(April 22, 2004, updated April 24 & 26) -- In a high visibility confrontation with federal authorities carrying local, statewide and potentially national implications, the CA Public Utilities Comm'n put itself on a collision course with the Federal Energy Regulatory Commission (FERC) as CPUC Commissioners voted unanimously at their April 22 meeting to adopt an "Order Instituting Investigation" (a regulatory proceeding) into a proposal by Mitsubishi subsidiary "Sound Energy Solutions" (SES) to build a Liquefied Natural Gas (LNG) facility in the Port of LB.

LB activist Bry Myown travelled to San Francisco to attend the CPUC proceeding. In her comments to the Commission delivered on behalf of LB Citizens for Utility Reform, the Sierra Club and LB Citizens Advocating Responsible Development, Ms. Myown said LB is apparently being made a "test case" nationally on how future LNG facilities will be sited. She thanked the CPUC for its actions to date...and urged support for CPUC's position by CA's Governor, federal delegation and state legislators.

The unanimous CPUC vote followed a bluntly worded presentation by CPUC General Counsel Harvey Morris, who said CPUC's order could lead to discovery proceedings...and indicated he considers FERC's order asserting exclusive federal jurisdiction over siting and safety issues incorrect legally and inapplicable to CPUC's April 22 action. Mr. Morris further indicated the CPUC intends to seek a rehearing from FERC of its order, an action which he indicated other state and local agencies may also take.

CPUC president Michael Peevey followed Mr. Morris with a similarly stern statement, stressing that "safety, safety should be the paramount concern to us as regulators." Other CPUC members voiced similar comments.

Following the vote, CPUC president Peevey said to CPUC's General Counsel, "Mr. Morris, you have your marching orders."

Prior to the vote, the Commission heard LB activist Bry Myown thank the agency on behalf of several groups for its record to date, stating in pertinent part:

SES proposes to build an 80 million gallon LNG receiving, storage and regassification facility and an associated propane/butane/ethane stripping plant (up to 4.5 million gallon capacity; through-put depends on type of LNG) in the Port of LB.

As previously reported by LBReport.com, FERC declared in March that it has exclusive regulatory authority over siting and safety issues and rejected CPUC's position that the applicant qualifies as a public utility that must seek and obtain a CPUC certificate of public convenience and necessity to proceed.

SES previously filed papers siding with FERC re federal vs. state jurisdiction, but has said it will seek and obtain other permits required from the Coastal Comm'n, Port of LB and SCAQMD. As reported on April 21 by LBReport.com, SES "reaffirmed [its] ongoing commitment" to "work with and obtain all required state and local permits" for the project. Tom Giles, Chief Operating Officer and Executive VP of South Energy Solutions, said in an April 21 written release:

Apart from whether FERC authorizes the facility, LB's Mayor-nominated, City Council-approved Board of Harbor Commissioners would also have to approve it...and Harbor Commission certification of the project's Environmental Impact Report could be appealed to the elected City Council.

As previously reported by LBReport.com, two other CA LNG proposals (by other firms) have been dropped by their proponents amid public opposition in northern CA (Vallejo and Eureka). Two offshore proposals off Ventura County are currently pending, as is an offshore proposal near Tijuana, Mexico. LB is apparently the only area in which a CA onshore proposal is presently pending.

LBReport.com also posts the verbatim text of the CPUC Order Instituting Investigation (as posted in draft form on the CPUC web site). To view it, click here

[April 26 update] The CPUC has posted the result of the item on its web site as follows:

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