North America’s new-found wealth in natural gas is driving energy industry participants to seek out new markets for the suddenly abundant fuel. Among these are markets for vehicular and marine fuels, other applications employing high-horsepower internal combustion engines and markets requiring supplies of natural gas to meet peak shaving or “off the grid” demands. Petroleum-derived fuels, principally diesel, currently dominate the vehicular fuel, marine and high horsepower markets. Natural gas, often converted into liquefied natural gas (LNG) for ease of transportation and storage, can be substituted for diesel and other petroleum-derived fuels relatively easily and, given natural gas’ lower cost and lower emissions, can be extremely attractive to fleet operators and engine owners. Natural gas’ price advantage is also enticing to large volume energy consumers not served by piped natural gas that instead rely on propane and petroleum-derived fuels.

Because facilities producing LNG for vehicular and high horsepower engine use and for use in peak shaving and remote markets would be engaged in the transportation and sale of natural gas, their proposed activities raise questions as to whether and the extent to which they are subject to regulation by the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act (NGA). On September 4, 2014, in response to LNG project developer petitions, FERC issued two orders addressing such questions. These orders are significant because in them FERC held that it does not have jurisdiction over activities that are likely to be performed by LNG facilities serving vehicular fuel, marine, high horsepower and some peak shaving and remote markets.