Congress: States can’t regulate LNG terminals, FERC has the authority

Allen Baker

The big spending bill approved by Congress in its lame duck session includes a provision that puts the lawmakers firmly behind the concept that states can’t regulate siting of LNG terminals, reserving that duty for the Federal Energy Regulatory Commission.

In California, where local opposition to the terminals has been fierce, state energy regulators have maintained that they have authority over where LNG terminals can be built, and the California Public Utilities Commission has challenged FERC’s jurisdiction in court. The federal agency says it’s the only authority in the matter.

Congress has put its weight behind the FERC side of the argument, saying the Natural Gas Act of 1938 mandates federal oversight. But that congressional position is lodged in a conference report, not in the form of a new law. So states may still have a court case. California can also argue that LNG terminals there are intended to serve an in-state, not an interstate, market.