Federal regulators say they, not states, have say over approving natural gas terminals


Associated Press Writer

Last update: 24 March 2004

WASHINGTON -- Regulators on Wednesday rejected arguments by California that states and the federal government have authority over approving liquefied natural gas facilities.

The Federal Energy Regulatory Commission said the federal government has sole jurisdiction over siting and construction of the terminals.

The California Public Utilities Commission had argued that companies seeking to build an LNG terminal at the Port of Long Beach must submit an application to the state as well as to the federal agency.

The issue of jurisdiction over LNG terminals -- including siting decisions and environmental impact reviews -- is expected to grow in importance in the coming years. There are nearly 30 proposals for LNG facilities in various stages of development.

FERC Chairman Pat Wood emphasized that the agency would work with state and local officials in considering such proposals. He also urged companies seeking approval for such facilities to do their "local homework first" before submitting an application to FERC, said an agency spokeswoman.

Proposals for two LNG terminals -- one in California and the other in Maine -- were canceled recently because of local opposition.

Calpine canceled an LNG project near Eureka, Calif., because of what officials said was negative feedback from local citizens and officials. Strong opposition to the plan surfaced at a Eureka City Council meeting earlier this month.

In Maine, TransCanada Corp. and ConocoPhillips abandoned a plan to build an LNG terminal at a former Navy fuel depot site after citizens in the community of Harpswell voted 55-45 against leasing land for the facility.

The case involving Long Beach appeared to test the traditional view that FERC has sole jurisdiction over LNG facilities since it regulates the transportation of natural gas. In Wednesday's decision, the agency sought to clarify the jurisdictional question.

The commission said in a statement that it would work closely with the California officials and with local agencies in reviewing the application by Sound Energy Solutions, the company seeking to build the terminal at the Port of Long Beach.

It said it would examine the facility's potential impact on the environment and cultural resources and take into consideration tanker operation, marine facilities, safety and terminal siting and operation.

"We acknowledge the legitimate concerns of the CPUC regarding matters of safety and security and give our assurance that the evaluation of the proposed project will include thorough and rigorous review of these issues," the commission said.

Sound Energy Solutions argued that the California PUC's involvement cast "a cloud of uncertainty" over the project.

The state agency maintained that while federal law gives FERC authority over gas imports, it does not explicitly give it authority over LNG facilities within a state.

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