One week after California regulators announced they had asserted jurisdiction over proposed liquefied natural gas (LNG) facilities in Long Beach harbor, the state’s chief regulator Michael R. Peevey last Monday personally extended an olive branch to FERC Chairman Pat Wood in the “spirit of cooperation” to resolve any potential conflicts between the two agencies.

Peevey’s conciliatory letter came after the California Public Utilities Commission (CPUC) informed FERC in late February that it had voted to assert jurisdiction over Sound Energy Solutions (SES), a U.S. subsidiary of Japan’s Mitsubishi Corp., and its proposed LNG plant in the state, setting the stage for a potential power struggle between the federal and state agencies.

In a Feb. 23 protest filed at FERC, the CPUC acknowledged that FERC had clear-cut authority over the actual importing of LNG under the Natural Gas Act (NGA), but it “questioned the FERC’s jurisdiction over the LNG facilities, and over the company owning and operating the facilities, in light of the facts in this case where the facilities, the sales, and the transportation of natural gas would be wholly within the state of California and do not involve interstate pipelines,” wrote CPUC President Peevey in his March 1 letter to Wood.

Given this shared federal-state jurisdiction, he proposed that the two agencies coordinate hearings on the SES LNG project in California. “There is precedent, as well as sound policy reasons, for the FERC and CPUC to attempt to cooperate with each other in exploring the issues involving SES’s proposed LNG facilities at the Port of Long Beach, California.”

As soon as SES submits its project application to the CPUC, “we would be interested in having CPUC staff work with FERC staff in order to make arrangements for how our two agencies could jointly conduct concurrent hearings in California,” Peevey said.

He urged FERC to “please consider our proposed procedures or other ways in which we can work together while respecting the jurisdiction of the CPUC in this matter.”

This was the second time that the CPUC had proposed that the two agencies work together on the SES LNG project. The CPUC initially recommended joint agency hearings in its Feb. 23 protest, but FERC has been noticeably silent on the issue.

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