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    News

    LB LNG Development: FERC Posts Order Denying CPUC & LBCUR Requests For Rehearing, Reaffirms FERC's Self-Declared Exclusive J'diction, Acknowledges Other State & Local Agency Roles; Says LB Has J'diction Over Muni Util. Pipeline


    (June 11, 2004, updated text) -- The Federal Energy Regulatory Commission (FERC) has posted an order on its web site, denying requests for rehearing by the CA Public Utilities Commission (CPUC) and LB Citizens for Utility Reform (LBCUR) (among numerous other state and local agencies) reaffirming FERC's March 2004 order self-declaring its exclusive jurisdiction over siting and safety issues related to an application by a Mitsubishi subsidiary (Sound Energy Solutions or SES) to build and operate a Liquefied Natural Gas (LNG) facility in the Port of LB.

    In its order, bearing a date of June 9, FERC clarifies its March 2004 order and reiterates its stated "goal to work cooperatively with the CPUC and other State and local authorities to protect the safety of residents and minimize adverse environmental impacts. In addition, we intend to hold a technical conference to address safety issues, and we invite state and local authorities to participate in this process. This order serves the public interest by providing uniform federal oversight of siting, construction, operation, and safety of facilities to be used to import foreign LNG to meet the nationís critical energy needs."

    The FERC order, which was posted as part of the SES docket, is not highlighted elsewhere on FERC's site...and caught some parties off guard. FERC has also agendized an item dealing with the LB LNG matter for its June 17 meeting.

    LBReport.com posts the text of FERC's web posted order below.

    Reached for comment by LBReport.com, CPUC General Counsel Harvey Morris said, "We're aware of it [FERC's order], we're studying it and we'll be discussing subsequent steps with the Commission [CPUC's members]."

    LBCUR's Bry Myown, a critic of SES' proposal, told LBReport.com:

    Once again, FERC has acted recklessly and hastily to strip Californians of constitutional protections we enacted to defend ourselves against the enormous physical and economic dangers posed by large utility conglomerates.

    The City of Long Beach was the handmaiden for this decision. While claiming that they "haven't really done anything" and may still vote against Mitsubishi's final certificate, the Long Beach City Council and its appointed Harbor Commission opened the door to Mitsubishi, handed this opportunity to FERC and rolled out the red carpet for the Bush administration.

    Ms. Myown has previously stated that she believes FERC is making LB a test case nationally that, if allowed to stand, could strip state and local agencies of control over safety and siting issues for proposed LNG plants across the country.

    [update] Jeff Adler, LB spokesman for SES, told LBReport.com the firm's position remains the same as it has been for months: "The dispute over jurisdiction is not one directly involving Sound Energy Solutions [i.e. it's a dispute between CPUC and FERC]. We'd like it to be settled, preferably as soon as possible." [end update]

    As previously reported by LBReport.com State Senator Betty Karnette (D, Long Beach) has joined Assemblyman Alan Lowenthal (D., LB-SP-PV) in supporting CPUC's position that SES must seek and obtain permission for its proposed facility from CPUC under CA law.

    FERC's March order and its latest order dated June 9 effectively declare that CA law does not apply, SES does not need CPUC's permission...and FERC is the body with exclusive jurisdiction over safety and siting issues.

    In April, CPUC escalated its confrontation with FERC by voting unanimously to institute its own regulatory proceedings (regardless of FERC's position). In a CPUC proceeding, SES would have to demonstrate to CPUC's satisfaction that its proposed facility would be safe and serve the public interest and necessity.

    Requests for rehearing and/or clarification of FERC's March 2004 Order were filed by CPUC, Californians for Renewable Energy, Inc. (CARE); the CA Coastal Commission; the CA Department of Fish and Game, Office of Spill Prevention and Response (OSPR); the CA Regional Water Quality Control Board, Los Angeles Region (Los Angeles Regional Water Board); the South Coast Air Quality Management District (SCAQMD); LB Citizens for Utility Reform (Long Beach Citizens or LBCUR)...and the City of Long Beach.

    In its June order, FERC said in part:

    The City of Long Beach declares its intent to build a 2.3-mile pipeline segment to take vaporized LNG away from SESís LNG Terminal, and requests the Commission clarify that the March 2004 Order does not indicate Commission intent to assert jurisdiction over this 2.3-segment.

    Long Beach Citizens [for Utility Reform] contend that SESís proposed natural gas liquids recovery system, storage facilities, LNG trailer truck loading facility, LNG vehicle fuel storage tank, and any future ethane/propane facilities are neither inextricably related to, nor necessary for, LNG importation or the operation of the proposed terminal. Long Beach Citizens ask that the Commission disclaim jurisdiction over these facilities to clear the way for state regulation. Acknowledging that these proposed facilities can be used to process LNG imports, Long Beach Citizens insist that rather than bring in LNG supplies that require processing before distribution, SES should only import LNG that conforms with existing gas tariffsí standards...

    ...SES verifies that it expects the City of Long Beach to build and operate the 2.3-mile takeaway line, and thus sees no need to amend its application to include a request for authorization for this line. SES asks the Commission to clarify that if Long Beach or another municipally constructs, operates, and owns the 2.3-mile line, the Commission will not assert jurisdiction over the line...

    ...We confirm that if a municipality constructs, operates, and owns the 2.3-mile line to interconnect the proposed terminal with SoCalGasí existing pipeline, the short line will be exempt from our section 3 jurisdiction. Since the City of Long Beach is a municipality, it is not a "person" subject to section 3; consequently, it need not obtain section 3 authorization in order to build and operate the 2.3-mile interconnect. [footnote omitted]

    We deny Long Beach Citizensí request that we disclaim jurisdiction over a portion of the proposed terminal facilities. The facilities in question are not extraneous, but essential, to the receipt, storage, and delivery of LNG. It would be unrealistic, from both a practical and financial perspective, to expect every shipload of LNG to match local tariff standards without further treatment. Imported LNG is routinely subject to additional treatment to recover liquids, remove impurities, or modify heat content in order to render it marketable. The proposed facilities for loading LNG onto a vehicle for transport or into a vehicle for fuel are delivery facilities, and as such are properly included in SESí application.

    A separate party, Californians for Renewable Energy, Inc. (CARE), submitted a motion asking FERC to remove the Port of Long Beach as lead state agency and substitute CPUC, stating its concern that the Port allegedly entered into an illegal precommitment with SES.

    CARE indicated it considers it a conflict of interest for the Port of Long Beach, governed by the City of Long Beach, in charge of assessing a proposal from which Long Beach stands to benefit financially...implying having LB City Hall as a prospective pipeline owner and operator conflicts with its assessing environmental impacts at the earliest feasible stage of the planning process.

    FERC replied that it found "no impropriety in the partiesí negotiations concerning terms of a prospective land lease" and stated:

    The selection of a lead agency for the purposes of CEQA compliance is a matter of California law, and this Commission has no input into that decision. Thus, we have no authority to oust the Port of Long Beach in favor of the CPUC, as CARE requests. Accordingly, we dismiss CAREís request that we intrude on a matter of state jurisdiction.

    We find nothing in the record to indicate that the City or Port of Long Beach has made any irrevocable commitment to the project as proposed. Further, we find no indication that either the City or Port of Long Beach will be unable to assess objectively the best interests -- economic, environmental, developmental -- of Long Beach. Finally, we note that although we are acting in concert with the Port of Long Beach to develop an EIS/EIR expected to satisfy the requirements of both NEPA and CEQA, ultimately each agency must reach its own conclusions. Thus, while the Port of Long Beach will coordinate with other responsible and trustee California agencies to produce a document to satisfy CEQA, we are obliged to independently verify and evaluate the information, alternatives, and conclusions in the final EIS/EIR.

    From the outset, it has been clear that there will need to be an interconnection between the proposed terminal and the existing grid, [footnote omitted] and from the outset, SES identified a 2.3-mile link to SoCalGas as the means to do so. Thus, the fact that the party planning to take responsibility for the 2.3-mile line was not specified earlier has not handicapped the environmental review, since the need for and proposed route of the 2.3-mile line were included in SESí initial application.

    When we issued our March 2004 order, there was no indication in the record that the City of Long Beach would build, operate, and own the 2.3-mile outlet line. As discussed above, if the City of Long Beach, a municipality, assumes responsibility for this line, this line will be exempt from our section 3 jurisdiction. However, if an entity subject to our NGA jurisdiction assumes responsibility for this line, then that entity would need to submit an application to the Commission for authorization for the line.

    To view or download FERC's order in pdf form from FERC's web server, click June 9, 2004 order

    Further comment is pending as we post. Revisit this page, click reload or refresh on your browser to ensure updated text.


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