Do states have any rights in siting LNG terminals?
William Mogel is vice chair of the national utility group of Saul Ewing LLP. Contact Mogel at email@example.com. Shuchi Batra is an associate at the firm. Saul Ewing LLP is a regional law firm with eight offices and nearly 300 lawyers.
Natural gas often is called the world’s most perfect fuel. And since it can be transported as liquefied natural gas (LNG), and, as LNG, is projected to meet 20 percent of the country’s natural-gas requirements by 2025, the construction of onshore LNG terminals is crucial for the United States, which has only 3 percent of the world’s proved reserves of natural gas.1 Those details notwithstanding, the siting of LNG terminals is contentious as states and a range of stakeholders challenge and seek to frustrate FERC’s permitting authority. It has been observed that:
There are substantial, and in some cases huge, natural-gas supplies outside of North America and Western Europe. The difficulty lies in creating the infrastructure that can make it accessible to consumers.2
In 2007, two events—a federal court action in AES Sparrows Point LNG v. Smith3 and a bill4 introduced in Congress have called into question the states’ role in the siting onshore LNG terminals. The occurrence of these two events is understandable because of citizens’ opposition to major energy projects in their state, but difficult to reconcile in view of the Energy Policy Act of 2005 (EPACT).