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    Council Wants Resolution To State & Fed'l Lawmakers Supporting LB "Home Rule" On Whether To Site LNG Facility In PoLB; Council May Hold Study Session On LNG Proposal Sooner Than April

    Sound Energy Solution Rep. Says Firm Isn't Advocating Legislation Giving FERC Eminent Domain Power Re Proposed PoLB LNG Facility; Says Firm's Connecting Pipeline Application With FERC Doesn't Involve Eminent Domain

    (February 9, 2005) -- Acting on an item jointly agendized by Councilmembers Bonnie Lowenthal and Frank Colonna, the City Council voted 9-0 on Feb. 8 to direct the City Attorney's office to prepare a Resolution (with specific verbiage scheduled to return to Council for discussion a vote on Feb. 15) opposing efforts by the Federal Energy Regulatory Commission to seek Congressional legislation giving the agency eminent domain power over the siting of Liquefied Natural Gas (LNG) facilities.

    The Resolution would be transmitted to Washington and Sacramento lawmakers stressing LB's support for home rule over LB Port matters.

    "My feelings are that I want the federal government, and FERC in particular, to butt out," said Councilwoman Lowenthal, whose district includes parts of downtown as well as southern WLB near the Port.

    During Council discussion, some Councilmembers indicated they favored having a broader policy discussion regarding the 80+ million gallon LNG facility which Mitsubishi subsidiary Sound Energy Solutions proposes to build and operate in the Port of LB, roughly two miles from downtown LB.

    Several Councilmembers also indicated they were inclined to advance the date of a Council study session on the matter, currently planned for April, to a sooner date.

    During public testimony, Ken Ehrlich, who serves as outside counsel for the LNG project applicant, Mitsubishi-subsidiary Sound Energy Solutions, told the Council:

    ...I do want to share with the Council...are absolute facts about the existing permitting process and what we hear about what is going on in Washington, D.C.

    ...The Port and FERC are co-lead agencies. Without both the Port and FERC saying yes, this project doesn't go. Right now, the issue of eminent domain, for example, is not on the table. There is nothing in the application of Sound Energy Solutions, or in FERC's power, or the Port's power, that would have eminent domain over our facility.

    We are applying under Section 3 of the Natural Gas Act which does not contain eminent domain authority. We are [would be] an intrastate pipeline that would connect the Port receiving facility to the existing southern California gas infrastructure. According to the federal Natural Gas Act, there is no eminent domain authority over such a pipeline.

    Yes, there is a bill before Congress that would change part of the permitting process. That does not presently contain eminent domain powers over a facility like ours. Yes it has been discussed. I think no one in this room has any idea if that's actually going to go through.

    We can assure tonight it's certainly something that Sound Energy Solutions is not advocating in any way...

    Earlier in the meeting, Councilman Colonna said:

    I also would like us to engage in the discussion about just precisely what are the parameters that this Council has in control of that, in other words, if an LNG facility ends up at the Port, they've got to come through a pipeline through this city to serve us and I believe we had a discussion about that before..."

    ...I think that it's important that we clarify this because there's a lot of concerns among the community that we are just sort of flowing along with this, and I'm glad that we're in this process, because there are other issues that are attached to this resolution that I think we need to have the time to air out.

    My concern is that we are making, again, a commitment for foreign sources of fossil fuel that are from unstable countries, I mean the whole litany is long, not to mention the fact that Dec. 26 was a tsunami [in Asia] that could potentially send an LNG vessel maybe into the center of the City, God forbid.

    But I'm really interested in getting the discussion out there and I think that our country is spending an inordinate amount of time winging around the perimeter. I think we need to zero in on this and eventually take a position.

    City Attorney Shannon said, "I think it's important when we do consider this in full that we do start from the beginning and maybe refresh our collective recollections as to how we got started here, what assumptions we entered into at the beginning, the fundamental assumption being that the Harbor Dept. had final veto authority over the siting of the LNG plant, which this proposed action by FERC would totally turn on its head."

    Mr. Shannon added that as he understands the Council's request, his office will prepare a Resolution dealing with the "home rule" issue...not the issue of whether the Council wants the LNG plant sited in the Harbor. "The Resolution will not address that and we [City Att'y office] will not deal with that issue until I get policy direction from you," he said, noting that a Council study session was scheduled for early April...which the Council could move to a sooner date if it wished.

    Councilman Colonna indicated that when the resolution comes back, the Council "might want to advance that study session."

    Councilman Baker, whose district includes the Port, indicated he completely supports the motion bringing back a Resolution and agreed that "it's more important that we move that study session that's scheduled for April so we can move forward to Council on a position on the issue. From what I've heard in a number of discussions we've had as a Council on this, the vast majority of the Council has an opinion on the matter, and if that's the case, we should get that opinion out into the public in terms of a policy direction of the Council so that we're on the record and can move forward with that policy."

    Councilwoman Tonia Reyes Uranga urged that whenever the study session is held (early April or sooner) "that we really need to wait to hear from the public before we take a stand."

    Councilwoman Rae Gabelich, who brought a Jan 2005 agenda item that sought a study session on the proposed LNG facility (now slated for April) asked if it could be advanced. City Manager Jerry Miller said he would look at the options for scheduling it sooner if that was the Council's wish. "I think that would be a good idea. When we asked for the study to take place, we didn't have this sitting on our table with FERC," Councilwoman Gabelich said, adding "It's another quality of life issue."

    Bry Myown, the leader of LB opposition to the proposed LNG project, told the Council:

    ...I have been following this issue since my Councilmember [Dan Baker] appointed me to the Energy Task Force in 2001 and closely following California and federal energy legislation.

    The primary reason I have been so concerned about it has not been just about Liquefied Natural Gas but because the House has long ago passed an Energy Bill that our California delegation failed to protect our interests on and it has signaled this move every step of the way.

    And just so that you are aware, two provisions Congress has already passed include:

    (1) Just as FERC says the Congress gave control over all imports to the Secretary of Energy, the Energy bill would give control of California's coasts, of the nation's costs, our to 200 miles, to the Secretary of the Interior, for the purpose of methane-hydrate mining from the ocean floor and oil drilling. This threatens the CA Coastal Act and the CZMA.

    (2) The second provision of that Energy bill already passed by Congress that should concern you is that it would repeal the Public Utilities Company Holding Act which signals market manipulation that will make 2001 look like child's play and we were not well served by FERC in 2001.

    ...We are very appreciative of your efforts to get information and to pass this resolution, but we need to act very aggressively and do more than send a resolution.

    As someone who has been working on this for a couple of years, there are people in our community, including me, who are already partnering with 40 cities around the nation, cross-nationally with Baja, and have already organized one international conference from the producing end of the supply chain. We are already in touch with some of those cities with the CA [Public] Utilities Commission, its 18 Congressional amici [friends of the court] and the Attorneys General of Oregon, Washington and Rhode Island who are amici in that case.

    We want to partner with you to lobby very aggressively and very rapidly on this measure. I do not believe that these are decisions that you want by any federal administration, but particularly not by this one at this time in a wartime environment.

    ...I know there has been confusion in probably your mind and the public mind about why we have consistently brought this issue to you, and about whether you or the Port or the state or the federal government had control.

    The reason we have brought it to you is because the Port gave you control. And what I mean by that is that LNG operations are not simply terminals that will be located in Ports. They are two part operations that consist of terminals and pipelines. And you entered into a Memorandum of Understanding with Sound Energy Solutions to negotiate whether you want to construct and operate that pipeline...

    The Port gave you its assurance before you entered those negotiations that finalization of its agreement would include finalization of yours...

    And so the question is, why did the Port give you that insurance, and then go ahead and process an application for that amendment?

    The only way we can protect ourselves is to get out of your MOU and tell the Port that it is not living up to the assurances it gave you before you entered into your negotiations with Sound Energy Solutions. This is of urgent importance, and it signals far more urgent energy changes in our future...

    Under LB's current City Charter, LB's Harbor District is governed by a five-member non-elected (Mayor chosen, Council approved) Board of Harbor Commissioners...which the City Attorney's office says has final authority over whether the LNG project proceeds in the Port.

    As first reported locally in late January 2005 by, materials on the U.S. Senate Energy and Natural Resources Committee web site indicate that FERC has communicated that it wants unambiguous siting authority -- including the power of eminent domain -- over siting onshore Liquefied Natural Gas (LNG) facilities.

    The Senate posted documents indicate that FERC referred in the Jan. 24 meeting (without mentioning LB details) to a controversy stemming from the Port of LB's action in processing the application of Sound Energy Solutions to build and operate the PoLB LNG facility. The firm is seeking regulatory permission from FERC but not from the CA Public Utilities Commission (CPUC). FERC says existing federal law gives FERC exclusive authority over LNG facility siting and safety issues and says the applicant doesn't need CPUC permission. CPUC disagrees, has launched its own state proceeding...and is suing FERC in federal court to enforce CA law which CPUC says gives the CA agency regulatory and safety authority.

    The CPUC v. FERC LB dispute is considered a test case with national implications. A number of state and local officials across the country have weighed in with opposition to FERC's position.

    For over a year, Ms. Myown has warned of risks in proceeding with the project. Port and City Hall officialdom mainly brushed off her arguments...until the possibility of federal eminent domain power arose (first reported locally by in January 2005).

    As previously reported by, in November 2004 the City Council approved LB's 2005 federal agenda, reiterating City Hall's traditional support for local control of city activities. By coincidence, at the same meeting Councilmembers renewed a contract with E. Del Smith & Co., a DC firm that for years has handled DC legislative advocacy for both LB City Hall and the Port of LB (under separate contracts).

    A few days later, learned and reported that a House-Senate conference committee had inserted language in a legislative report accompanying a multi-agency spending bill, backing FERC's position on exclusive federal authority over LNG issues.

    The Port sits on CA state tidelands (operated by the PoLB as a public trust granted by the state). Responding to a December 2004 inquiry by, the press office of CA Governor Arnold Schwarzenegger said the Governor had no comment on the FERC vs. CPUC dispute. LB area state Senator Alan Lowenthal and Assemblywoman Betty Karnette have both previously indicated that they support CPUC's position. maintains a link on our front page to a compilation of our LNG coverage. To view it, click here.

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