FERC has denied a petition in which Dynegy LNG Production Terminal L.P. asked the Commission to disclaim jurisdiction over the siting, construction and operation of the company’s planned liquefied natural gas (LNG) import facility in Hackberry, LA.

The Commission order rejected Dynegy LNG’s argument that the Energy Act of 1992 removed FERC’s jurisdiction over the importation of LNG and LNG import facilities. While the 1992 act did de-regulate the sale of imported natural gas and LNG as a commodity, the order noted that it left intact FERC’s jurisdiction over the siting, construction and operation of LNG facilities (CP01-423).

“..[E]xamination of the language in the Energy Policy Act, the legislative history of the act, and statements by members of the House of Representatives and Senate in support or opposition to the act, reveals no intent by Congress to remove Commission jurisdiction in these matters.” it noted.

While the decision was a “close call” on the legal merits, Chairman Pat Wood said he thought that “in light of the current environment, though, it is a better call” for FERC to continue exerting jurisdiction over LNG import facilities in the United States.

Granting Dynegy LNG’s petition would have been “unacceptable” from a regulatory standpoint, said Commissioner William Massey during FERC’s regular meeting Tuesday. “The logical extension of this petition is that a large company could build an LNG import facility, and pick and choose both the customers to be served and its own price.”

In the event its petition was denied, Dynegy asked FERC to treat its petition as an application for import authority. The Commission denied the request on the grounds that it lacks such authority. “Applications for authority to import natural gas must be submitted to the Department of Energy,” the order said.

The planned Dynegy LNG import facility in Louisiana would have the capacity to receive and vaporize 750 MMcf/d initially, and be expanded to 1.5 Bcf/d later. The company also said it intends to build a header pipeline that would connect the plant to multiple interstate pipelines. The project is expected to be in service in the fourth quarter of 2003.

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