State agencies can safely site LNG terminals: CPUC head

Washington (Platts)--2Jul2004

California agencies have the right to require that Sound Energy Solutions'
proposed liquefied natural gas terminal be moved to a more remote location if
necessary, the head of the California Public Utilities Commission said on
Thursday in a letter to US Federal Energy Regulatory Commission member Joseph
Kelliher. The two energy regulators have been firing off letters to each other
since May, with Kelliher arguing that FERC has exclusive jurisdiction over the
project and CPUC President Michael Peevey rejecting that assertion. In the
July 1 letter, Peevey reiterated that the SES project would be sited in a
densely populated area in Long Beach and it would be on landfill near numerous
active earthquake faults.

Thus, under standards outlined in the Pipeline Safety Act of 1979, the state
can "exercise decisionmaking authority to require the LNG facilities to be
sited in a more remote location, either onshore or offshore California, if it
cannot be demonstrated that these LNG facilities can be safely located at this
particular site," he said. "There is no reason for the FERC to insist that
states must be powerless to protect their citizens and their environment from
the hazards posed from LNG facilities," Peevey argued. Still, he said the case
"should not threaten" LNG development elsewhere. "Whether or not the CPUC
should authorize [SES'] proposed project, . . . it should not have any effect
on currently planned LNG facilities" elsewhere," he said. "I continue to
believe that LNG facilities can and will be sited by state agencies in safe
locations with due regard for environmental concerns."

This story was first published in Platts real-time news and market reporting
service Platts Natural Gas Alert (http://naturalgasalert.platts.com ).

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