From: Josef Hebert, Associated Press
Published December 2, 2004 12:00 AM

Language in Spending Bill Raises Concern about Gas Terminal Approvals

WASHINGTON − A provision slipped with little notice into a massive spending bill may help the Federal Energy Regulatory Commission overcome local and state opposition in the approval of liquefied natural gas import terminals.


The commission already has asserted formally that it has final permitting authority over LNG terminals under a 1938 law regulating natural gas transport. But that authority is being challenged in a California case and may also be contested in connection with several projects in New England.


The language quietly tucked into a $388 billion spending bill just before Congress adjourned last month reasserts that FERC has "exclusive jurisdiction" over LNG permits and that the 1938 law "pre-empts" states on approving natural gas infrastructure "associated with interstate and foreign commerce."


While the provision is not legally binding because it is only advisory, some lawyers say it may help FERC argue in court that Congress fully intended the commission to have final rule over LNG sites.


There are about 40 LNG proposals for U.S. coastal areas before FERC and the U.S. Coast Guard, which deals with offshore facilities. Only a handful of those projects are expected to be built, but proposals have unleashed emotional debates in some communities.


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The California Public Utilities Commission has argued that state officials should be involved in approval of a natural gas site being proposed for Long Beach, Calif., to ensure it addresses state environmental and safety concerns. FERC rejected that argument last April and reasserted its jurisdiction. The case is pending in federal court.


Patrick Lynch, the attorney general of Rhode Island, raised the California case in a recent letter to members of the state's congressional delegation.


The language in the spending bill "is a threat, not only to the pending litigation in California, but to every state in this nation," wrote Lynch. He said it could affect the state's legal challenge to two LNG terminal proposals in Providence, R.I., and nearby Fall River, Mass. Both projects have received favorable environmental reviews from FERC.


Tyson Slocum of the advocacy group Public Citizen said he's concerned about "the chilling effect" the legislative language might have on communities thinking of challenging LNG decisions by FERC.


Others played down the significance of the legislative provision, whose origin remains a mystery. The California utility commission argues that the 1938 law -- and legislative language that accompanied it -- demonstrates that FERC has no basis for pre-empting California's environmental requirements for LNG facilities.


Source: Associated Press


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