A May 2003 Letter of Intent between the Port of LB and SES indicated that finalizing the LNG project would involve LB Energy (and thus the City Council. presumably related to City Hall building a pipeline), a proviso that appeared to give Councilmembers some say in the project (that will otherwise be decided by LB's non-elected Board of Harbor Commissioners).

(Portion of Letter of Intent: "Finalization of the preferential assignment agreement will involve SES and the Energy Department of the City of Long Beach entering into an arrangement for the benefit of the citizens of Long Beach, the Energy Department, the Port of Long Beach and SES.")

If SES' amended application is accepted by FERC and allowed to proceed, the following hardball dynamic could arguably result: if City Hall doesn't build the pipeline, SES could build it; if City Hall builds the pipeline, it would ultimately involve Council assent, thus removing a possible hurdle to the project. Either outcome would give the SES LNG facility natural gas connectivity to the Port area/WLB Salt Works Station site. As previously reported by LBReport.com, the Salt Works site was recently identified by the CA Public Utilities Commission as one of three new connecting sites for natural gas entry into CA.

LB Citizens for Utility Reform (LBCUR) leader Bry Myown, a critic of the project, reacted to the developments, telling LBReport.com, "This was foreseeable and preventable. This project is out of control because the City, instead of looking after its residents, has allowed the Port of Long Beach and Long Beach Energy to run amok."

Sound Energy Solutions CEO Tom Giles told LBReport.com, "This all has to do with permitting. It doesn't have to do with the ultimate ownership [of the pipeline] which we still believe will be some city entity. Really, this is sort of a non-event from our standpoint. This is part of the process of getting our project permitted. We actually believe nothing has changed between us and the city."

After FERC issued its declaratory ruling asserting exclusive-jurisdiction in the LNG proceeding, LBCUR and other grassroots groups filed materials in opposition. However LB City Hall's position focused on maintaining City Hall control of the pipeline if City Hall were to build and operate it. FERC ultimately agreed with City Hall that LB Energy, as a municipal utility, could build the pipeline without FERC permission. However, FERC added that it has the power to grant others authority to build and operate a pipeline in connection with the LNG project. SES has now cited FERC's position as a basis for its amendment.

The Port, via its Board of Harbor Commissioners, still presumably retains authority to say "yes" or "no" to the entire LNG project. However, LB's Harbor Commission and City Council have recently been at odds over other Port actions, including Port opposition to AB 2042, "no increased air pollution with port growth." The Port's opposition to the bill (which the City Council supported) prompted Councilmembers Reyes Uranga and Gabelich to agonize an item to pursue possible City Charter changes that controls how the Port is governed. On the same day, Harbor Commissioners attached a hardball proviso that required the Council to approve the Port's latest budget "as submitted"...or the Port would reexamine its offer to transfer immediately over $6 million to City Hall's cash strapped Tidelands Operating Fund.

Two Councilmembers (Gabelich and Lerch) voted against approving the Port's budget and the Council held off proceedings on a Charter Amendment -- for now. Quarterly meetings are reportedly in the works between Councilmembers and Harbor Commissioners.