You asked for a description of the liquefied natural gas (LNG) provisions in the recently adopted federal energy law (HR 6). The most significant provisions are found in section 311 of the act.

SUMMARY

The act gives the Federal Energy Regulatory Commission (FERC) exclusive jurisdiction over the siting of LNG terminals, although it retains the rights of states under other federal laws including the Coastal Zone Management Act (CZMA). It designates FERC as the lead agency in obtaining federal authorizations and complying with the National Environmental Policy Act (NEPA).

The act allows an agency designated by the host state’s governor to file an advisory report on local and safety considerations with FERC within 30 days after the LNG siting application is filed with FERC. FERC must respond specifically to the issues raised before authorizing the terminal. FERC must require that the terminal operator develop an emergency response plan, in consultation with the Coast Guard and state and local agencies, that includes a cost-sharing component. The state may conduct safety inspections in accordance with federal regulations and with notice to FERC. The state may notify FERC of any violations and the appropriate federal agency take action.

The act makes procedural changes to CZMA. It gives the federal appeals courts original and exclusive jurisdiction over disputes regarding the issuance of permits for natural gas facilities.

LNG PROVISIONS IN FEDERAL ENERGY LAW

HR 6 gives FERC the “exclusive authority to approve or deny an application for the siting, construction, expansion or operation of a liquified natural gas terminal.” On the other hand it states that, except as specifically provided in the act, it does not affect the rights of states under the federal CZMA, Clean Air Act, and Water Pollution Control Act.

The governor of a state where a LNG terminal is proposed to be located must designate a state agency to consult with FERC regarding state and local safety considerations, including the location’s natural and physical aspects and the emergency response capabilities near the location. The act allows the agency to file an advisory report on local and safety considerations with FERC within 30 days after the application is filed with FERC. FERC must respond specifically to the issues raised before authorizing the terminal.

FERC must require that the terminal operator develop an emergency response plan, in consultation with the Coast Guard and state and local agencies. The plan must include a cost-sharing component, including a description of any direct costs of state and local agencies to be reimbursed by the applicant. FERC must approve the plan before final construction of the terminal can be approved.

The act also designates FERC as the lead agency for coordinating all federal authorizations and for complying with NEPA. It gives FERC authority to set schedules for required federal authorizations, including state permits issued pursuant to federal law. 

The act gives the U.S. Circuit Court of Appeals original and exclusive jurisdiction to review an order or action by a federal agency or state agency acting pursuant to federal law in permitting natural gas infrastructure projects. It gives the U.S. Court of Appeals for the District of Columbia original and exclusive jurisdiction over allegations that such agencies have failed to comply with the FERC decision schedule. Thus state courts do not have jurisdiction in these cases. These provisions do not apply to actions under CZMA or to actions by FERC itself.

Under the CZMA and parallel state laws, states review developments in coastal areas (including state waters) to determine their consistency with the law. If a state determines that a project is inconsistent with the law, it cannot go forward, but this determination can be appealed to the U.S. Department of Commerce. HR 6 establishes a 270-day period after which the Secretary of Commerce must close the decision record for such appeals. The secretary may stay the deadline for up to 60 days to acquire (1) supplemental information regarding the consistency determination or (2) clarifying information from a party to the proceeding related to information already in the record.  The secretary then has 90 days after the record is closed to issue a decision or explain why he cannot, in which case he has an additional 45 days to issue a decision.  In total, this section allows for 1 year and 100 days for the Secretary to complete action on an appeal of a consistency determination.

Once a terminal is operating, the act allows the state where it is located to perform safety inspections, in accordance with federal regulations and with notice to FERC. The state may notify FERC of any violations and the appropriate federal agency is directed to take action and report to the state.

The act also:

1. codifies, until 2015, FERC’s “Hackberry” policy, thereby allowing sole propriety ownership of an LNG terminal and eliminating open access requirements as a way to encourage site development.

2. directs the Secretary of Energy, in cooperation with secretaries of Transportation and Homeland Security, FERC, and governors of coastal states, to convene at least three forums to discuss LNG siting issues such as siting, safety, and emergency response, in order to identify and develop best practices related to LNG and to foster cooperative efforts;

3. requires FERC to adopt regulations on the NEPA pre-filing process for LNG projects and requires applicants to comply with this process; and

4. requires FERC to enter into a memorandum of understanding with the Defense Department with regard to LNG facilities that may affect active military installations.

KM:ts