FERC Commissioner Joseph Kelliher last week called on California regulators to drop their challenge to FERC’s claim of “exclusive jurisdiction” over the siting and construction of a planned liquefied natural gas (LNG) terminal for the Port of Long Beach, CA, saying the state could turn out to be the biggest loser if it continues its effort.

“The stakes in this jurisdictional dispute are high. If the CPUC [California Public Utilities Commission] were to prevail in its challenge, I believe LNG development would be severely retarded, not only in California but also in the rest of the nation. The biggest losers may well be California consumers, who would end up paying high prices for natural gas,” warned Kelliher in a June 24 letter to CPUC President Michael R. Peevey.

“I urge the…jurisdictional challenge be dropped so the CPUC can join the other California agencies that are cooperating with us in review of this proposal,” he said.

Congress and the courts have given FERC the authority to license facilities to import LNG, Kelliher noted. “The Commission does not have the discretion to abdicate these legal duties, and has no authority to delegate its licensing jurisdiction to the CPUC, even if it were so inclined.”

The letter comes on the heels of a two-page missive from Peevey in early June, which was sparked by Kelliher’s assertion in mid-May that all future LNG projects across the country facing regulatory review could be in trouble if FERC loses its jurisdictional battle with California (see Daily GPI, May 18). Peevey accused FERC of creating the “present jurisdictional conflict.

In response, Kelliher said “the Commission’s assertion of jurisdiction is not recent; it occurred 30 years ago, in the licensing of the Distrigas facility in Everett, MA,” a decision he noted that “was upheld by the courts, and has remained unchallenged — until now.”

Kelliher further accused Peevey of misrepresenting the origins of the FERC-CPUC dispute. “The California Public Utilities Commission…is not reluctantly responding to some recent jurisdictional claim made by the Commission, but [rather is] provoking a jurisdictional conflict in an area that was settled many years ago.”

He also disputed Peevey’s claim that FERC is depriving the CPUC and other state agencies of any decision-making authority over the project at the center of the feud, Sound Energy Solution’s LNG terminal.

“It has long been the Commission’s practice to conform its regulatory requirements to accommodate those of state and local authorities,” and the agency has done this in the Sound Energy case, Kelliher said.

In addition, he challenged Peevey’s claim that FERC doesn’t give “due consideration” to the safety and security concerns of nearby communities. “The history of LNG development in your own state makes plain the views of local communities are respected. The proposed LNG facility in Humboldt Bay was abandoned due to the opposition of the local community,” Kelliher said.

In a mid-June order on rehearing, FERC denied for a second time the CPUC’s bid to claim sole jurisdiction over the LNG project of Sound Energy, a U.S. subsidiary of Japan’s Mitsubishi Corp.(see Daily GPI, June 14). The Commission said it has 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 import terminal proposed by Sound Energy. The case now is ripe to be litigated in the U.S. Court of Appeals for the District of Columbia. The CPUC has until mid-August to petition the court to review FERC’s ruling in the case.

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