The issue of who has jurisdiction over new liquefied natural gas (LNG) terminal facilities — the federal government or the states — will be the focus of a House subcommittee meeting this week.

The House Government Reform Committee’s subcommittee on Energy Policy, Natural Resources and Regulatory Affairs will tackle on Tuesday the thorny issue, which has arisen as a result of a jurisdictional dispute between FERC and California over an LNG terminal planned for that state.

Expected to appear before the panel are FERC Chairman Pat Wood; Donald Santa, president of the Interstate Natural Gas Association of America; Rear Admiral Larry Hereth, director of the Office of Port Security for the U.S. Coast Guard; David Garman, acting under secretary for the Department of Energy; Joe Desmond, deputy secretary of energy for the California Resources Agency; representatives from the Louisiana Public Service Commission and Maryland Public Service Commission; and Philip Warburg, president of the Conservation Law Foundation.

Notably, no one representing the California Public Utilities Commission (CPUC), the state agency involved in the dispute with FERC, will be at the hearing.

The jurisdictional controversy is an issue that will be decided in the “courts or in Congress, or maybe both,” said a natural gas legislative expert. He believes that Rep. Lee Terry’s (R-NE) bill, which would place jurisdiction for the siting and construction of LNG terminals solely with FERC, “stands a good chance of being introduced in the Senate.” Terry’s bipartisan measure was introduced in the House in May (see NGI, May 24).

Earlier this month, the Federal Energy Regulatory Commission upheld a March order in which it asserted “exclusive jurisdiction” over the planned LNG terminal for the Port of Long Beach, CA, that is being sponsored by Sound Energy Solutions, a U.S. subsidiary of Japan’s Mitsubishi Corp. This facility is at the center of the ongoing dispute between the federal and state energy regulators. The CPUC has 60 days to appeal the decision in federal court.

“As of this time, no state has a comprehensive, statutory scheme addressing LNG import facilities, though several regulate LNG storage facilities,” said Rep. Doug Ose (R-CA), chairman of the House Government Reform Committee, in a memo last week to subcommittee members. “California’s LNG Terminal Act of 1977…was repealed in 1987,” he noted.

“The question of whether FERC possesses exclusive jurisdiction over siting of onshore facilities turns on interpretation of the [Natural Gas Act],” Ose believes.

The “state and local authorities want more authority to say ‘no’ [to the projects]…scare off a lot of development,” countered the legislative analyst. Already LNG projects in Alabama and several in New England have been halted, and “all of them in California are in jeopardy,” he noted.

The states “[shouldn’t] complain about…natural gas prices if [they] don’t want to fix the problem.”

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.