April 28, 2005

Bush wants controls over LNG imports
President says the federal government must be able to determine where processing facilities are placed.

By Toby Eckert
Copley News Service

WASHINGTON -- Jumping into a legal battle between California and federal energy regulators, President Bush on Wednesday urged Congress to ensure that the federal government has the final say on where liquefied natural gas facilities are built.

In a speech to small business owners designed to drum up support for his wide-ranging energy policy, Bush cited LNG imports as a way to help satisfy the country's growing demand for natural gas.

But the facilities where the volatile fuel is unloaded from ocean-going tankers and converted back into a gaseous state are often controversial and have run into strong opposition in Long Beach and other communities.

The California Public Utilities Commission (PUC) and the Federal Energy Regulatory Commission (FERC) are locked in a court fight over whether state or federal regulators have jurisdiction on deciding where the plants can be located. The case erupted after the PUC ordered the developer of the proposed Long Beach facility to seek state approval.

"Congress should make it clear to the Federal Energy Regulatory Commission its authority to choose sites for new terminals so we can expand our use of liquefied natural gas," Bush said.

"Our ability to expand our use of liquefied natural gas is limited because today we have just five receiving terminals and storage facilities around the United States. Federal agencies must expedite the review of the 32 proposed new projects that will either expand or build new liquefied gas terminals. There's projects on the books and we're going to get after the review process," he said.

An energy bill passed by the House last week includes a provision intended to strengthen FERC's authority. Similar legislation has been introduced in the Senate. The proposal has drawn intense opposition from some lawmakers.

The PUC, backed by Gov. Arnold Schwarzenegger, has argued for concurrent state and federal jurisdiction over LNG siting decisions. Environmental and consumer groups also oppose Bush's proposal.

"The energy industry is very, very concerned that they will have to deal with a bunch of communities who have very valid concerns about the security and safety of LNG," said Tyson Slocum, energy research director for Public Citizen, which opposes the energy legislation. "They desperately want their friends at FERC to take over this role. It's been the priority since California filed its lawsuit."

Energy companies, including San Diego-based Sempra, say they are seeking clarity and uniformity in regulations governing LNG facilities. Sempra is developing three LNG facilities -- in Louisiana, Texas and Baja California.

"We've made no secret that this is something that will help the process," Mark Stultz, spokesman for the Natural Gas Supply Association, said of Bush's comments.

State and local officials complain that giving final siting authority to FERC is a federal power grab and that they are in a better position to evaluate safety and environmental concerns about LNG facilities.

But FERC spokesman Bryan Lee said states would still have "significant authority" to review proposed terminals.

"There's nothing about this legislative language that is going to affect existing state authority. This is simply an effort to clarify FERC's authority, which has been challenged by the state of California," he said.

The administration is feeling public pressure to do something about high gasoline prices. The White House has acknowledged that Bush's energy plan is unlikely to have an immediate effect.