismiss them, parties take the rehearing provision in the natural, at least in the federal power act is where I'm more familiar with it, but it's interpreted the same as the natural gas act would allow them to. [00:30:38] Speaker 07: you know, ask for rehearing of our dismissal if we said we're not going to address this again, they could ask for a hearing and then they could come to this court and say, gee, they wouldn't give us a territory order. [00:30:47] Speaker 07: We think that this is you know, I guess that's. [00:30:53] Speaker 07: In terms of the cases they site like sands and knocks on this a lot of that turned on the specific facts as to ongoing injury or potential for injury. [00:31:02] Speaker 07: You know, we just weren't sure when no Petro made their statement. [00:31:05] Speaker 07: It wasn't a statement that we might want to pursue this facility. [00:31:07] Speaker 07: It had a lot of we might want to use other facilities. [00:31:09] Speaker 07: We don't think this declaratory order cover. [00:31:14] Speaker 07: I'll take a drink. [00:31:22] Speaker 07: As the court was explaining with my friend on the other side, on the merits, we think the statute's ambiguous. [00:31:26] Speaker 07: We think we have the best reading of the statute, certainly not the only reading of the statute. [00:31:31] Speaker 07: In terms of onshore, we do think that onshore and state waters, transported in interstate commerce, and then also the heading of the new provision, section two, section 11, or two subsection 11, being an LNG terminal, [00:31:48] Speaker 07: As we explained in the order, I think it's a foot in the hearing order. [00:31:51] Speaker 07: Footnote 31 at J66 cites some earlier commission orders. [00:31:55] Speaker 07: We cited a number of those and others at page 27 of our brief. [00:31:59] Speaker 07: LNG terminal or a terminal was typically a large port or was used in parlance prior to the 2005 act. [00:32:06] Speaker 06: Let me ask you about that history. [00:32:09] Speaker 06: Your theory is LNG terminal had acquired an almost term apart status. [00:32:20] Speaker 06: Public Citizen has a striking, and I'm just wondering how much of this is anachronistic, because they say that when the intervening statutes were enacted, there was only one export facility. [00:32:34] Speaker 06: It was in Alaska, and I assume it's like what you have in mind here. [00:32:39] Speaker 06: It's a coastal facility that can directly load a specialized tank. [00:32:46] Speaker 06: So I would have to. [00:32:48] Speaker 06: So is that accurate as to export? [00:32:52] Speaker 06: And it's just we were doing a lot of the US was doing a lot of importing at the time. [00:32:57] Speaker 07: Where do we get established practice? [00:33:00] Speaker 07: So if I can I think narrow or kind of clarify at the time of the statute, there was one LNG terminal or terminal that was a coastal facility in Alaska. [00:33:09] Speaker 07: there was I think imports there may have also been exports um with the you know coasts or sorry on the border and we note in our that we've exercised jurisdiction over the border portion under section three of cross border pipelines there was also you know potentially transfer via trucking or trains we weren't going to exercise authority over that I can cite a couple orders that were actually prior to the um [00:33:32] Speaker 07: The statute, if you look, this is about the Bahamas facility. [00:33:37] Speaker 07: At paragraph 39 of the declaratory order, we cite a calypso or tracto bell calypso, which was about a facility in the Bahamas. [00:33:46] Speaker 07: We were going to regulate under section 3 the portion of this pipeline that crossed what's called the exclusive economic zone of the United States. [00:33:52] Speaker 07: It's outside state waters and the exclusive economic zone of the Bahamas. [00:33:56] Speaker 07: And so there we were regulating under section 3 that border crossing piece of the pipeline. [00:34:01] Speaker 07: If you go to Shell, they'll actually discuss how there's two different Bahamas orders. [00:34:04] Speaker 07: There was two different proposed projects. [00:34:06] Speaker 07: Neither were ever actually built. [00:34:07] Speaker 07: But the interesting thing about the Calypso order that we cite there is there's only one mention of LNG terminal in that order. [00:34:14] Speaker 07: And it's in a footnote talking about how the LNG terminal was going to be in the Bahamas where the ships dock and they unload their LNG. [00:34:21] Speaker 07: And then it's going to be piped 42 miles to the US. [00:34:24] Speaker 07: And we're exerting section three jurisdiction over that portion of the pipeline that's crossing the border. [00:34:28] Speaker 07: So that would be an example of [00:34:30] Speaker 07: I think it was obviously important import facility that was crossing the border. [00:34:33] Speaker 07: We weren't, you know, calling a terminal. [00:34:38] Speaker 06: Yeah, but I mean, portions of pipeline just seems to me like it might be a different thing. [00:34:46] Speaker 06: So you have these facilities you say, gosh, everyone, you know, what everyone understood LNG facility to be is this giant thing that's right on the coastline. [00:34:59] Speaker 06: And it [00:35:00] Speaker 06: loads directly or unloads directly from ships. [00:35:04] Speaker 07: Your honor, actually, I have to disagree with our position. [00:35:08] Speaker 07: It was LNG terminal. [00:35:09] Speaker 07: Terminal is what described the deep water port. [00:35:12] Speaker 07: That's why our Energy Project heads testimony during the hearing that they cite later in the testimony, he says the requirements of an LNG terminal are in the first requirement is deep [00:35:22] Speaker 07: access. [00:35:23] Speaker 07: We had been regulating after DistroGas sort of LNG facilities and that's what included the cross-border pipelines. [00:35:30] Speaker 07: Those were facilities when we talked about LNG terminals and that's I guess I didn't make that clarification earlier in my call up with you. [00:35:37] Speaker 07: The one LNG terminal was the terminal in Alaska. [00:35:40] Speaker 07: There were other important export facilities that were being regulated and so you know in terms of LNG terminal in Hackenbury [00:35:47] Speaker 07: which we cite in our brief, I think at 27, it's cited in the hearing order at note 31. [00:35:52] Speaker 07: That case involved section three and section seven jurisdiction. [00:35:56] Speaker 07: We distinguished between the part of the project that had LNG ship unloading and was capable of unloading 210 tankers a year. [00:36:03] Speaker 07: That was the terminal, the interstate. [00:36:06] Speaker 06: We're just talking about LNG terminals as regulated by 3E. [00:36:13] Speaker 06: not whatever broader category of export facilities, there might be under three A's, you know, Distragaspinumbra. [00:36:23] Speaker 06: Yes. [00:36:24] Speaker 06: Right? [00:36:24] Speaker 06: Yes. [00:36:25] Speaker 06: So we're talking about like, can one draw an inference from history about what the term LNG terminal covers? [00:36:38] Speaker 07: Yes, and we think you can again, because when we use the term LNG terminal, we were talking about these facilities at the coast where a ship is coming and directly offloading LNG to or from the ship. [00:36:53] Speaker 07: Freeport is a case that they relied on regularly. [00:36:56] Speaker 07: and we cite also in our brief. [00:36:58] Speaker 07: In Freeport, they described the LNG terminal as the facilities that were receiving the LNG. [00:37:03] Speaker 07: And the 9.6 mile pipe was actually called the send out pipeline and described in different paragraphs of the order. [00:37:10] Speaker 07: And we had different, yes, we approved the LNG terminal and the send out pipeline. [00:37:15] Speaker 06: This alternative export means of using containers. [00:37:22] Speaker 06: Did it exist at the time? [00:37:24] Speaker 06: Was it popular? [00:37:26] Speaker 06: So I do think that there may be that the reason why everyone was thinking about facilities on the shore is not that anyone thought, oh, a quarter mile inland is completely different. [00:37:38] Speaker 06: It's just that was the only existing technology. [00:37:41] Speaker 06: And it's sort of like a Fourth Amendment applies to wiretaps point. [00:37:46] Speaker 06: There's a new technology and all right, so it's a little bit inland. [00:37:49] Speaker 06: Like, so what? [00:37:50] Speaker 07: So I do think that, and I believe the commission said in shell that there were experts that were, you know, cross border exports. [00:37:57] Speaker 07: You know, I described some pipeline ones, but you know, if you were trucking or taking something by train cross border, we've never considered that within our jurisdiction. [00:38:06] Speaker 07: So just castles question was, did that even exist? [00:38:09] Speaker 07: when this was obligated. [00:38:11] Speaker 07: I don't think it did. [00:38:14] Speaker 07: The Congressional Research Service reports that are cited in, I think, put note 78 or 81 of Shell, but they're also, I think, one of them is cited in their brief, do talk about exports to Mexico and Canada. [00:38:25] Speaker 07: They don't specify how we're exporting to Mexico and Canada in 2004 or 2009. [00:38:31] Speaker 05: Do you not know? [00:38:32] Speaker 05: I would just think as representing FERC, you would know that this is a technology that started in 2015. [00:38:39] Speaker 07: I do believe, I don't believe that the technology in terms of trucking or taking by rail LNG or by pipeline is a technology that started in 2015. [00:38:48] Speaker 07: We just don't have a commission order, you know, and I asked sort of the relevant colleagues, have we ever sort of commented on this and we didn't have one for that? [00:38:59] Speaker 07: But obviously there was cross-border pipelines and we were regulating things other than LNG terminals prior to 2005 or 2009. [00:39:10] Speaker 07: And so, you know, we have, I think, again, [00:39:14] Speaker 07: maybe more footnotes in Shell and more footnotes in Pivotal talking about a facility in Maine that trucks into Canada. [00:39:21] Speaker 07: But we didn't have a site there. [00:39:22] Speaker 07: I again reached out to people at the commission. [00:39:25] Speaker 07: That facility never came to us for a declaratory order, so we didn't have an order stating when that facility started trucking things to Mexico. [00:39:31] Speaker 07: I looked at the Department of Energy because all of their export approvals are available online. [00:39:35] Speaker 07: I looked at them last night. [00:39:37] Speaker 07: there were a number of export approvals in the 80s that sort of specify the countries or import. [00:39:42] Speaker 07: I think it was mostly imports actually, but imports and exports that specified the country we're coming from. [00:39:46] Speaker 07: There was, I should have printed it out and brought it with me, but you know, coming from Minnesota and back with pipeline transfers and everything. [00:39:54] Speaker 07: I don't know about whether any of them specified we're going to truck or we're going to use trains to move LNG away. [00:40:00] Speaker 07: But again, we were referring to terminals as being these open water ports or. [00:40:07] Speaker 01: Can I ask you to focus on the direct transfer test in particular? [00:40:11] Speaker 01: Because history aside, we now have a statute in 2005 that you agree in your brief is very broad. [00:40:19] Speaker 01: It says an LNG terminal covers all natural gas facilities that receive, unload, load, store, transport, gasify, and so on. [00:40:27] Speaker 01: But your test seems to say that something is an LNG terminal if and only if it has a pipe that directly loads or unloads from a tanker. [00:40:37] Speaker 01: And I'm just really struggling with how to square that with the statutory text. [00:40:43] Speaker 07: So I have to point to foot 33 where we said we have not sort of taken a position on something that would have a pipe coming into the facility. [00:40:51] Speaker 07: It would then liquefy at the port and put into ISO containers and be a dedicated facility that load those containers onto the ship. [00:40:59] Speaker 07: Like we said, we weren't confronted with that. [00:41:00] Speaker 07: in terms of the pipe, you need a pipe coming in. [00:41:04] Speaker 01: I'm sorry, can you say that again? [00:41:05] Speaker 01: Because the text of your order and the rehearing order says over and over. [00:41:09] Speaker 01: This is not an LNG terminal because it doesn't directly transfer to an LNG tanker. [00:41:14] Speaker 01: Yes. [00:41:14] Speaker 01: And to me, that seems to be the rule you've applied clearly distinguishes between two exactly identical facilities, except that one has the pipe that goes directly onto the tanker. [00:41:27] Speaker 01: and one has a pipe that loads into containers and they get trucked over, or maybe even there's a crane there and it gets put on. [00:41:34] Speaker 01: That's the test. [00:41:37] Speaker 07: If I can unpack that a little bit. [00:41:39] Speaker 07: When we're talking about natural gas facilities, it needs to be a facility dedicated to natural gas. [00:41:43] Speaker 07: And so in this specific no-petrol proposed facility, the trucking to a general use port, we even discussed how the crane at the general use port, that's then not part of the facility because those are general use. [00:41:56] Speaker 07: I was commenting that I think it's in the declared order and not the rehearing order. [00:42:00] Speaker 07: Footnote 33 talks about how we haven't taken a position on a facility that would have a pipeline coming in. [00:42:06] Speaker 07: It would liquefy right there at the coast. [00:42:08] Speaker 07: LNG tanker, or not an LNG tanker, a ship would come in. [00:42:12] Speaker 07: It would be solely, not a general use facility, but solely for the purposes of natural gas. [00:42:18] Speaker 07: instead of piping it into the ship, it piped it into a ISO container and craned it onto. [00:42:24] Speaker 05: We have a footnote saying... Could you please answer Judge Garcia's question? [00:42:28] Speaker 05: Because that's also something that I would like to know the answer to. [00:42:31] Speaker 05: How does your interpretation that requires an LNG terminal to directly transfer LNG onto a ship, how does that square with the statute, the structure, [00:42:43] Speaker 05: the context and the intent of Congress. [00:42:46] Speaker 07: So directly transferring all, and if I can just, all I meant was we haven't said directly transfer. [00:42:52] Speaker 05: Could you please just answer the question? [00:42:53] Speaker 07: Okay. [00:42:54] Speaker 07: Directly transfer comes from the statutes, you know, focus on onshore or in state waters and it being an LNG facility. [00:43:02] Speaker 07: We said historically LNG facilities were facilities that I can quote real quick. [00:43:11] Speaker 07: that were connected via pipeline was one, but the relevant one was located at the point of import or export such that LNG is directly transferred to or from an ocean going bulk carrier LNG tanker. [00:43:22] Speaker 07: So, you know, we thought of them being at the point of export or import and historically the point of export or import was directly transferring onto an LNG tanker. [00:43:32] Speaker 07: And so that's where we get the direct transfer tests here to for the direct transfer has always been by a pipeline, but we did leave room that if you. [00:43:42] Speaker 01: Sorry, so I just want to go back to clarify. [00:43:44] Speaker 01: The concern is that we're interpreting the words located on shore, right? [00:43:50] Speaker 01: And it seems to me that here we could have a facility that's located right on the coast. [00:43:55] Speaker 01: does maybe four or five of the statutory you know activities right it gasifies it liquefies it transports and it's on the shore and somehow your interpretation of the word located on shore would mean that's not an LNG terminal and I just [00:44:14] Speaker 01: And it's based on whether it transfers and how it transfers to a ship. [00:44:19] Speaker 01: I think that's sort of the fundamental problem I see with the direct transfer test. [00:44:23] Speaker 01: You have sort of a way to connect this back to the text. [00:44:26] Speaker 07: So connecting it back, the direct transfer test is about focused on locating at the point of import or export, which we deem to be the point at which you are transferring the LNG for purposes of bulk carrier facilities onto the vessel. [00:44:39] Speaker 07: If that makes sense. [00:44:41] Speaker 07: And so if you imagine, say they couldn't get permitting or something for the Port of St. [00:44:45] Speaker 07: Joe, no, Petro had said in their application or if the Port of St. [00:44:48] Speaker 07: Joe was full, they might truck to Jacksonville, which I think is 200 and something miles or Mobile, Alabama is 200 miles the other direction. [00:44:54] Speaker 07: You could have a facility that was located right at a coast but was not using a nearby port but was trucking many, many miles away. [00:45:02] Speaker 07: Again, we would say the trucking cuts off it being a LNG facility because you're trucking to a general use port. [00:45:08] Speaker 07: And that facility might be located at [00:45:12] Speaker 07: It might be located very close to the shore or right at the shoreline, but it's not at the point of import or export because that's that other general use port is the point of import or export. [00:45:20] Speaker 07: It would sort of distinguish if you built, thinking about trucking into Canada, if you built a facility on the sort of coast of Maine, or I guess in the Puget Sound might be easier, in Washington, right up against the water, but then you trucked up into British Columbia, [00:45:35] Speaker 07: You know, we would say the point of import or export is the truck crossing into British Columbia, and that facility is not located at the point of import or export. [00:45:42] Speaker 07: And so that's where we're, you know, we're thinking about LNG. [00:45:46] Speaker 07: Again, the terminal we think does describe deep water LNG ships, but we're thinking about where is the point of import or export. [00:45:53] Speaker 07: And that's why for pipelines, you know, it's that stretch of the pipeline that crosses the international border. [00:45:59] Speaker 06: Let me try it this way. [00:46:00] Speaker 06: You've just said that [00:46:03] Speaker 06: If you have a facility loading cartons, crates, what's the, I forgot the term. [00:46:09] Speaker 06: ISO containers. [00:46:10] Speaker 06: Containers. [00:46:11] Speaker 06: If you have a facility loading containers, it can be right on the border or it can be anywhere, right? [00:46:19] Speaker 06: And once the item is loaded on the truck, that's the end of the facility and you're not at the point of import. [00:46:27] Speaker 06: But let's focus on what you think is regulated. [00:46:31] Speaker 06: Is there something about the directness of transfer that just makes in geography? [00:46:45] Speaker 06: Because I have the same concern my colleagues do on direct transfer, which is just if you think at the highest level of generality, [00:46:54] Speaker 06: The statute requires geographic proximity and FERC has replaced that with some concept of directness. [00:47:06] Speaker 06: And that seems problematic unless there's something, you know, unless, I don't know, technologically a direct transfer facility has to be right there at the coast. [00:47:20] Speaker 07: So I think this goes to that, you know, the direct transfer is what we think of as the point of import or export. [00:47:26] Speaker 07: And so we've traditionally only regulated, including for the cross border pipelines, just the point of import and export was sort of import or export, sorry, was the section three jurisdiction and the section seven jurisdiction was the interstate. [00:47:38] Speaker 06: Even the facilities, the paradigm LNG export facility that you think the statute covers, right? [00:47:49] Speaker 06: On the outgoing end, it has like a mini insulated pipeline, right, that affects a transfer from the facility to the specialized ship. [00:48:04] Speaker 06: Yes. [00:48:05] Speaker 06: Is there some reason why that insulated pipeline can't be a quarter of a mile long? [00:48:12] Speaker 07: So if the pipeline is still transferring directly to the ship, I think we would say that because the facility includes that pipeline, the facility is then running up to the point. [00:48:22] Speaker 05: If it were in Nebraska and the pipeline ran to the ship, that would be on shore. [00:48:27] Speaker 07: It would actually be a little bit different there because the pipeline from Nebraska to whatever the point of export import state would be section seven pipeline. [00:48:34] Speaker 07: And so because it'd be interstate, it would be transiting. [00:48:38] Speaker 07: And so that would then be exempted from section three and put in section seven by the section 211. [00:48:45] Speaker 05: 10 miles away in the same state. [00:48:47] Speaker 05: So onshore. [00:48:49] Speaker 05: So in land in the same state onshore. [00:48:51] Speaker 07: So I think the Freeport example or the Alaska Gas Line example sort of talking or thinking in Freeport, the liquefaction facility was right at the shore. [00:49:01] Speaker 07: The inland pipeline for the intake was 9.6 miles. [00:49:04] Speaker 07: It was a traditional terminal right there at the shore. [00:49:07] Speaker 07: I suppose if you did the liquefaction at the other end of the 9.6 and you had the pipe, the pipe is all going to be still part of the same facility. [00:49:14] Speaker 07: and the facility is still going to extend to the shore, if that makes sense? [00:49:18] Speaker 06: So your answer... And still going to be directly transferring at the... No, I don't want to put words in your mouth, but I think your answer has to be that, has to turn on the metaphysics of what the facility is. [00:49:33] Speaker 06: And if you have, you know, the facility needs to load the ship, you need a pipeline to do that, [00:49:41] Speaker 06: you're saying that pipeline by definition is part of the facility. [00:49:47] Speaker 06: And it turns out most of these things are right on shore and the pipeline is 10 feet long, but same analysis if it's a quarter of a mile long. [00:49:58] Speaker 07: Again, the facility has to extend to the point of importer export, which in the example you're giving me is the pipe sort of piping into the LNG tanker at the coast. [00:50:09] Speaker 06: Yeah, and I guess I'm just trying to figure out is that pipeline going out from the facility, is it more like a truck which [00:50:18] Speaker 06: feels like it's just a different thing or is it, it's just part of the facility. [00:50:25] Speaker 06: You know, you've got the storage tank and the pipeline, it's just an arm coming out of it and there's something about the science or the technology that just requires you to treat that as one unit. [00:50:37] Speaker 07: I think it's partly because it's the same sort of facilities and things that we've traditionally regulated, the port, the coastal, the LNG tanker berth, et cetera, the takeoff pipeline, the liquefaction facilities, the storage facilities. [00:50:51] Speaker 07: They've all been part of a facility. [00:50:53] Speaker 07: And again, traditionally, when we've had applications for these and when we've talked about an LNG terminal, again, the terminal language was for these large tankers. [00:51:01] Speaker 07: We had other cases about pipelines crossing interstate. [00:51:05] Speaker 07: You know, the natural gas facilities language in section 211, that's where we draw our sort of first criteria that needs to be dedicated to natural gas. [00:51:15] Speaker 07: So again, the pipeline is dedicated to natural gas. [00:51:18] Speaker 07: It's all part of the same natural gas facilities. [00:51:20] Speaker 07: They're only dedicated to natural gas. [00:51:22] Speaker 07: Now, Petro here broke that chain of natural gas facilities when they load these general use containers onto trucks and they truck to a general use port. [00:51:30] Speaker 07: We did have, I think in paragraph 12 of the declaratory order and [00:51:34] Speaker 07: I can't recall the paragraph in the rehearing order. [00:51:35] Speaker 07: We talked about the crane, even though it's on by no petrol, still wouldn't be a part of the natural gas facilities because it's a general use crane. [00:51:42] Speaker 05: So, you know, it seems to me that what FERC wants to regulate, correct me if I'm wrong, is safety. [00:51:51] Speaker 05: And what's happening at these facilities is they're, I guess, cryogenically freezing the natural gas to make it liquid. [00:51:58] Speaker 05: It has to get to whatever 260 degrees below whatever it is. [00:52:02] Speaker 05: And it seems to me, why does it matter where the facility is if the purpose of this regulation is to promote safety? [00:52:12] Speaker 07: So I think the purpose of the Section 3E addition was to make clear that FERC was going to be regulating the site and construction and operation of these facilities as compared to states. [00:52:23] Speaker 07: There was obviously a dispute between California and FERC going on at the time about a proposed LNG terminal in the Port of Long Beach. [00:52:31] Speaker 05: And by all accounts, it seemed that FERC wanted standards that apply everywhere. [00:52:36] Speaker 05: They didn't want different states [00:52:38] Speaker 05: doing this on their own and different states have different capabilities and experience in regulating something like this. [00:52:44] Speaker 05: And so I'm just trying to understand why it is that FERC doesn't want to regulate these facilities unless they're right on the coastline, because it seems to me it's a matter of function, not location, if your goal is safety. [00:52:59] Speaker 07: So I think we've traditionally interpreted section three similar to how we interpret section seven and taken the view that you know you needed to be an importer like at the point of import. [00:53:10] Speaker 07: But why? [00:53:10] Speaker 05: I guess you keep going to it's our tradition but I'm trying to understand but why? [00:53:15] Speaker 07: We understood that the Congress's purpose were initially drafted the natural gas act to be concerned with the interstate pipeline transport at the time we didn't think that exports included the facilities it was district gas, I think there's cats are just going to see it during this year's call. [00:53:30] Speaker 07: We noted that it was district gas for this court sort of informed us that section 3 a covered more than just the actual import or export of the gas so you know our earlier reading of the statute was that [00:53:40] Speaker 07: it was focused on pipeline transportation for section 7 it was focused on the actual import export sales rates terms things like that. [00:53:48] Speaker 07: And so I'm not sure that we've treated the statute more broadly even after district gases being focused on safety as much as focused on where the party that regulates you know terms and conditions in some of these. [00:53:59] Speaker 07: when they're not asking for a declaratory order for import or export, but they're asking for certain rates if they're importing that they're going to be selling into the market and other things like that. [00:54:08] Speaker 05: But you're charged with regulating site and construction, et cetera. [00:54:12] Speaker 05: That's not rates. [00:54:15] Speaker 05: It seems to me that, correct me if I'm wrong, that doesn't all go to safety. [00:54:19] Speaker 05: Why else would you have to regulate site and construction and how these things are run? [00:54:25] Speaker 07: I think safety would be one concern, you know, environmental interests, regional interests. [00:54:30] Speaker 07: We've traditionally similarly regulated kind of siting of pipelines in the Section 7 situation. [00:54:36] Speaker 05: So my question is why does that depend on where it is, whether it's a quarter of a mile from the shore or five feet from the shore, why does it matter? [00:54:45] Speaker 07: For us, it matters for two reasons. [00:54:47] Speaker 07: We think that the statute used onshore and LNG terminal to talk about these deep water, or not, I shouldn't, to talk about these sort of bulk tanker facilities. [00:54:56] Speaker 07: And we traditionally treated our export and import jurisdiction, even after district gas, as focused on the point of export import, which was that kind of point of crossing a border, point of crossing an economic exclusionary zone. [00:55:08] Speaker 07: Let me try it this way. [00:55:09] Speaker 06: It seems like the practical effect of what you're doing is to draw a regulatory distinction between facilities that are loading specialized tankers through an outgoing pipe and facilities that are loading cartons. [00:55:35] Speaker 06: for shipping. [00:55:38] Speaker 06: What is the difference? [00:55:41] Speaker 06: Why might someone want to treat those two categories differently? [00:55:47] Speaker 07: So the general use containers or general use cargo ships, I think is what you're asking me. [00:55:52] Speaker 07: You know, we've always viewed general use facilities as outside of our jurisdiction because natural gas facilities meant things that were specifically dedicated to the import and export. [00:56:02] Speaker 07: And so that's where the import and export, the point, and so we need the point of import and export to have dedicated natural gas facilities. [00:56:10] Speaker 07: And so that's where the pipe that loads onto an LNG tanker ship is the point of import and export. [00:56:15] Speaker 06: All it's doing is natural gas. [00:56:17] Speaker 06: So sorry, all it's doing is natural gas, but the truck that carries these cartons. [00:56:26] Speaker 06: Can it just be any old truck and all the technologies in the carton doing the insulating, or do you need a special kind of truck to carry LNG? [00:56:35] Speaker 07: Well, so for purposes of this project, they're carrying LNG in these ISO international containers. [00:56:42] Speaker 07: Those containers can carry other things. [00:56:44] Speaker 07: A colleague said orange juice is something that they often want to cool when they're trucking that they would carry in the truck. [00:56:49] Speaker 07: The trucks could carry it. [00:56:50] Speaker 07: Yes. [00:56:50] Speaker 07: So if you cleaned it out after you had natural gas, you could have something different in that container. [00:56:54] Speaker 07: To your specific question, I assume that there's some sort of ISO container carrying truck. [00:56:59] Speaker 07: So it might be different than a general flatbed, but it's going to be some sort of ISO container truck. [00:57:04] Speaker 07: Either the truck or the container can accommodate a natural gas or orange juice or something else that needs to be kept cool and is in a liquid state there. [00:57:14] Speaker 07: So yes, I guess we and so we don't view those trucks as dedicated natural gas facilities. [00:57:20] Speaker 07: And so that kind of breaks the chain of what is the facility we're talking about with respect to no Petro. [00:57:24] Speaker 06: I mean, that might be an argument for why direct connection flows from your dedication requirement, but you linked it to onshore, which is the geographic requirement. [00:57:44] Speaker 07: Yeah, I think, again, I think our three criteria come from natural gas facilities located onshore and state waters transported sort of the waterborne aspect of the onshore there. [00:57:56] Speaker 07: And also from our use of LNG terminal, which again is traditionally these bulk carrier facilities are what we call terminals. [00:58:04] Speaker 07: In the congressional testimony, we described uniting ability for these large tanker berths. [00:58:09] Speaker 07: The point of importer export [00:58:11] Speaker 07: is, you know, we demarcate that and we didn't decide to have some sort of geographical proximity to the point of import or export. [00:58:19] Speaker 07: We looked at our traditional practice. [00:58:21] Speaker 07: We looked at what we'd seen before and thought the point of import or export is where you're directly transferring something to the foreign country in the case of a pipeline or to the tanker in the case of these LNG terminals that we had seen. [00:58:34] Speaker 05: It seems to me that you're relying a lot on your traditional practice or what you've always thought. [00:58:38] Speaker 05: But we have a statute here [00:58:40] Speaker 05: that is really inconsistent with your traditional practice. [00:58:42] Speaker 05: And the statute has to control, right? [00:58:45] Speaker 05: Yeah, I'm not sure that, or I guess we don't think the statute's inconsistent. [00:58:49] Speaker 05: Well, where in the statute does it say it's deep ports? [00:58:51] Speaker 05: It says all natural gas facilities that do all these things, transport, gasify, liquefy process. [00:58:58] Speaker 05: And where does it say at the point of import or export? [00:59:01] Speaker 05: It says that is imported. [00:59:03] Speaker 05: It doesn't say at the point of import or export. [00:59:06] Speaker 05: None of that is, the way you've construed the statute is at odds with what the statutory language says. [00:59:15] Speaker 07: You know, I think we think that natural gas facilities that do these functions for gas imported into the United States or exported from, you know, again, you're right. [00:59:24] Speaker 07: We're construing it against our traditional understanding of what section three is doing. [00:59:27] Speaker 05: Correct. [00:59:28] Speaker 05: And I'm suggesting to you that your traditional understanding to the extent it conflicts with the statute, the statute has to control. [00:59:35] Speaker 05: I'm asking you to point out where in the statute it says that it has to be next to the water and it has to be one of these deep port, big natural gas terminal things that you're thinking of. [00:59:47] Speaker 05: And where does it say that it has to be at the point of export? [00:59:49] Speaker 07: So obviously we think that the statute's ambiguous and it's broad and we think that Congress was legislating against. [00:59:55] Speaker 07: Where's the ambiguity? [00:59:57] Speaker 07: Onshore, again, as meaning at the shore can also mean coming towards the shore like an onshore wind is a wind coming from the ocean to the shore. [01:00:05] Speaker 07: It can mean located on land. [01:00:07] Speaker 07: So we think that onshore is broadly ambiguous. [01:00:09] Speaker 07: We do think that in using the term LNG terminal and the legislative history talking about these coastal facilities and LNG tankers, Congress was intending to legislate against our regulatory [01:00:20] Speaker 07: backdrop it. [01:00:20] Speaker 07: And so we think that the broad ambiguous language of the statute was not meant to displace our traditional understanding to legislate in light of our traditional understanding. [01:00:29] Speaker 07: Again, that's, they didn't, you know, they use LNG terminal, which was a term we had used in prior orders describing these coastal facilities that had large anchors. [01:00:36] Speaker 05: They didn't use, you know, all export facilities. [01:00:39] Speaker 05: They used a completely different definition of LNG terminal than your traditional understanding. [01:00:45] Speaker 05: And it doesn't say at the point of import or export, where is that ambiguous? [01:00:50] Speaker 07: No, it didn't. [01:00:51] Speaker 07: I think, and I believe this is covered in Shell or in Pivotal, but we traditionally thought of the point of import export versus the interstate commerce as being the line between Section 3 and Section 3. [01:01:04] Speaker 07: We're back to tradition, and I'm looking at that story. [01:01:06] Speaker 07: you know, in Section 211B, they excluded any pipeline or storage facility subject to our Section 7 jurisdiction. [01:01:15] Speaker 07: And so we thought that was an indication that, again, for these cross border pipelines, they were still thinking about the distinction that we have traditionally drawn between Section 7 jurisdiction and Section 3 jurisdiction. [01:01:26] Speaker 07: You know, that was an issue in other cases about [01:01:29] Speaker 07: intrastate transit or about where the section 7 regulations came versus section 3. [01:01:34] Speaker 07: But we did think when they exempted the section 7 they were sort of thinking of our traditional line between section 3 and section 7. [01:01:40] Speaker 02: Thank you. [01:01:44] Speaker 07: Thank you. [01:02:11] Speaker 04: May please the court. [01:02:12] Speaker 04: I am Jennifer Key. [01:02:14] Speaker 04: I am representing the intervener. [01:02:15] Speaker 04: No Petro, LNG, LLC. [01:02:18] Speaker 04: And I'm here just appearing to reinforce the position that my client does not view the case as moot. [01:02:26] Speaker 06: What can you tell us about your client's intentions? [01:02:30] Speaker 04: I could tell that currently they do not have plans to move forward with this project at this time, and that's due to market conditions, as we stated in our letter. [01:02:42] Speaker 04: That doesn't mean we've abandoned the idea completely at this port or any other port that has a suitable facility. [01:02:54] Speaker 04: suitable area nearby where we might engage in this activity. [01:03:00] Speaker 06: For how long does the declaratory order protect you if you want to begin construction? [01:03:07] Speaker 04: I mean, I view it protects us till another commission comes and changes the policy indefinitely. [01:03:18] Speaker 06: You would build the plant if the price of natural gas goes up. [01:03:23] Speaker 04: Yeah, and we need to find the right off-taker, and definitely the price of natural gas, I think, has an impact here. [01:03:34] Speaker 04: But we definitely think the standard generally used of [01:03:38] Speaker 04: The issue arising again has to be too remote and too speculative to not occur again. [01:03:47] Speaker 04: We don't think that standard of too remote or too speculative has been met. [01:03:51] Speaker 01: And the other often used speculative, that it's absolutely clear that the behavior which... As to your client's intentions, I imagine what you just said probably describes any number of potential projects they might have in the pipeline, right? [01:04:07] Speaker 01: know, we've got our our list of 20 projects we might do someday, maybe, and this project is now back in that bucket if, you know, the price of natural gas goes up and other conditions are favorable. [01:04:20] Speaker 01: Is that essentially what you're telling us? [01:04:23] Speaker 04: I don't think I will. [01:04:24] Speaker 04: I'd say it's more than just the price of gas. [01:04:26] Speaker 04: I think there's other [01:04:28] Speaker 04: market concerns other than the price of gas, but that basically the reason they're looking to export, and particularly, I can tell you this much, the areas they were looking to export to were generally not too far from Miami, the Yucatan, Belize, those areas where they do have trouble with, yeah. [01:04:52] Speaker 04: To produce electricity, natural gas can be used such that there are entities down there that if the right [01:05:06] Speaker 04: you know, if a right project was built in one of those areas that needed natural gas, um, you know, that they would be interested in specifically relating to the, um, the port at St. [01:05:19] Speaker 04: Joe, there is a piece of land that, um, the project was going to go on, um, [01:05:26] Speaker 04: is contaminated and it's highly contaminated such that it should be available to our client because there's almost nothing else that can go there. [01:05:36] Speaker 04: So when we talk about it, if a customer came along for the product and we fully expect that we could [01:05:49] Speaker 04: Um, we don't currently have, uh, I think an option to lease that piece of land, but that piece of land can basically be used very few other things. [01:06:05] Speaker 02: Thank you. [01:06:06] Speaker 06: Appreciate your. [01:06:20] Speaker 03: I would like to make a couple of points about mootness and then a few points on the merits. [01:06:25] Speaker 03: First, the commission says it decides these things on a case-by-case basis. [01:06:30] Speaker 03: I think, Judge Casas, as you pointed out, it doesn't apply facts and circumstances test. [01:06:36] Speaker 03: It has a pretty definitive ruling about truck transport being outside of its jurisdiction. [01:06:42] Speaker 03: It also mentions, the commission mentions that public citizen could seek a declaratory ruling if no Petro decides to start up this project again. [01:06:51] Speaker 03: To my knowledge, there's no timing requirement on a declaratory ruling. [01:06:54] Speaker 03: The commission could sit on it and Petro could build its plan. [01:06:57] Speaker 03: And by then the case moved. [01:07:00] Speaker 03: On the merits, the commission spent a lot of time on term LNG terminal and its historical understanding. [01:07:06] Speaker 03: It is not a term of art. [01:07:07] Speaker 03: It's a defined term in the statute. [01:07:08] Speaker 03: The question is, what does that definition mean? [01:07:12] Speaker 03: I think almost nothing in the commission's order really parses out the word LNG terminal. [01:07:18] Speaker 03: It's about what the meaning of onshore is. [01:07:23] Speaker 03: The other point I would like to make on LNG terminal, although the commission mentions large facilities that directly transfers LNG onto tankers, the new fortress decision that this court decided last year involved a completely different type of facility. [01:07:36] Speaker 03: There was a chain of transfers onto the dock, onto a floating storage unit that then uses a small hose. [01:07:44] Speaker 03: transfer the LNG onshore and the Commission said we're not going to let you circumvent our jurisdiction through innovative designs. [01:07:51] Speaker 03: So I think that's completely inconsistent with Commission's position that it looks to its historical understanding of what LNG terminals look like. [01:07:59] Speaker 03: In terms of the statutory definition, I'll just point out liquefaction facilities, regasification facilities, they'll never be located at the point of export because they have to be connected to the ship in some way, either by truck. [01:08:12] Speaker 03: It's the type of truck that will be located [01:08:14] Speaker 03: at the point of export. [01:08:17] Speaker 03: And finally, as to the commission's emphasis on point of export, that's not a permissible dictionary definition of the term. [01:08:24] Speaker 03: The plausible universe of interpretations are on land or near the coast, not near the point of export. [01:08:31] Speaker 03: I think that cabins your authority altogether. [01:08:36] Speaker 03: Or has no further questions. [01:08:38] Speaker 02: Thank you. [01:08:40] Speaker 06: Thanks to all council. [01:08:41] Speaker 06: The case is submitted.