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    In Detail

    CA Officials Sent Letter To House Dems, Not House GOP Leaders, Objecting To FERC Supremacy on LNG & Opposing Other Energy Bill Items Potentially Affecting Coast

    (April 14, 2005) -- As a major federal energy bill neared a key Committee hearing containing provisions that could strip CA and local agencies (including LB) of decisionmaking power over the siting and safety of proposed Liquefied Natural Gas (LNG) facilities and associated pipelines, the California Ocean Protection Council [a mainly advisory body comprised of the heads of the CA EPA, CA Resources Agency & State Lands Commission (currently the Lt. Governor)] sent a letter to four CA House Democrats -- but not to House majority Republican leadership -- that "objects" to the LNG provisions and opposes other parts of the bill.

    As previously reported by, efforts to remove the LNG provisions in the House Energy & Commerce Committee failed by a large margin. Committee chair Cong. Joe Barton (R., TX) called the portions giving the Federal Energy Regulatory Commission (FERC) clear supremacy over state and local bodies on LNG applications among the most important parts of the bill. [ detailed coverage click here.]

    A letter dated April 4 from the California Ocean Protection Council, addressed to House Democrats Henry Waxman (D., LA), Hilda Solis (D., ELA-SGV), Anna Eshoo (D., Palo Alto) and Lois Capps (D., Santa Barbara), is signed by the Council's three members: Mike Chrisman (Sec'y, CA Resources Agency), Alan Lloyd (Cal EPA Sec'y) and Cruz Bustamante (SLC chair, Lt. Gov.) and states in pertinent part:

    At our first meeting on March 21, the Council discussed the need to maintain strong ocean and coastal protection measures. As a Council we did not suggest a position on the energy bill, but reached consensus on the need to re-affirm California's position on the following ocean and coastal protection issues:

    • Congressional Oil and Gas Moratorium. The Council opposes any effort to lift the Congressional moratorium on off shore oil and gas leasing activities that has been protecting our shores since 1982.

    • Coastal Zone Management Act. The Council opposes efforts to reduce the ocean and coastal protections provided by the Coastal Zone Management Act.

    • Liquefied Natural Gas Facility Siting. The Council objects to efforts to reduce or eliminate a state's role in the siting of Liquefied Natural Gas facilities.

    As previously reported by, Lt. Gov. Bustamante separately wrote a letter to Cong. Eshoo critical of some Energy bill provisions on March 23. The letters were publicly mentioned by Cong. Eshoo during her Committee presentation in support of an amendment to delete the FERC LNG supremacy provisions offered by Cong. Edward Markey (D., MA). The amendment failed 18-35.

    The April 4 letter from the CA Ocean Protection Council is posted without comment on the Council's web page as a response to members of Congress on the pending energy bill.

    The CA Ocean Protection Council, established by 2004 CA Ocean Protection Act signed into in law by Gov. Schwarzenegger, consists of the CA Secretary for Resources, Secretary for Environmental Protection, Chair of the State Lands Commission, and two ex-officio legislative members. "The Council will help coordinate and improve the protection and management of California’s ocean and coastal resources" says its web site, adding that it is "anticipated that the Council will hold 3 or more meetings a year."

    The legislature directed the CA Ocean Protection Council to (among other things) coordinate activities of state agencies related to protection and conservation of coastal waters and ocean ecosystems, improve the effectiveness of state efforts to protect ocean resources within existing fiscal limitations...and "[i]dentify changes in federal law and policy necessary to achieve the goals of [of the legislation] and to improve protection, conservation, and restoration of ocean ecosystems in federal and state waters off the state's coast [and] [r]ecommend to the Governor and the Legislature actions the state should take to encourage those changes in federal law and policy."

    On a LB level, the City Council has by voted action previously adopted a federal legislative agenda that indicates the city will "[s]upport legislation that protects and/or expands the City's authority and rights over its affairs." and adds that "proposals and policies inconsistent with this agenda may be subject to opposition by the City." However, the LB City Council has not taken a formal position on the pending Energy bill or its LNG or coastal provisions...except for eminent domain provisions (sought by FERC but not included in the bill) which were opposed by the Port of LB.

    As reported on April 7, LB City Attorney Bob Shannon said of the bill's LNG/FERC section even without eminent domain: "We are very concerned about the [continuing] potential in this bill to take away state jurisdiction as well as affecting the right of the City Council to review appeals on the LNG EIR/EIS [Environmental Review documents]." The bill would substantively affect rights under the CA Environmental Quality Act (CEQA), possibly leaving little if anything for appeal and review by the City Council. The City Attorney's office says that as landlord, the Port of LB (via its non-elected Board of Harbor Commissioners) continues to have the power to decide whether to approve locating the LNG plant on its land.

    Bry Myown, an opponent of siting an LNG facility in the Port of LB, warned last year that the Port of LB's conduct had invited a "test case" in which LB and cities nationally might lose their ability to say "no."

    The LB LNG issue gained national attention after a Mitsubishi subsidiary, "Sound Energy Solutions," applied to FERC -- but not to the CA Public Utilities Commission -- for permission to build and operate an 80+ million gallon LNG terminal in the Port of LB. The Port of LB advanced the firm's FERC application...during which FERC said it SES didn't need CA authority because FERC exclusive decision making jurisdiction.

    CPUC sued FERC in federal court, seeking to enforce CA law (the case is pending). The now-pending Congressional action could make the CPUC's court case moot.

    Coastal states are among the most impacted by the bill's LNG provisions as well as its Coastal Zone Management sections. The House Committee debate on the Energy bill turned usual Republican and Democrat positions on their heads...with GOP members urging federal supremacy to override states to promote a national policy and Democrats backing the rights of state bodies to defend local interests.

    Parts of Energy bill giving FERC new prerogatives on Coastal Zone Management issues were opposed by Florida Governor Jeb Bush.

    Below is the House bill's LNG text:

    (b) DEFINITION. Section 2 of the Natural Gas Act (15 U.S.C. 717a) is amended by adding at the end the following new paragraph:

    (11) ‘Liquefaction or gasification natural gas terminal’ includes all facilities located onshore or in State waters that are used to receive, unload, load, store, transport, gasify, liquefy, or process natural gas that is imported to the United States from a foreign country, exported to a foreign country from the United States, or transported in interstate commerce by waterborne tanker, but does not include:

  • (A) waterborne tankers used to deliver natural gas to or from any such facility; or
  • (B) any pipeline or storage facility subject to the jurisdiction of the Commission under section 7...


    (1) COMMISSION AUTHORIZATION REQUIRED. No person shall construct, expand, or operate a liquefaction or gasification natural gas terminal without an order from the Commission authorizing such person to do so.


    (A) NOTICE AND HEARING. Upon the filing of any application to construct, expand, or operate a liquefaction or gasification natural gas terminal, the Commission shall

  • (i) set the matter for hearing;
  • (ii) give reasonable notice of the hearing to all interested persons, including the State commission of the State in which the liquefaction or gasification natural gas terminal is located;
  • (iii) decide the matter in accordance with this subsection; and
  • (iv) issue or deny the appropriate order accordingly.


    (i) IN GENERAL. The Commission shall act as the lead agency for the purposes of coordinating all applicable Federal authorizations and for the purposes of complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4312 et seq.) for a liquefaction or gasification natural gas terminal.

    (ii) OTHER AGENCIES. Each Federal agency considering an aspect of the construction, expansion, or operation of a liquefaction or gasification natural gas terminal shall cooperate with the Commission and comply with the deadlines established by the Commission.


    (i) COMMISSION AUTHORITY TO SET SCHEDULE. The Commission shall establish a schedule for all Federal and State administrative proceedings required under authority of Federal law to construct, expand, or operate a liquefaction or gasification natural gas terminal. In establishing the schedule, the Commission shall

  • (I) ensure expeditious completion of all such proceedings; and
  • (II) accommodate the applicable schedules established by Federal law for such proceedings.
  • (ii) FAILURE TO MEET SCHEDULE. If a Federal or State administrative agency does not complete a proceeding for an approval that is required before a person may construct, expand, or operate the liquefaction or gasification natural gas terminal, in accordance with the schedule established by the Commission under this subparagraph, and if

  • (I) a determination has been made by the Court pursuant to section 19(d) that such delay is unreasonable; and

    (II) the agency has failed to act on any remand by the Court within the deadline set by the Court, that approval may be conclusively presumed by the Commission.

    (D) EXCLUSIVE RECORD. The Commission shall, with the cooperation of Federal and State administrative agencies and officials, maintain a complete consolidated record of all decisions made or actions taken by the Commission or by a Federal administrative agency or officer (or State administrative agency or officer acting under delegated Federal authority) with respect to the construction, expansion, or operation of a liquefaction or gasification natural gas terminal. Such record shall be the exclusive record for any Federal administrative proceeding that is an appeal or review of any such decision made or action taken.


    (i) IN GENERAL.—The Commission shall consult with the State commission of the State in which the liquefaction or gasification natural gas terminal is located regarding State and local safety considerations prior to issuing an order pursuant to this subsection and consistent with the schedule established under subparagraph (C) (ii) STATE SAFETY INSPECTIONS.

    The State commission of the State in which a liquefaction or gasification natural gas terminal is located may, after the terminal is operational, conduct safety inspections with respect to the liquefaction or gasification natural gas terminal if

    (I) the State commission provides written notice to the Commission of its intention to do so; and

    (II) the inspections will be carried out in conformance with Federal regulations and guidelines. Enforcement of any safety violation discovered by a State commission pursuant to this clause shall be carried out by Federal officials. The Commission shall take appropriate action in response to a report of a violation not later that 90 days after receiving such report.

    (iii) STATE AND LOCAL SAFETY CONSIDERATIONS. For the purposes of this subparagraph, State and local safety considerations include:

    (I) the kind and use of the facility;
    (II) the existing and projected population and demographic characteristics of the location;
    (III) the existing and proposed land use near the location;
    (IV) the natural and physical aspects of the location;
    (V) the medical, law enforcement, and fire prevention capabilities near the location that can respond at the facility; and
    (VI) the feasibility of remote siting.


    (A) IN GENERAL. The Commission shall issue an order authorizing, in whole or in part, the construction, expansion, or operation covered by the application to any qualified applicant

    (i) unless the Commission finds such actions or operations will not be consistent with the public interest; and
    (ii) if the Commission has found that the applicant is

    (I) able and willing to carry out the actions and operations proposed; and
    (II) willing to conform to the provisions of this Act and any requirements, rules, and regulations of the Commission set forth under this Act.

    (B) TERMS AND CONDITIONS. The Commission may by its order grant an application, in whole or in part, with such modification and upon such terms and conditions as the Commission may find necessary or appropriate.


    (i) IN GENERAL. Any Commission order issued pursuant to this subsection before January 1, 2011, shall not be conditioned on:

    (I) a requirement that the liquefaction or gasification natural gas terminal offer service to persons other than the person, or any affiliate thereof, securing the order; or

    (II) any regulation of the liquefaction or gasification natural gas terminal’s rates, charges, terms, or conditions of service.


    Clause (i) shall not apply to any pipeline subject to the jurisdiction of the Commission under section 7 exiting a liquefaction or gasification natural gas terminal.

    (iii) EXPANSION OF REGULATED TERMINAL. An order issued under this paragraph that relates to an expansion of an existing liquefaction or gasification natural gas terminal, where any portion of the existing terminal continues to be subject to Commission regulation of rates, charges, terms, or conditions of service, may not result in

    (I) subsidization of the expansion by regulated terminal users;
    (II) degradation of service to the regulated terminal users; or
    (III) undue discrimination against the regulated terminal users.

  • Related: archived LNG coverage

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