States' Rights in Authorization of LNG Facilities

States still have the ability to effectively "veto" an LNG facility by denying permits associated with the Clean Water Act, the Coastal Zone Management Act, and the Clean Air Act.

The Federal Energy Regulatory Commission has exclusive authority under the Natural Gas Act to authorize the siting of facilities for imports or exports of LNG. But that authorization is conditioned on the applicant's satisfaction of other statutory requirements for various aspects of the project. Substantial authority exists through current federal statutes pertaining to those aspects of the project for states to authorize or block and thereby effectively "veto" development of an LNG facility. Nothing in the Energy Policy Act of 2005 changes the states' authorities in this regard. These are summarized below:

Coastal Zone Management Act
Section 307(c) - An LNG project proponent must certify that the proposed activity in a designated coastal zone complies with the enforceable policies of the affected state's coastal zone management program. If the state does not concur with the certification, no FERC approval to construct may be granted. This applies to all Federal permits and authorizations, including FERC and the U.S. Army Corps of Engineers. A finding of inconsistency can be appealed to the Secretary of Commerce.

Clean Water Act
Section 401 - A certification of compliance with the state's water quality standards is required from the responsible state agency for any activity (including construction and operation of LNG import facilities) that may result in a discharge into navigable waters. If the 401 certification is denied, the LNG facility cannot be constructed.

Section 404 - A permit is required from the U.S. Army Corps of Engineers for discharge of dredged and fill material. The Corps permit requires applicants to obtain a section 401 certification, which can be blocked as stated above.

Clean Air Act
Section 502 - A permit is required for any person to operate a source of air pollution, as detailed in the Act. If the responsible state agency does not issue the permit, the project cannot go forward.

Cooperating Agency with FERC
Beyond its authority based on these Federal statutes, the state also has the ability to be a cooperating agency with FERC during the review of a project under the National Environmental Policy Act (NEPA), and can contribute to the complete environmental review of the proposal.

List of Coastal State Agencies enforcing Clean Water Act, Clean Air Act, and Coastal Zone Management Act - updated 08/08/05