Energy Bill Has FERC Proposing Mandatory LNG Process

The Federal Energy Regulatory Commission took the first formal step to implement the Energy Policy Act of 2005, proposing that its voluntary prefiling process for developers of new liquefied natural gas (LNG) terminals become mandatory. Technically, FERC issued a notice of proposed rulemaking August 29, seeking comments on its proposal by September 15. A final rule is expected by October 7. These dates are necessary to meet the law's requirement that prefiling regulations be in place within 60 days of President Bush's signing of the new law. "The commission has very tight deadlines to carry out 15 new regulatory mandates from Congress, and the [LNG rulemaking] proposal illustrates our dedication to meeting those deadlines," stated commission chair Joseph Kelliher. FERC attorney Cynthia Marlette has the new position overseeing the commission's implementation of its substantial obligations under the energy bill. Lawyers practicing before the commission were generally pleased with the proposed regulations, noting that they contained few, if any, changes in the existing process. FERC's "staff have evolved a very helpful process" for those that want to seek permission to build an LNG terminal, explained Akin Gump partner Gail Watkins. "It makes sense to codify" this effort, she continued. Some criticized the lack of specifics in the proposal to reflect language in the new law mandating consultation with state and local authorities on safety issues raised by proposed terminals. But White & Case partner Stuart Caplan doesn't see any need for such specifics, pointing out that the new regulations will "make mandatory a process that requires vetting" of all issues involved in the construction of new terminals. FERC notes that it has used prefiling procedures for several years as a voluntary option available to all potential applicants for Natural Gas Act facilities. The process informs its staff about potential future projects and helps identify landowners, state and local officials, and others with an interest in a planned proposal. Prefiling also helps companies to prepare applications for commission authorization that address the proper scope of public interests and issues, according to FERC's statement. The proposed rules would require applicants to submit conceptual design and engineering features of the project, as well as extensive information about potential environmental, security, and safety impacts, the commission said. "FERC is going to read in a broad fashion the LNG terminal definition" that Congress added to the new law, Watkins said.

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Energy Bill Has FERC Proposing Mandatory LNG Process

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