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    In Detail

    President Bush Presses Congress To Pass Energy Bill; Current Version Includes FERC Supremacy on LNG & Other Energy Bill Items Potentially Affecting Coast

    Councilman Colonna Asks City Att'y To Report To Council On Legislation's Proposed New FERC Powers

    (April 16, 2005) -- Using his weekly radio address, President Bush has urged Congress to pass an Energy bill...whose current House version includes provisions that could strip CA and local agencies of decision making power over the siting and safety of proposed Liquefied Natural Gas (LNG) facilities and associated pipelines.

    The President's address (text below) didn't mention the bill's FERC LNG or coastal provisions...but did indicate that House debate on the Energy bill is expected to begin in the coming week.

    As previously reported by, the House Energy & Commerce Committee refused to remove the FERC LNG supremacy and coastal impacting provisions from the bill...with the Committee chair calling the FERC LNG verbiage among the bill's most important provisions.

    In his radio address, President Bush urged Congress to "send me a bill that meets four important objectives": encourage use of technology to improve conservation; encourage more production at home in environmentally sensitive ways; diversify our energy supply by developing alternative sources of energy like ethanol or biodiesel; help find better, more reliable ways to deliver energy to consumers.

    In response to the Capitol Hill developments, 3d district Councilman Frank Colonna has agendized an item for the April 19 City Council meeting requesting that City Attorney Bob Shannon "report to the city council at the meeting of April 19, 2005, about proposed federal legislation amending the Natural Gas Act to confer new powers upon the Federal Energy Regulatory Commission."

    Text of the President's April 16 radio address follows:

    THE PRESIDENT: Good morning. American families and small businesses across the country are feeling the pinch from rising gas prices. If you're trying to meet a family budget or a payroll, even a small change at the pump can have a big impact.

    America's prosperity depends on reliable, affordable and secure sources of energy. And today our energy needs are growing faster than our domestic sources are able to provide. Demand for electricity has grown more than 17 percent in the past decade, while our transmission ability lags behind. And we continue to import more than one-half of our domestic oil supply. In the coming days and weeks I'll talk more about what we need to do in Washington to make sure America has an energy policy that reflects the demands of a new century. The first order of business is for Congress to pass an energy bill. Next week Congress begins debate on energy legislation and they need to send me a bill that meets four important objectives:

    First, the energy bill must encourage the use of technology to improve conservation. We must find smarter ways to meet our energy needs, and we must encourage Americans to make better choices about energy consumption. We must also continue to invest in research, so we will develop the technologies that would allow us to conserve more and be better stewards of the environment.

    Second, the energy bill must encourage more production at home in environmentally sensitive ways. Over the past three years, America's energy consumption has increased by about 4 percent, while our domestic energy production has decreased by about 1 percent. That means more of our energy is coming from abroad. To meet our energy needs and strengthen our national security we must make America less dependent on foreign sources of energy.

    Third, the energy bill must diversify our energy supply by developing alternative sources of energy like ethanol or biodiesel. We need to promote safe, clean nuclear power. And to create more energy choices, Congress should provide tax credits for renewable power sources such as wind, solar, and landfill gas. We must also continue our clean coal technology projects so that we can use the plentiful source of coal in an environmentally friendly way. The bill must also support pollution-free cars and trucks, powered by hydrogen fuel cells instead of gasoline.

    Finally, the energy bill must help us find better, more reliable ways to deliver energy to consumers. In some parts of the country, our transmission lines and pipelines are decades older than the homes and businesses they supply. Many of them are increasingly vulnerable to events that can interrupt and shut down power in entire regions of the country. We must modernize our infrastructure to make America's energy more secure and reliable.

    Every source of power that we use today started with the power of human invention, and those sources have served us well for decades. Now it's time to apply our knowledge and technology to keep the American Dream alive in this new century. There is nothing America cannot achieve when we put our mind to it. And I urge Congress to work out its differences and pass an energy bill that will help make America safer and more prosperous for the years to come.

    Thank you for listening.

    As also previously reported by, on April 5 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.

    The letter, dated April 4 and 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 also reported by, Lt. Gov. Bustamante separately wrote a letter to Cong. Eshoo critical of some Energy bill provisions on March 23.

    The correspondence was 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...with majority Republican Committee members solidly in support of the bill as is.

    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, to date the LB City Council has not taken a formal position on the pending Energy bill or its LNG or coastal provisions...except for its eminent domain provisions (originally sought by FERC but not included in the bill). The eminent domain provisions were opposed by the Port of LB and the LB City Council.

    LB City Attorney Bob Shannon has told that even without the eminent domain provisions, "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) would continue 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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