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    News / Perspective

    PoLB Says It Retains Decisionmaking On LNG Proposal Despite FERC v. CPUC Fight; PoLB LNG EIR Will Likely Get Council Vote

    (March 28, 2004) -- Although the Federal Energy Regulatory Commission (FERC) has asserted exclusive jurisdiction over regulatory and siting matters (contending the CA Public Utilities Commission lacks regulatory authority), the hot button issue of a proposed 80 million gallon LNG receiving, storage and regassification facility and associated 4.5 million gallon propane/butane/ethane stripping plant in the Port of LB will almost certainly come before the elected LB City Council.

    The LB City Attorney's office has told that if the non-elected LB Harbor Commision certifies the LNG project EIR, the Harbor Commission's certification of the adequacy of the EIR can be appealed to the elected LB City Council.

    Responding to an inquiry from, LB's Principal Deputy City Attorney for Harbor District matters, Dominic Holzhaus, said "The certification of the EIR...will be made by the Harbor Board and the certification of the adequacy of that disclosure document is appealable to the City Council under 21151(c) of the Public Resources Code."

    CA Public Resources Codes section 21151(c) provides: "If a nonelected decisionmaking body of a local lead agency certifies an environmental impact report, approves a negative declaration or mitigated negative declaration, or determines that a project is not subject to this division, that certification, approval, or determination may be appealed to the agency's elected decisionmaking body, if any."

    Applying that statute, we presume that if Port certification of the LNG EIR is appealed, a vote of the Council would determine whether the facts support the Harbor Commission's decision. However, the Council would not conduct a de novo review (new EIR findings from scratch). The Council could agree with Harbor Commissioners or send the issue back to the Harbor Commission for additional documentation or other action. (Local environmentalists used this procedure in 2003 to force a public Council vote on changes to a Carnival cruise ship dock; the Council voted to approve that Port action which city officials described as having minimal impact.)

    Meanwhile, in the wake of FERC's action, LB Harbor officials issued a March 26 release stating that they and other local officials still retain a key role over the LNG project. A release from the Port of LB quoted Harbor Commission president John Hancock as saying:

    In addition to approval from FERC, the LNG terminal project also will need a permit from the U.S. Army Corps of Engineers, an amendment to the Port's land-use master plan from the California Coastal Commission, and approval from the Long Beach Board of Harbor Commissioners to lease the site on Terminal Island...FERC approval is meaningless without a lease from Long Beach. And the only way we can approve a lease is if our board has certified an EIR (environmental impact report), addressed impacts and adopted an amendment to our Master Plan (which also needs Coastal Commission approval). FERC's role is very important, but clearly, the primary determination of whether this project goes forward will be made locally.

    The Port's assurances of local decisionmaking led a prominent local opponent of the LNG project to insist that LB officials take action immediately to halt the project. LB writer Bry Myown told

    Mr. Hancock is correct that the Port of Long Beach exercises the power of ownership, and as the landlord, it should immediately stop this process from going foward. Failing that, the Council should step in and kill the project now to save themselves the prospect of being asked to do so down the road when any EIR decision will be appealed to them. As for other permits and procedures Mr. Hancock lists, either FERC occupies the field or it does not. No one can make promises regarding how this will unfold in court or claim that any other agency has any powers whatsoever.

    Ms. Myown added:

    The CA Public Utilities Commission is the only agency on record to have expressed concern about the safety of Long Beach citizens. It is extremely disappointing that the City Council and Harbor Commission failed to file motions in support of CPUC's protest [filed with FERC]. The Council and the Port are financially interested parties. They have demonstrated that they value profits more than they value public safety.

    As previously reported by, in March 20, 2004 remarks at an LNG forum held by LB's League of Women Voters, the Port of LB's Managing Director of Development, Geraldine Knatz Ph.D., said that under financial understandings already reached with the Mitsubishi subsidiary seeking to built the facility, the Port could receive between $3.5 million to $4.5 million per year in rent from the completed project.

    In addition, LB City Hall could levy charges and collect revenue on a pipe conveying the natural gas from LB to So. Cal Gas distribution lines about two miles away.

    In May 2003 vote, the LB Board of Harbor Commissioners approved a Letter of Intent and Summary of Terms with SES, giving the firm exclusive right to pursue developing the LNG receiving terminal at the site until their earlier of (1) the time SES determines the project isn't feasible; or (2) the Federal Energy Regulatory Commission (FERC) denies the project; or (3) 37 months after the date of the letter. The Summary of Terms indicates the Port would assign SES a berth and backlands consisting of roughly 27 acres for a term of 40 years.

    On May 13, 2003 -- in 87 seconds -- the LB City Council voted to authorize LB's City Manager to execute a Memorandum of Understanding (MOU) with the Mitsubishi subsidiary (SES) regarding an LNG terminal and regasification facility on roughly 27 acres of land at the southern end of the eastern part of the general area where the LB Naval Shipyard once stood (Port of LB Pier T).

    The total elapsed time between the clerk calling the item and a Council motion and a second was 1.8 seconds.

    LB Councilmembers were given a city staff report from LB Energy that indicated the MOU pertained to discussions about a future long-term gas contract and the feasibility and development, financing, construction, operation and maintenance of gas pipelines to the proposed LNG facility. It also said the MOU would also assist SES in its ability to market the potential of an LNG terminal in Southern California to potential customers and to regulatory agencies.

    The area proposed for the LNG terminal at the Port of LB is (unofficially) roughly two miles west & southward of LB City Hall and the "Pike at Rainbow Harbor" and slightly less than this from the Aquarium of the Pacific.

    The following is a transcript (unofficial, prepared by us) reflecting what took place:

    City Clerk Herrera: Item 26, Report from Long Beach Energy regarding the Memorandum of Understanding between Long Beach Energy and Sound Energy Solutions.

    [Audible off mike: Move to Authorize. Second.]

    Mayor Beverly O'Neill: It's been moved and seconded, but I do think we need a few comments on this. I think Liquefied Natural Gas is of great interest, so there doesn't need to be a extensive report. Mr. City Manager, Gerry Miller.

    City Manager Miller: Thank you, Madam Mayor and Councilmembers, and Mr. Chris Garner our Director of Long Beach Energy will provide that brief staff report. Thank you.

    Mr. Garner: Thank you. What you have before you tonight is simply a document that we want to enter into with SES, Sound Energy Solutions which is a wholly owned subsidiary of Mitsubishi, that is proposing a Liquefied Natural Gas terminal down in the Port of Long Beach. And what we're looking at doing is negotiating a gas supply deal, long term, somewhere along the line of 20, 30, 40 years with Sound Energy Solutions. And the other component would be the pipeline that would connect the terminal to our pipeline system and to the Southern California Gas Co. pipeline system. Thank you.

    Mayor O'Neill: Are there any comments on this?

    Council: [silence]

    Mayor O'Neill: This agreement is a good agreement.

    Council: [silence]

    Mayor O'Neill: Thank you very much. Please record your vote on item, what were we on, 26.

    Clerk: Motion carries unanimously. [9-0, Yes: Lowenthal, Baker, Colonna, Carroll, Kell, Richardson, Reyes-Uranga, Webb, Lerch].

    As previously reported by, LB is now the only CA area in which an onshore LNG facility publicly remains under consideration. Two onshore proposals in northern CA (at the former Mare Island Naval Stn. near Vallejo and on Humboldt Bay near Eureka) were dropped by their proponents (different firms than the LB proposal) following community opposition. Two proposals to build an offshore LNG facility off the Ventura County coast near Oxnard are currently pending.

    Drafts of the LB project's federal Environmental Impact Statement and state Environmental Impact Report are scheduled for release in April or May 2004 with public hearings to follow. Final environmental reports are expected in fall 2004 when the FERC, Army Corps of Engineers, Coastal Commission and Harbor Commission would decide whether to approve the project.

    As previously reported by, the Port of LB has announced it plans to do an independent risk analysis of a proposed LNG project, similar to the analysis being done jointly by the Port and the Federal Energy Regulatory Commission (FERC) for inclusion in the Environmental Impact Report (EIR) but conducted independently of that analysis.

    In her March 20 presentation, Dr. Knatz noted, "The Port of Long Beach, as part of the City of Long Beach, has the ability to say no. Even if FERC approves the project, the Coastal Commission approves the project, the Board of Harbor Commissioners has the right to say no. It has the right to say yes, too."

    The Mitsubishi subsidiary which seeks to build the LB LNG facility has established a web site discussing its project at:

    For a compendium of coverage of the LNG issue, see Coverage of LNG Terminal Proposed in Port of LB

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