California Public Utilities Commission President Michael Peevey delivered the latest salvo in the simmering jurisdictional fight over a proposed Long Beach, CA, LNG facility, disputing FERC Commissioner Joseph Kelliher’s claim that exclusive federal jurisdiction is necessary to further development of LNG imports in the United States.

Peevey told Kelliher that he “respectfully disagrees” with the FERC commissioner’s statements made in a speech at GasMart 2004 in Denver last month, saying joint federal-state action should be pursued (see Daily GPI, May 18).

Peevey wrote to Kelliher in response to the regulator’s statements that unless FERC is found to have exclusive jurisdiction in siting LNG terminals, the move to build a series of new import stations would be in serious trouble across the country.

“The stakes in this dispute are high,” Kelliher said, noting that without the authority granted to the Federal Energy Regulatory Commission by the Congress, “I doubt that the natural gas infrastructure in this country would have been anywhere near as developed and efficient as it is now.”

Kelliher said that if the CPUC’s jurisdictional claim prevailed in court, “one would expect it to become very difficult to license LNG import facilities in this country and one would suspect that the overall future of LNG in this country would be pretty bleak.” He also pointed out that the states don’t have the expertise currently to make decisions regarding LNG terminals and building that expertise would take time.

Peevey responded that the CPUC tried to avoid a conflict with FERC by proposing to conduct joint hearings on the Long Beach terminal proposal. “FERC has chosen to create the present jurisdictional conflict by asserting exclusive jurisdiction and attempting to preclude the CPUC and other state agencies from having any decision-making authority in this matter.

“Your action has forced us to respond by challenging the FERC’s claim of exclusive jurisdiction.”

Peevey argued that the state’s expertise and history with local conditions (the CPUC in 1979 jointly with FERC approved a later-abandoned LNG receiving terminal near Pt. Conception 40 miles west of Santa Barbara), along with its undisputed jurisdiction over the intrastate pipeline connection of the terminal to the transmission pipeline grid in the state all favor a joint processing of the application by Mitsubishi’s Sound Energy Solutions (SES) to build the Long Beach terminal.

He said a majority of CPUC commissioners and many state agencies in California recognize the need for LNG, but Kelliher’s “attempt to extrapolate from SES’s unique case to forecast serious trouble for all LNG facilities proposed around the country if the FERC did not have exclusive jurisdiction, does not present a complete picture.

“There is no logical reason why LNG facilities cannot be sited by state agencies in safe locations with due regard for environmental concerns.”

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