(May 22, 2005) -- Against a backdrop of steadily escalating federal developments, on May 24 the LB City Council will find itself at ground zero as part of a national controversy over who should decide where, when and under what conditions LNG facilities are built and operated.

The issue comes as two of LB's highest ranking local officials -- LB City Manager Jerry Miller and City Attorney Bob Shannon -- have jointly agendized a memo explicitly seeking City Council policy direction on how LB City Hall should proceed regarding the proposal of a Mitsubishi subsidiary (which on May 17 announced a Joint Development agreement with a Conoco subsidiary) to build and operate an 80+ million gallon LNG facility within the Port of LB, roughly two miles from downtown LB.

In May 2003, the Port of LB (governed by Mayor-appointed, Council-approved Harbor Commissioners) entered into a Memorandum of Understanding (MOU) with the Mitsubishi subsidiary which didn't commit to approve the project but did grant the firm exclusive negotiating rights to part of Pier T (eastern end of the port). The Port has since worked with the firm to advance its application through the federal FERC process...although the firm isn't seeking permission to build and operate the plant from the CA Public Utilities Commission. CPUC insists its approval is required under CA law, but FERC contends state law doesn't apply.

FERC is now asking Congress to give the agency unambiguous federal authority over LNG siting and safety decisionmaking...and such verbiage was included in a House-passed federal Energy bill in April, backed by the President.

On the same day as the House voted to pass the Energy Bill, LB Mayor Beverly O'Neill's office sent a letter addressed to the chair of the House Energy Committee (which had already passed the bill), cc'd to local Congressmembers, expressing LB City Hall's opposition to the federal LNG provisions. The letter did not take a position either way on the pending LB LNG proposal. A Senate version of the bill is due for release shortly.

On May 20, FERC staff released an Environmental Impact Statement supporting a proposed LNG facility in Fall River, MA, several miles inland from Boston, that will send huge LNG tankers past multiple upriver towns over the objections of local and state officials and their Congressional representatives. FERC's five appointed Commissioners are expected to vote on whether to certify the Fall River, MA LNG EIS shortly.

In a separate action, FERC staff said expansion of a Rhode Island industrial facility to handle LNG shipments would not meet current safety standards (a decision that may doom the project on cost grounds). As previously reported by LBReport.com, the Rhode Island proposal was forcefully opposed by the state's Congressional delegation, Attorney General and was the subject of a blistering analysis by former National Security Council advisor and anti-terrorism expert Richard Clarke. <[Coverage of FERC action via Reuters, click here].

The Rhode Island LNG proposal was opposed by the Mayor of Providence.

LB's Mayor has not publicly opposed the LB LNG project...and to date, the LB City Council hasn't taken a policy position one way or the other on the matter.

That could change on May 24, when the Council confronts the item agendized by City Manager Miller and City Attorney Shannon. In their agendizing memo, Messrs. Miller and Shannon note that the Port's MOU with the Mitsubishi subsidiary stated in part:

"'Concurrent with any final agreement with the Port of Long Beach, SES will enter into an arrangement for the benefit of the citizens of Long Beach, the Long Beach Energy Department, and the Port of Long Beach to provide liquid natural gas (natural gas.)' Therefore, no final agreement with the Port will occur under the Port’s existing MOU unless SES successfully concludes negotiations on the two issues discussed in Long Beach Energy’s MOU approved by the City Council."

The Council-approved MOU was authorized in a May 13, 2003 action of roughly 87 seconds. Following a brief city staff report, Mayor O'Neill said, "This is a good agreement." She was the only elected official to speak. The Council vote was 9-0 to enter into an MOU for potentially reduced natural gas costs for LB's City Hall-run gas utility if the LNG project were completed. Neither the Council MOU nor the Port MOU granted the Mitsubishi subsidiary permission to build the facility or committed to do so.

Following approval of the Council and Port MOUs, LB Mayor Beverly O'Neill wrote U.S. Senator Dianne Feinstein (D., CA) in June 2003, asking her to help speed the LNG project. The letter turned up in response to a Public Records Request by Bry Myown, a LB activist who has raised multiple concerns about the project...including the possibility of a federal takeover on major LNG decisionmaking.

After LBReport.com learned of the letter and published it, Mayor O'Neill acknowledged to rankled Councilmembers (without changing her own position on the LNG proposal) that the Council, not the Mayor, makes city policy.

To date, the Council has not taken a policy position on the proposed LNG plant.

Ms. Myown has previously urged the City Council to terminate its MOU with the Mitsubishi subsidiary...and on May 13, 2004, Councilmembers Bonnie Lowenthal and Dan Baker jointly agendized an item for the May 18 Council agenda with the following accompanying memorandum:

However prior to the meeting, Councilmembers Lowenthal and Baker abruptly withdrew their item. Asked at the time what happened, Councilman Baker's chief of staff, Mark Taylor, told LBReport.com that multiple Councilmembers had expressed concerns about a lengthy May 18 agenda with numerous time-consuming issues. Councilwoman Lowenthal's chief of staff, Niki Tennant, said "Unfortunately, when we submit agenda items for agendizing, we often do not know the makeup of the upcoming agenda. We inadvertently chose a very busy agenda upon which to post this item. We've conceded to our colleagues' request that this item not be discussed, due to a very heavy and time-consuming agenda for May 18th."

The May 2004 item never returned.

Meanwhile, City Attorney Shannon, without expressing a view on LNG policy itself, has on multiple occasions reminded the Council of its options in the matter, including issuing a detailed, publicly agendized memo on the subject after two new Councilmembers (Gabelich and O'Donnell) took office.

On January 4, 2005, Councilwoman Rae Gabelich agendized an item that stated in part, "[s]erious concerns have been raised about the safety of...[a proposed] LNG facility in Long Beach, as well as the ultimate benefit to the residents of Long Beach" and requested a study session within 60 days to receive staff and public input on the appropriateness of locating an LNG facility in Long Beach.

The study session took place on April 2, 2005...with no subsequent Council policy decision.

On April 22 -- one day after the House of Representatives voted to pass a federal Energy bill with verbiage giving FERC virtually complete federal siting and regulatory authority with regard to proposed LNG terminals -- the City Council's Federal Legislation & Environmental Affairs Committee (chair Colonna, members Kell & Reyes Uranga) held a specially convened meeting. At that meeting, LBPD and LBFD officials delivered reports following a recent visit they'd made to a Boston-area LNG facility.

LBPD reported that Boston area officials indicated they were incurring unreimbursed LNG-related security and public safety expenses. LBFD described the potential impacts in the Boston area of an LNG-related fire.

The Miller-Shannon May 24, 2005 memo states in part:

LB LNG opponent Myown is treating the coming Council vote as a watershed moment. In an email to LB activists titled "Last Chance to Stop LNG," Ms. Myown wrote in part:

"The Port's LNG deal can only happen if the Council concludes a side agreement with Mitsubishi (who's now hooked up with ConocoPhillips). If the Council stops negotiating with Mitsubishi, the project will STOP -- unless the Port cooks up a new deal or the Feds take control. Residents, mayors, state representatives, governors and Congress members across our coasts need strong support from California. They don't believe Arnold's too-little-too-late-double-talk [Gov. Schwarzenegger May 13, 2005 letter to Senate Energy & Natural Resources Committee re federal Energy bill] and they won't believe CA Senators if Long Beach stays in bed with Mitsubishi."

Visible support for the LNG project has come from the Building and Construction Trade Council of Los Angeles and Orange Counties, a union whose members may or may not live in LB but have previously packed the Council Chamber in support of the LNG project. In a February 2, 2005 Press-Telegram op-ed, the union's Executive Secretary, Richard Slawson, wrote in part, "LNG is a necessary and stabilizing boost for our local energy needs, California jobs and our economy overall. The real question is whether the opponents of LNG are open to an honest discussion or one driven by hysteria."

Ms. Myown's email to activists pointedly adds:

"We support labor. We want construction workers employed building efficient buildings and renewable energy projects that make American jobs, not rebuilding Long Beach after an LNG disaster. We support our LBFFA & LBPOA, surrounding first responders & our 25,000 ILWU workers. We want to keep them, ourselves, our neighborhoods and our Port safe."

The unions representing LB's first responders -- the LB Firefighters Association and LB Police Officers Association -- have thus far not weighed in on the LNG proposal.

City Hall plans currently call for building a permanent LBFD fire station not far from the proposed 80+ million gallon LNG facility. Another LBFD Fire Station recently opened near the Queen Mary. LBFD HQ and Fire Station 1 are about two miles away...and LBFD management has announced it is taking one of two fire trucks out of service from Station 1 starting about June 1, citing budget reasons.

A Port-overseen Environmental Impact Report and risk analysis, which the Port previously indicated would be released by now, continues to be delayed. Depending on the outcome the pending federal Energy legislation, FERC -- and not LB Harbor Commissioners subject to Council appeal authority -- could end up with the power to decide these environmental and safety matters.

The LB City Attorney's office says that absent federal legislation granting FERC the power of eminent domain (not in the House Energy bill, Senate version bill isn't public as we post), LB's non-elected Board of Harbor Commissioners retains the power as landlord to say "yes" or "no" to the siting the project on Port property.