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    In Depth / Perspective

    House/Senate Committee Says CA Public Utilities Comm'n Has No Role In Safety & Siting Approval Re LB LNG Facility

    (November 29, 2004) -- A House/Senate conference committee has inserted language in a legislative report asserting that the CA Public Utilities Commission and similar state regulatory bodies nationwide have no power in safety and siting decisions regarding Liquefied Natural Gas (LNG) facilities.

    The Capitol Hill development stems from a decision by the Port of Long Beach to facilitate an application to build and operate an 80+ million gallon Liquefied Natural Gas (LNG) facility roughly two miles from downtown LB in which the applicant is seeking permission from the Federal Energy Regulatory Commission (FERC) but not from the California Public Utilities Commission (CPUC), which says CPUC approval is required under CA law.

    The CPUC, created by CA voters, has said its hearing procedures are more rigorous and its safety and siting review better suited to CA's experience with earthquakes and other natural disasters...and it has authority in the matter under state law.

    But members of a House/Senate conference committee whose task was iron out differences in H.R. 4818 (a multi-agency spending bill) added verbiage to a November 19 legislative report which supports FERC's position that CPUC approval is not required on grounds a 1938 federal law prevents state and local entities from deciding LNG siting and safety issues.

    In discussing FERC budget funding, House-Senate conferees (who included Rep. Jerry Lewis, R., San Bernardino) inserted the following verbiage:

    On March 24, 2004, FERC issued a declaratory order asserting exclusive jurisdiction over the approval and siting of liquefied natural gas (LNG) terminals. FERC concluded that LNG terminals are engaged in foreign commerce and, as such, fall clearly within the authority granted to the FERC under Section 3 of the Natural Gas Act of 1938. The conferees agree on this point and disagree with the position of at least one State government agency that it should be the authority responsible for LNG terminal siting within its boundaries, rather than the FERC.

    The Natural Gas Act clearly preempts States on matters of approving and siting natural gas infrastructure associated with interstate and foreign commerce. These facilities need one clear process for review, approval, and siting decisions. Because LNG terminals affect both interstate and foreign commerce, LNG facility development requires a process that also looks at the national public interest, and not just the interests of one State.

    The conferees recognize that, as a matter of energy supply, the nation will need to expand its LNG infrastructure over the decades to come to satisfy natural gas demand. Any dispute of LNG siting jurisdictional authority now will be counterproductive to meeting our natural gas needs in the future.

    The House/Senate committee report doesn't carry the force of law but allows LNG advocates to argue that it indicates Congress' view as a whole. FERC's assertion of its exclusive jurisdiction on LNG facilities hasn't been separately debated on the House or Senate floor.

    The House/Senate committee action comes as the CPUC is challenging FERC's self-declared exclusive power over LNG facilities in federal court. The case could decide the extent to which states and communities across the country have the ability under current law to regulate whether an LNG facility is built in their communities and on what terms it operates.

    The fact that the issue has arisen from actions involving the Port of LB incenses Bry Myown, a LB writer and activist opposed to the proposed PoLB LNG facility.

    "In my view, LB's Board of Harbor Commissioners, and the City of LB, have a duty under the state constitution to uphold CA law," Ms. Myown said, noting "By facilitating the application solely through FERC, the Port of LB has effectively taken a position against CA's Public Utilities Commission...and the Port's action now threatens to become a position against local control."

    She added, "The Port of LB could have the distinction of helping deprive communities across the U.S. of control over LNG facilities in their areas. Members of the U.S. Conference of Mayors ought to question whether Mayor Beverly O'Neill should speak for them on this issue."

    Ms. Myown noted that in a June 2003 letter (which she obtained under CA's Public Records Act), Mayor O'Neill wrote U.S. Senator Dianne Feinstein seeking assistance in facilitating the LB LNG facility's federal approval process and claimed the LNG project was supported by the City of LB. After broke the story, Mayor O'Neill rescinded her letter and acknowledged that the Council sets LB policy...but didn't back away from her personal support for the LB LNG project.

    Although LB's elected City Council sets policy for the City of LB, LB's non-elected Board of Harbor Commissioners has taken positions at odds with Council-declared policies. In a recent high visibility split, the LB City Council (and the South Coast Air Quality Management District) supported AB 2042, authored by LB Assemblyman, now State Senator Alan Lowenthal which sought to prevent the Ports of LB and L.A. from worsening air pollution beyond 2004 levels as they expand. The Port of LB opposed the bill...and Governor Schwarzenegger vetoed it.

    In September 2004, some Councilmembers responded by questioning whether the Port could take policy positions in conflict with Council-declared policy. That prompted Harbor Commissioners to threaten to reconsider their then-pending transfer of roughly $7 million in Port revenue to LB's Tidelands fund unless Councilmembers approved the Port's budget unchanged. Councilmembers complied.

    LB's current City Charter gives LB's Harbor Commission exclusive power and duty on behalf of the City to control and have jurisdiction over the Harbor District. Under the Charter (which can only be changed by a vote of the people) LB's Harbor Commissioners are selected by the Mayor and approved by the Council.

    LB's non-elected Harbor Commissioners will conduct the LNG project's environmental review and decide whether to proceed with the project. The Port and City Hall have separately entered into Memoranda of Understanding with the LNG project applicant on separate issues (2003) and the Port is currently working with FERC and the applicant to process the firm's application.

    LB is believed to be the only CA community in which an onshore LNG application is currently being entertained. Plans for an onshore LNG facility in Eureka, CA were abandoned amid community opposition. A proposed LNG facility in Vallejo, CA (on the former Mare Island Naval Shipyard site) was likewise dropped following local resistance.

    Two offshore LNG proposals are currently pending in the Ventura-Oxnard area.

    The LB LNG project applicant, "Sound Energy Solutions," maintains a web site at

    Ms. Myown has indicated she plans to launch an LB informational web site on LNG issues soon. maintains a link on our front page to a compilation of our LNG coverage: LNG coverage.

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