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Kelliher Says New Law Protects States' Veto Over LNG Projects; States Have Different View

While the newly enacted energy bill preserves FERC's exclusive authority to site liquefied natural gas (LNG) import terminals, Commission Chairman Joseph Kelliher contends it also safeguards the rights of states to "effectively veto" LNG projects under federal laws designed to protect the environment and coastlines from energy activities and other construction.

States continue to have the right to exercise their authority under the Coastal Zone Management Act (CZMA), Clean Air Act and Clean Water Act to block LNG projects "regardless of any FERC decision," he wrote in a letter to the Wall Street Journal earlier this week. "In short, the new law maintains the status quo" with respect to state and federal authority over LNG facilities.

"The only change under the energy bill is to allow FERC to set reasonable and statutorily supported timelines for the states to exercise their Clean Air Act and Clean Water Act permitting processes," Kelliher said. And for the CZMA, the new law sets timelines for the secretary of the Commerce Department to act on administrative appeals of state decisions.

But "this in no way takes away the states' authorities. Indeed, the bill enhances state oversight by giving the states authority they don't have now to conduct safety inspections of LNG facilities," he said.

But states aren't swayed by Kelliher's arguments. "We still consider this a preemption even though the chairman says states have veto power" over FERC-approved LNG projects, said Tamra Spielvogel of the National Conference of State Legislatures in Washington, DC.

Congress included the LNG language in the bill because California regulators challenged FERC's claim of exclusive jurisdiction in court, Kelliher noted. The lawsuit, which is pending in the U.S. Court of Appeals for the Ninth Circuit in California, "threatened to bring the development of LNG import facilities to a standstill, which is why Congress acted."

By affirming FERC's authority under the Natural Gas Act, "the legislation resolves the regulatory uncertainty created by the [California Public Utilities Commission's] challenge to FERC's established authority," he said.

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