US Senate energy bill would give FERC 'exclusive' LNG authority

Washington (Platts)--23May2005

Language in the US Senate Energy and Natural Resources version of a broad
energy bill would give the Federal Energy Regulatory Commission "exclusive
authority" to approve applications to build and operate liquefied natural gas
import terminals. The language codifying federal jurisdiction is designed to
strengthen FERC's hand in a pending case before the US 9th Circuit Court of
Appeals brought by the California Public Utility Commission challenging FERC's
claim of broad authority over LNG siting. 

Under the provision, which was released late Friday and is to be considered by
the committee this week, states would retain most rights to challenge projects
under on the federal Coastal Zone Management Act, Clean Air Act and the
Federal Water Pollution Control Act. But the final decision would be left to
the commission. FERC officials have sought language that largely mirrors the
Senate version. FERC Chairman Pat Wood has said he considers it critical to
include the word "exclusive" to describe the agency's LNG authority.

The Senate bill also would require that reviews and challenges to commission
decisions on LNG projects go directly to the US Court of Appeals for the
District of Columbia Circuit. Elected officials and public interest groups in
the Northeast and along the West Coast are concerned that transporting LNG
through US waterways and ports that are near populated areas poses safety
risks that require a greater role for state and local officials. 

The bill also would amend the Natural Gas Act to give FERC the ability to
authorize market-based rates for gas storage. The Bush administration has
sought market-based rates to spur competition and encourage investment in gas
storage as it prepares the US to handle greater supplies of gas. "The
commission shall ensure that reasonable terms and conditions are in place to
protect consumers," the language said. In addition, it would require FERC to
"review periodically," but not more often than every three years, whether a
market-based rate is "just, reasonable and not unduly discriminatory or
preferential."

This story was originally published in Platts Natural Gas Alert
http://www.naturalgasalert.platts.com

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