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Kelliher: Energy Law Nixes Legal Challenge of FERC's LNG Siting Power

With the passage of the omnibus energy bill last month, Congress "in effect visciated the lawsuit" brought by California regulators challenging FERC's jurisdiction over the siting of liquefied natural gas (LNG) terminals, FERC Chairman Joseph Kelliher said last Wednesday.

In uttering those words, Kelliher became one of the few to publicly say that he believes the new energy law negates the lawsuit currently pending in the U.S. Court of Appeals for the Ninth Circuit in California.

That lawsuit cast a "pall...over our authority to approve LNG facilities," he said during an interview on Bloomberg TV's "Money & Politics" program. The energy bill responded to the California legal challenge by clarifying that the Federal Energy Regulatory Commission, not the states, has "exclusive" jurisdiction over the siting of LNG terminals.

The flap began last year when FERC asserted primary jurisdiction in a case involving a Mitsubishi Corp. subsidiary's planned LNG terminal for the Port of Long Beach, CA. The California Public Utilities Commission (CPUC) challenged FERC's claim, but the agency rejected it on rehearing. The CPUC then appealed the case in court.

"I believe that the federal authority [given to FERC in the new energy law] will help that situation, but there's a considerable amount of local concern on safety issues that need to be addressed" in California, said Sempra Energy CEO Stephen Baum on the Bloomberg program.

He said he believes the energy bill will help LNG developers in general and Sempra Energy specifically. "Maybe over the next seven or eight years we'll see 10 additional terminals" built.

Currently, Baum noted that Sempra Energy is in the process of building two LNG import terminals in Mexico and Louisiana, and licensing a third facility in Texas.

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