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FERC Rejects New England Lawmakers' 'Regional Approach' to LNG Construction

FERC Rejects New England Lawmakers' 'Regional Approach' to LNG Construction

The Federal Energy Regulatory Commission has signaled its reluctance to consider a recommendation of New England House lawmakers that it review proposals for construction of new liquefied natural gas (LNG) terminals based on a regional approach.

The Commission indicated its dislike for the approach in a letter to Rep. John F. Tierney (D-MA) last month. Tierney, along with a number of other House lawmakers from Massachusetts and Rhode Island, had called on the agency in mid-October to make its "decisions [on] whether to build and where to locate LNG facilities...carefully and from a regional perspective rather than on an ad hoc basis." (see NGI, Oct. 25)

FERC informed the House members that it already takes regional issues into consideration in its decisions on new LNG projects, and said the action proposed by the lawmakers could undermine the agency's regulatory responsiveness.

"Even in the unlikely event that a consensus can be reached within a reasonable time frame identifying potential sites, and assuming that sponsors apply to site projects at those locations, we must then conduct site-specific impact analyses. Inevitably, affected stakeholders at those locations would raise their own, unique concerns and issues to be resolved. The time consumed to arrive at yet another contentious, case-specific forum would undermine the regulatory responsiveness and certainty needed by government agencies, industry and the financial community to make firm decisions" on LNG projects, FERC Chairman Pat Wood wrote to Tierney.

The siting of LNG facilities is a heated issue in both Massachusetts and Rhode Island, where local opposition to new projects is running high. Currently, there are approximately four LNG facilities that are either proposed or planned for onshore or off the coast of the two states.

Under their proposed regional approach, the New England lawmakers said new LNG facilities should only be built if they meet a "defined regional need;" provide "utmost protection" to public safety and have the least impact on nearby communities; and protect the environment.

"The federal government should not just consider the locations targeted by companies seeking to build new facilities. Demand for the facility should first be established and, if a new LNG facility is needed in a particular region, under NEPA [National Environmental Policy Act], alternative locations in that region should be considered," the New England lawmakers said.

FERC cited the number of outreach activities and conferences that it has held in the past couple of years focusing on the need for more natural gas infrastructure in the New England region. It also issued the "New England Natural Gas Infrastructure Report" in December 2003, which was submitted to House and Senate energy committees and found that "adequate capacity exists to meet projected demand through 2005 and that proposed new construction of natural gas infrastructure would meet demand through 2010." The new infrastructure would include both gas pipelines and LNG import facilities, the agency said.

With respect to the review and permitting of LNG facilities, the Commission also assured the New England lawmakers that it "[was] committed to close coordination" with the Department of Transportation's Office of Pipeline Safety and the U.S. Coast Guard within the U.S. Department of Homeland Security. At this time, FERC noted there are 11 new LNG import facilities proposed around the nation in various stages of review, and others are expected.

"Your letter recognizes the importance of preventing any undue delay to the development of LNG facilities. We believe that regional issues and needs play an important role in the Commission's decision-making process and in our coordination with other agencies at the state and federal level," Wood told Tierney. "We will continue processing the proposals currently before the Commission to ensure the decisions can be made to allow the efficient and timely development of the much-needed infrastructure in the Northeast."

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