Congress Secretly Strengthens Feds' Hands On LNG Permitting

The jurisdictional battle between California and the Federal Energy Regulatory Commission over who calls the shots on liquefied natural gas terminal siting heated up last week. Language boosting FERC's permitting clout was quietly slipped into the conference report accompanying the massive federal appropriations bill. Although not binding, the provision could be used as proof that Congress intended to give FERC sole say over LNG siting under the Natural Gas Act-the crux of a lawsuit between the California Public Utilities Commission and FERC involving Sound Energy Solutions' LNG project in Long Beach, California. With this new language, "FERC can preempt states on the permitting and siting of LNG facilities, thereby squelching the ability of states and local communities to have adequate control over these controversial projects," said Tyson Slocum, research director of Public Citizen. If a federal court rules that FERC has sole authority over LNG siting, it would most likely make Sound Energy's proposed LNG terminal easier to build. Going through the state regulatory process in addition to the federal one would create uncertainty and delay the development of new gas supplies, Sound Energy, a Mitsubishi subsidiary, asserts. The omnibus spending bill, HR 4818, was passed by both houses but will not be enacted until another controversial provision-also secretly added, and which would infringe on taxpayer privacy?is voided by the House. Unlike that provision, the secretly inserted LNG language will not be challenged because "frankly, there is not the same kind of groundswell over such a local issue," said David Sandretti, spokesperson for Senator Barbara Boxer (D-California). "This omnibus bill was stuffed tighter than your Thanksgiving turkey" with secret provisions, he added. Slocum also took issue with the surreptitious additions to the 3,600-plus-page package. "Congress has created a culture of unaccountability that robs the public-and in this case, whole states-of the notion that our laws and America's policies are deliberated in a fair and open manner," Slocum said. The new provision states, "The Natural Gas Act clearly preempts States on matters of approving and certifying natural gas infrastructure associated with interstate and foreign commerce. These facilities need one clear process for review, approval and siting decisions." CPUC attorney Harvey Morris was not overly concerned by the language at issue because it was not in the bill and does not amend the Natural Gas Act. Before that provision came to light, two dozen members of Congress from California urged the CPUC to consider holding evidentiary hearings on alternatives to LNG development and the fuel's potential impact on rates. "Full evidentiary hearings addressing fundamental supply and demand issues will help the commission select the most cost-effective options that are in the best interest of utility ratepayers and the state as a whole," wrote the lawmakers in a joint November 23 letter to CPUC president Mike Peevey. Signatories include representatives Nancy Pelosi, George Miller, Maxine Waters, Tom Lantos, and Ellen Tauscher. In early September, state regulators adopted aggressive policies to make way for LNG development and rejected calls for hearings on the underlying assumptions behind the need for imported gas ( Circuit , September 3, 2004). Also during Thanksgiving week, the commission canceled January hearings regarding Sound Energy's onshore facility in Long Beach. Commission judges decided to wait for the release of an environmental impact report on the terminal, expected in March. Sound Energy Solutions is not concerned about the hearing postponement, said Tom Giles, the company's chief operating officer. "The project is proceeding and we're excited about it," he said. He added that the environmental reviews being conducted by the Port of Long Beach and federal regulators are on track ( Circuit , June 18, 2004). Lisa Weinzimer also contributed to this report.

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Congress Secretly Strengthens Feds’ Hands On LNG Permitting

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