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RI Asks Court to Reject Federal Sovereignty Over Proposed Providence LNG Terminal

Rhode Island's attorney general last Monday sued KeySpan Energy over its plan to expand its liquefied natural gas (LNG) storage facility in Providence, RI, into an import terminal.

In filing a complaint in the U.S. District Court for the District of Rhode Island, Attorney General Patrick C. Lynch asked the court to reject the notion that federal law alone governs whether or not KeySpan can site an LNG facility in Providence. The action came a little more than a week after KeySpan LNG filed a lawsuit in federal court seeking to clarify the permitting process for an upgrade of its storage facility to a 525 MMcf/d LNG import terminal (see NGI, March 7).

Rhode Island Gov. Donald L. Carcieri vowed that his state would fight the KeySpan lawsuit, saying it seeks to block the state's Coastal Resources Management Council (CRMC) from "exercising its federally stipulated jurisdiction" to review the KeySpan project to determine its consistency with the state's Coastal Resources Management Plan.

"It's important for Rhode Islanders to understand what's going on here. KeySpan sued them [in early March] in federal court and asked the court to preempt their rights. KeySpan wants Rhode Islanders to believe that a federal regulation trumps their right to determine whether or not they want an LNG terminal in their capital city. What I'm telling KeySpan on their behalf, however, is that a regulation cannot and will not preempt their ownership, their title to the seabed of Narragansett Bay," Lynch said.

He said he believes that by suing the state first, "KeySpan is attempting to squelch Rhode Islanders' rights to determine the destiny of Narragansett Bay."

KeySpan Energy spokeswoman Carmen Fields last Tuesday declined to respond to Rhode Island's complaint, saying, "We have not seen the suit yet, and as a rule we do not comment on pending litigation."

The back-and-forth lawsuits mirror the ongoing dispute that the Federal Energy Regulatory Commission has been having with California regulators over who has jurisdiction over a LNG terminal planned for the Port of Long Beach, CA. In a March 2004 order, the Commission asserted "exclusive jurisdiction" over the proposed LNG plant, saying its jurisdiction stemmed from Section 3 of the Natural Gas Act (NGA) and from the authority of the energy secretary (see NGI, March 29, 2004).

The California Public Utilities Commission countered that it has jurisdiction over the planned terminal. The matter is now pending in the U.S. Court of Appeals for the District of Columbia Circuit.

FERC fully supports KeySpan's plans to upgrade its Providence facility, as well as to build controversial LNG terminals in Fall River, MA (Weaver's Cove) and offshore Connecticut in Long Island Sound (Broadway Energy).

A delegation led by Sens. Lincoln Chafee (R-RI) and Jack Reed (D-RI), and Reps. Patrick Kennedy and James Langevin, both Democrats from Rhode Island, as well as Lynch and Providence Mayor David Cicilline are scheduled to meet with FERC Chairman Pat Wood on Thursday (March 17) at FERC's headquarters in Washington, DC to discuss the proposed Providence LNG terminal.

If ultimately approved, the KeySpan LNG upgrade would boost the facility's vaporization capacity to 525 MMcf/d from 150 MMcf/d, and would provide 375 MMcf/d of additional firm baseload supply of natural gas to Rhode Island and the greater New England region. KeySpan LNG signed an agreement in October 2003 with BG LNG to undertake the $50 million conversion project.

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