LNG: FERC Asserts Control

Public Utilities Fortnightly, pp.24

June 2004

By Julia R. Richardson and John H. Burnes, Jr.

To guarantee the continued growth of liquefied natural gas (LNG) importation and use in the United States, the energy industry needs to pay close attention to govern the regulation, siting, and operation of LNG import terminals—issues traditionally overseen by the federal government. States may have a number of reasons for wanting to establish oversight authority over LNG import terminals, but these efforts, no matter how well intentioned, would have the impact of curtailing the development of LNG facilities at a time when the United States is in urgent need of new sources of natural gas.

The latest such effort was launched by the California Public Utilities Commission (CPUC) in February and was rebuffed, quite forcefully, by the Federal Energy Regulatory Commission (FERC). This decision is good news for LNG terminal developers, state agencies, environmentalists, and, most importantly, consumers, because it clarifies and sets forth in decisive language the regulatory path that must be taken if a new terminal is to be built or an existing terminal expanded.

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