Congress over the weekend clarified that the Federal Energy Regulatory Commission, not the states, has exclusive jurisdiction over the approval and siting of liquefied natural gas (LNG) terminals.

Language confirming that the Commission has overriding authority over onshore LNG facilities was included in a conference report on the omnibus spending bill for fiscal year 2005 that Congress approved over the weekend (H.R. 4818).

“The conferees agree on this point [of FERC jurisdiction] and disagree with the position of at least one state government agency that it should be the authority responsible for LNG terminal siting within its boundaries, rather than the FERC,” said the report. “Because LNG terminals affect both interstate and foreign commerce, LNG facility development requires a process that…looks at the national public interest, and not just the interest of one state.”

The report provides a “sense of Congress” on the issue of LNG terminal jurisdiction, but it doesn’t have the effect of law, said Charles Isom, whose boss Rep. Lee Terry (R-NE) introduced a bill in May to end the “jurisdictional conflicts and legal ambiguities” over LNG jurisdiction (see Daily GPI, May 21).

“Our bill would actually be law,” he noted. Terry plans in the 109th Congress to re-introduce his legislation, which also would make FERC the lead agency for carrying out environmental reviews and the permitting of LNG projects; set a deadline for the Commission to act on LNG terminal projects (one year after an application has been filed); and codify a FERC ruling exempting LNG terminals from the agency’s open-access requirements.

The language in the conference report “lays the foundation” for Terry’s measure, Isom said.

Congress felt obligated to address the issue after California regulators earlier this year challenged FERC’s jurisdiction over Sound Energy Solutions’ planned LNG terminal for the Port of Long Beach, CA. In an order in March, the Commission held that it had jurisdiction under Section 3 of the Natural Gas Act and by the authority of the energy secretary over the siting, construction and operation of the proposed terminal [CP04-58]. Sound Energy Solutions is a U.S. subsidiary of Japan’s Mitsubishi Corp.

The California Public Utilities Commission has asked the U.S. Court of Appeals for the District of Columbia to review the FERC decision in the case.

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