By OGJ editors
HOUSTON, July 16 -- The California Public Utilities Commission (CPUC) has voted unanimously to file a petition for review with the US Court of Appeals for the District of Columbia regarding the siting of a proposed Long Beach, Calif., LNG terminal.
CPUC expects to file the petition this month or in early August, a spokeswoman told OGJ Friday.
The July 8 CPUC decision concerns a jurisdictional dispute with the US Federal Energy Regulatory Commission. Sound Energy Solutions (SES), a wholly owned subsidiary of Japan's Mitsubishi Corp., applied to FERC in January for a permit to site, build, and operate an LNG terminal at the Port of Long Beach.
ConocoPhillips reported that it has a nonbinding memorandum of understanding with SES to work jointly on the continuing development of the proposed terminal, which would have a sendout capacity of 700 MMcfd with a peak capacity of 1 bcfd (OGJ Online, July 13, 2004).
CPUC filed a notice of intervention in February, saying that SES needs a state permit under California law and that FERC has no jurisdiction because the proposed facility would only send natural gas intrastate within California. In March, FERC ruled that it has jurisdiction over the SES facility.
"Any suit filed by CPUC is likely to move to the (US) Supreme Court and be drawn out, impeding financing and project development," said Washington-based PFC Energy.
"Proposed legislation in the US Congress to clarify FERC's authority ¿ is unlikely to move forward until 2005 following the presidential elections. However, if federal laws were enacted that clearly delegated authority to FERC, the court case would likely be dropped," PFC added.
Possible consequences
Regardless of the outcome, the state of California has added to the complications of siting LNG terminals, PFC noted. California's pending legal challenge to FERC authority could have significant consequences for LNG terminal sitings across the US.
"If CPUC succeeds in asserting greater authority, it may force environmental requirements on LNG projects more stringent than federal guidelines, thus increasing project costs. Projects risk losing their commercial viability, and a regional regulatory agency could succeed as a champion for negative public opinion about LNG projects," PFC said.
Meanwhile in related news, 11 Democratic members of the California congressional delegation have asked CPUC President Michael Peevey to schedule public evidentiary hearings on plans to build LNG terminals within the state. The letter advocates a broader discussion of LNG issues.
The letter was written by Rep. Bob Filner from Chula Vista. It also was signed by Lois Capps of Santa Barbara, Susan Davis of San Diego, Sam Farr of Monterrey, Barbara Lee of Oakland, Juanita Millender-McDonald of Torrance, George Miller of Contra Costa, Hilda Solis of San Gabriel Valley, Mike Thompson of Eureka, Henry Waxman of Los Angeles, and Anna Eshoo of Palo Alto.
Peevey comments
Peevey last month wrote a letter to FERC Commissioner Josephy T. Kelliher, saying that CPUC has tried to avoid conflict with FERC regarding LNG jurisdiction by offering to work cooperatively via joint and concurrent hearings with FERC.
FERC and CPUC worked cooperatively in the late 1970s when both agencies approved the site for an LNG project at Point Conception, Calif. That project never was built.
"While the Point Conception facilities were not constructed due to changes in the market, the PUC's decision approving the site ¿ belies your contention that LNG facilities would not be built if state regulators have jurisdiction over LNG projects," Peevey said.
He added: "The LNG industry and the consumers of natural gas would benefit much more if there were cooperation between FERC and state agencies rather than the FERC's assertion of exclusive jurisdiction."
