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    News in Depth

    Council Gets Status Report On LNG Proposal, Hears Public Criticism & Conducts Colloquy w/ City Att'y

    (May 13, 2004) -- Almost exactly a year to the day after a City Council vote -- in 87 seconds -- to approve entering into a Memorandum of Understanding (MOU) with a Mitsubishi subsidiary regarding an 80+ million gallon Liquefied Natural Gas (LNG) facility in the Port of Long Beach, City Councilmembers spent more than an hour discussing the project.

    This time, roughly an hour of Council discussion ensued.

    It came in response to an end-of-meeting "New Business" item agendized by 7th district Councilwoman Tonia Reyes-Uranga seeking a status report...which resulted in a number of LB activists blasting the project and the Port of LB's pursuit of it...and leading to a significant Council colloquy with the City Attorney on what options the Council has in the matter.

    City Hall's May 13, 2003 MOU didn't grant the applicant permission for the project; as described in a staff report at the time, it was to discuss a future long-term gas contract [with LB Energy, LB's municipal utility] and assist the Mitsubishi subsidiary in its ability to market the potential of an LNG terminal in Southern California to potential customers and to regulatory agencies.

    Separately, but at about the same time in 2003, the Port of LB entered into its own exclusive negotiating agreement with the Mitsubishi subsidiary. It likewise didn't grant the firm permission, but the Port of LB is working with the firm and the Federal Energy Regulatory Commission (FERC) to prepare documents to move the project forward...a decision that the Port of LB says it will ultimately make regardless of whether FERC grants approval.

    Under LB's current City Charter, the Port is governed by a non-elected, Mayor-named, Council-approved Board of Harbor Commissioners. Its decision on certifying an EIR for the project could be appealed to the elected City Council; other leases, plan amendments and permits would be decided by the Harbor Commissioners.

    A number of public speakers blasted the Port's facilitation of the project, noting that the CA Public Utilities Commission takes the position that under CA law, the firm must seek and obtain CPUC regulatory approval. In March 2004, FERC declared that it -- and not CPUC -- has exclusive regulatory authority over siting and safety issues. The Mitsubishi subsidiary has declined to date to seek CPUC regulatory permission for the project...although it has pledged to seek permit authority from other state and local agencies within their established fields.

    [As separately reported by, on May 12 FERC agreed to a rehearing of its March 2004 order.] posts extended excerpts of the Council discussion below. Our text is unofficial, prepared by us; not all speakers or their statements are indicated; ellipses indicate deletions; bracketed material by us for clarity.

    City Attorney Robert Shannon: ...[The 2003 Council MOU] admittedly was prior to the time that it became clear that there was significant community opposition to the LNG plant, so I don't construe this is in any way to be a rubber stamp or an approval by the City Council of the LNG plant itself...

    ...The City Council has not taken a position as I understand it, one way or another, on the LNG plant...You could formally take a position relative to the EIR, which may come to you on appeal from an action of the Port. In addition to that, you are certainly perfectly free -- since this is obviously an issue of great concern in the community -- you are free to take a position in concept as to whether you believe the LNG plant should be built, based upon public input and based upon, of course, your own feelings as to whether or not it's appropriate or not appropriate.

    ...Councilman Dan Baker: ...I've had in my head that we weren't allowed, as a body, to take a position because of the whole prejudging issue before it comes to the hearing. I'd be very happy to take a position and let everybody known once and for all if we're going to waste two more years or stop the thing right now. [applause] If it is in fact OK for the City Council to take a position, that if the vote is there to stop the project, certainly if that is the will of the Council, it should be known now as opposed to two or three years from now after everybody's spent a lot of time, energy and money.

    City Attorney Shannon: ...You do bring up a point, that is, if this does come to you on appeal, there would be the raising of an issue that you have prejudged. And so what I would like, since this was not brought to us with the understanding that there would be any position taken tonight, in fact it was specifically understood that it would not be done tonight, I would like the opportunity to look at that nuanced question, so that we're on firm ground so that we don't end up doing something that's counterproductive, for example, taking a firm position that might undercut our ability to make a decision on the appeal from the EIR. So I would like to have some period of time to be able to look at that and give you the best possible legal advice as to how you should proceed.

    But at the end of the day, you will be in a position to take a position on the LNG plant before the horse has left the barn.

    ...Councilman Rob Webb: ...I guess what I was hoping to see was a study session...It seems to me that we probably need to have a study session to look at a variety of issues. One is the safety that everybody is concerned about before we move forward. I have always wanted to hear what the potential benefits are supposed to be...

    Vice Mayor Frank Colonna: ...I do have significant concerns [about the item]...The suggested foreign source of supply, which in my view, could be considerably related as unstable and unreliable, that adding to the mix of the safety and the concerns of a lot of people in the city as to what we could be getting ourselves into I think is very important.

    And I think that we should at least have an opportunity to have some further discussion...I think before the horse does leave the barn we should have some good discussion regarding the matter, and then get your [City Attorney Shannon's] legal opinion as to whether the Council can take a position prior to the Harbor bringing the item forward to us...Could you give us some suggested direction as to what you would like to see?...It appears that there are some loose ends to this that maybe we could refine in the form of your suggestion

    City Attorney Shannon: My simple suggestion would be that you put this over and make it clear just exactly that you're going to consider all of those issues relating to the construction of the LNG plant that it is legal for you to consider in 30 days, that is before the NPO comes to you...A study session that doesn't contemplate that you're going to take any action is probably the best idea of all, with an understanding that you may be following on the heels of that with an action item at some future date, so in other words it would be a two-step process after tonight...

    Bry Myown: The status of this project is first of all that the letter of intent the Port has authorized says that finalization of their agreement will include finalization of your utility company's [LB Energy] agreement, so by my reading of this, you could walk away from this deal any time you want to and it would go away.

    Secondly, the status of this project is that your Harbor Dept. is processing an application from Mitsubishi, and your utility company is negotiating an agreement with Mitsubishi, when you and your Harbor Dept. and your utility company have all been put on notice by the California Public Utilities Commission that that application is deficient under California law...And because of that, the CPUC has had file a protest that has set the stage for FERC to assert exclusive jurisdiction...

    ...If you do not [take action], you have facilitated a scenario in which the [Bush] administration [via FERC] is going to preempt municipal home rule and states' rights all across the nation...

    ...[T]he irony is that all of those states would have in the past said, oh this is just an example of the Bush White House sticking it to California, but now they are saying this is Long Beach sticking it to nation.

    And the reason this is happening is because all of you, and all of your Commissioners, who swore an oath to uphold the California constitution, failed to enforce the California law when you were put on notice by a constitutionally created agency that you were negotiating with a corporation that was acting in defiance of CA law [CPUC's asserted regulatory jurisdiction].

    I don't think it's up to you or your Commissioners to second-guess what a court would say if it goes there. I think that the people of California passed the Charter [constitution] and created a Utility and Coastal Commission and gave you Charter powers to uphold their laws and we elected you to uphold California law and the California constitution.

    You can all look your colleagues in the eye at the League of Cities and the U.S. Conference of Mayors and answer their questions why you were willing to throw their rights away, but what we need you to do cannot wait for a study session in July...

    ...We need you to instruct your Harbor Departments to enforce California law and halt the application; to instruct your utility department to follow California law and halt their negotiations; to instruct Mitsubishi not to come back to town until they're ready to follow California law, and to tell FERC that if the [Bush] administration wants to take our rights away from us, they can do it without your help. Please do that next week.

    Don May, California Earth Corps (independent environmental group): ...One comment that Bry [Myown] made is absolutely the case, that what the federal government is seeking to do is to establish standards nationally, and in order to do that they have really gone out on a limb in picking Long Beach as the place for the fight to be, and it put us right in the cross-hairs...

    Laurie Angel: ...What I really am concerned about is FERC's interest in doing this, and just bulldozing their way through the process without due consideration for the rights of the region, the municipalities, the state, and that concerns me that the federal government feels comfortable just edging themselves into this process, and taking over, and basically removing your jurisdiction over the whole issue, which is huge...

    Councilman Baker: Before I ask the obvious questions, I would like to see if there's a response to the issues that have been raised...

    City Attorney Shannon: I think you know the answer to one question. You don't have the authority to instruct the Harbor Department. They have separate Charter authority.

    But to answer a question that you haven't yet asked, you do have the authority --not tonight -- but you do have the authority to withdraw your approval of the negotiation for a non-binding agreement between the city and [the Mitsubishi subsidiary] with regard to the pipeline. Now it's my understanding that there hasn't even been any negotiation in the last three months...but in any event if you were to withdraw that authority, you of course would be sending a message that you may wish to send, I don't know, but that's your call.

    But in terms of what you have the authority to do, obviously you have authority to withdraw that approval to enter into negotiations for a Memorandum of Understanding, but you do not have any authority to direct the Harbor Department to do anything.

    Councilman Baker: ...What further can we do as a legislative body for the city to influence the FERC-CPUC issue?

    City Attorney Shannon: Our position with respect to FERC's lack of jurisdiction -- it is true relates to the pipeline which as far as Long Beach's interest is concerned -- is frankly integrally related to the LNG plan, we have taken no position with respect to the sole jurisdiction with regard to the sole jurisdiction of FERC with regard to the LNG plant because we've not been directed or given any direction to take a position in that regard. Frankly, it will take some time for us to do some legal research into what is in Long Beach's best legal interest except to say that was in Long Beach's best legal interests in my opinion at this point is to assert as vigorously as we can the jurisdiction of the city of Long Beach, and where appropriate the Port of Long Beach, over those areas that lie within the city and the port of Long Beach. That may mean we got to battle with FERC; it may mean we go to battle with the CPUC; but that is my preliminary feeling. In other words, we're getting back to the old issue of home rule.

    Councilman Baker: Would you need something from the Council by next week?...

    City Attorney Shannon: I'm not at all prepared to concede that we need to do anything prior to May 26, with the exception of if it is your desire to agendize next week a withdrawal of your approval of the May 2003 agreement, that certainly would put a different cast so far as our position before FERC is concerned, and make it very clear that the city is not intending at this time to enter into an agreement [with the Mitsubishi subsidiary] with regard to the pipeline, and that could be further clarified before FERC, and you could do that next Tuesday if you wish.

    Councilwoman Reyes-Uranga: ...I think I will be looking at bringing something back on the agenda next week, what exactly in the wording I would wait until I speak with the City Attorney...

    Councilman Lerch: ...I'm not sure how [some speakers] can stand here and say that...we're authorizing the law to be broken, and Mr. [City] Attorney, did FERC reach down and say you're application is coming to us, or did somebody make the decision that the application should go to FERC instead of the [CPUC]?

    City Attorney Shannon: The application was filed with [the Mitsubishi subsidiary] and no, the city is not breaking the law...

    Councilman Lerch: ...There's people out there now believing that this Council, the Harbor Dept. and so forth, is outright breaking the law, and I just want to set the record straight, that that is not true. It is an interpretation of the law and they [the Mitsubishi subsidiary] feels the interpretation is different...

    City Attorney Shannon: ...And I don't think the basic issue is the...arguments posed relative to whether CPUC or FERC has basic jurisdiction. I think our effort should be basically two-fold: to assert as aggressively as we can the full jurisdiction of the city of Long Beach and the port of Long Beach...and...if you do have a position relative to the building of the LNG plant, to use every legal means at your disposal to assert that position.

    In other words, again I get back to the same concept, home rule. I don't want FERC telling us what to do, and I don't want the CPUC telling us what to do. We want to maintain as much leeway to make our own decisions as is possible and that I would suggest is where our efforts should lie...

    Councilwoman Reyes-Uranga: Why don't we just receive and file the agenda item and then we'll do what we need to do and try to work out a date for a session if possible, if necessary.

    City Attorney Shannon: ...To the extent that something of substance is brought back next week, let's get to the core issue first to the extent that you can legally do it. Because a lot of what has been said here presumes that you are against the LNG plant. Now maybe you are and maybe you're not. If you are in fact against the LNG plant, certain other actions may follow. If you're not, or if you're not prepared to take a position, then certain actions do not follow.

    And so I think the initial issue that you have to get by is what is your position on the building of the LNG plant? And I think that that would require something more than simply an add-on item on Tuesday [May 18] on a very long agenda...and if you want to do this right away -- and I don't know, again it's your decision -- if you want to do it right away, I would strongly suggest that you pick another day of the week next week, or in the alternative, schedule something for the Tuesday that you would otherwise be dark [May 25].

    Vice Mayor Colonna: What I would just suggest is that we act on the agenda item and then any member of this Council on any Tuesday can bring an item forward requesting Council support on what their particular issue is and have the argument and then presentation on that evening. At this point, we don't have a full Council this evening, and at least we do have one item, and that is clearly that we can move to a July study session absent taking action prior to that. Mr. City Attorney, you can give us legal advice along the way.

    The Council approved a motion to receive and file the item. Vice Mayor Colonna thanked audience members for their comments, adding "I think the point is well taken and there's a lot of activity that's going to be happening here."

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