With the jurisdictional fight still unresolved in a pending federal court case, proponents of a liquefied natural gas (LNG) receiving terminal in Long Beach Harbor and California regulators continued this week to move closer to an eventual head-on legal collision. State regulators are moving ahead with a formal regulatory proceeding, and Mitsubishi Corp.’s Sound Energy Solutions (SES) is refusing to participate until the jurisdictional question is resolved.

Under the current ruling by the Federal Energy Regulatory Commission that it holds exclusive jurisdiction over SES’s proposed import facility, it would be “inappropriate” for SES to participate in another jurisdiction, said Tom Giles, SES executive vice president, leading the push by Mitsubishi to import up to 1 Bcf/d equivalent of LNG at an onshore site in Long Beach Harbor.

The California Public Utilities Commission has established a proceeding parallel to FERC’s and held a pre-hearing conference last month to outline the scope and hearing schedule for the case, with a targeted proposed decision from the CPUC administrative law judge by April next year on all issues, except an assessment of the proposed market for the supplies.

SES informed the CPUC “it will not participate in this proceeding until and unless the federal court finds that the (CPUC) has jurisdiction over the project,” the co-CPUC ALJs said in a scoping memo released earlier this month (Sept. 13).

Citing past cases, the co-ALJs, Peter Allen and Kim Malcolm, said that the CPUC has the “authority to investigate matters that are germane to utility regulation even when the (state) commission would otherwise not have jurisdiction over the entities engaged in transactions with California public utilities.” They warned SES in the scoping memo that the CPUC “expects SES to respond to any reasonable discovery request and to comply with all orders, rulings and directives” from the CPUC and its ALJs.

SES told the CPUC at the Aug. 23 pre-hearing conference that for the company to participate in the CPUC proceeding “would put it in the awkward position of having to disobey the order of one or the other of the agencies.” The CPUC ALJs, however, argued that FERC’s relevant orders do not require SES “not participate in any commission proceeding or that such participation would somehow prejudice or harm SES.”

The CPUC ALJs’ scoping memo outlined four issues that the case will address, starting with initial testimony due Dec. 1 and evidentiary hearings beginning Jan. 17, 2005. The issues are:

The ALJs noted that the proposed interconnection of the terminal with the Southern California Gas Co. intrastate transmission pipeline backbone system gives the CPUC the right to determine the “safety and effectiveness” of that interconnection since SoCalGas is a state-regulated utiility.

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