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FERC Looks to New Congress for Clarity on LNG Jurisdiction

FERC Looks to New Congress for Clarity on LNG Jurisdiction

Citing the highly public jurisdictional spat between it and the state of California, the Federal Energy Regulatory Commission has called on Congress to modify Section 3 of the Natural Gas Act (NGA) to make "clear and unambiguous" that FERC has exclusive authority over the siting of liquefied natural gas (LNG) import terminals onshore and in state waters, as well as over pipeline facilities that deliver gas from the LNG terminals.

"The FERC has been processing requests to site, construct and operate LNG terminals as quickly as possible under Section 3 of the Natural Gas Act. Nevertheless, FERC is embroiled in a dispute with a state [California] over the jurisdiction for the approval of LNG terminals," the Commission said in comments filed with the Senate Energy and Natural Resources Committee.

"Because resolution of the issue could take years through the judicial review process, it would be preferable to resolve the dispute in the near term by enacting legislation to establish one authority for siting LNG terminals, not a state-by-state regime of LNG siting regulations," the agency proposed.

"Without this continuity of regulation, there will [be] a chilling effect upon terminal sponsors who will be hesitant to invest their money and, without the necessary timely investment, there will be difficulty in securing the gas supply that the U.S. will demand in the future."

The proposed change is one of several that FERC advocated in comments filed with the Senate energy panel. The committee solicited the comments from state and federal regulators, natural gas trade groups, analysts and energy companies to be considered during its Jan. 24 conference addressing gas supply and demand.

In addition, the Commission proposed that Congress amend Section 3 of the NGA to grant the right of eminent domain to all FERC authorizations issued under that section of the law. "This authority would remove a possible obstacle to the timely construction of needed LNG facilities," it said.

The NGA also should be revised to make FERC the lead agency for the National Environmental Policy Act (NEPA) review for any natural gas infrastructure project and for the "development of the record necessary for all federal and state administered actions under federal law," FERC noted.

The Commission would set a deadline for other agencies to act with respect to a specific project. "The other agencies would have to act within that schedule or their approval would be conclusively presumed. Also, FERC would develop a single NEPA document by consolidating the environmental review of all federal and state agencies to prevent duplicative efforts and sequential decision-making."

With respect to its oversight of gas markets, FERC has asked Congress to "enhance [its] authority to discipline and correct harmful behavior by providing for or increasing civil penalty authority under FERC's natural gas statutes," according to an executive summary issued by the Senate energy panel.

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