BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
SCR 40 - Lowenthal/Vincent Hearing
Date: May 3, 2005 S
As Introduced: April 7, 2005 Non-FISCAL C
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DESCRIPTION
This resolution calls on the President and Congress to preserve
state and local authority over the siting of liquefied natural gas
(LNG) facilities in effect opposing provisions of H.R. 6, the
energy bill recently approved by the U.S. House of
Representatives, which would vest exclusive authority over LNG
siting with the Federal Energy Regulatory Commission (FERC) and
therefore preempt existing state and local authority.
BACKGROUND
LNG is natural gas that has been liquefied by cooling it to minus
259 degrees Fahrenheit. Liquefaction reduces its volume by a
factor of 600, allowing it to be transported overseas by tanker
then re-gasified. LNG infrastructure would enable California
consumers to draw gas from major reserves around the world - e.g.,
Alaska, Russia, Venezuela, Bolivia, Indonesia, Australia and the
Middle East. The California Energy Commission (CEC) has suggested
that importing natural gas from other continents may help reduce
Canadian and U.S. natural gas prices. One LNG terminal could
supply approximately 10% of California's total natural gas demand.
There are four LNG receiving and re-gasification terminals in the
U.S., but none are located on the West Coast and able to serve
California. The existing U.S. LNG terminals are located in
Louisiana, Georgia, Maryland and Massachusetts.
Currently, there are several proposals to develop LNG facilities
in or near California which would serve in-state gas demand.
Private companies have proposed building receiving terminals at
the Port of Long Beach, offshore of Ventura County and in Baja
California.
Proposed California/Baja terminals:
1. Sound Energy Solutions (Long Beach Harbor) - Mitsubishi
2. Cabrillo Deepwater Port (offshore of Port Hueneme) - BHP
Billiton
3. Clearwater Port (offshore of Oxnard) - Crystal Energy and
Woodside Energy
4. Energia Costa Azul (onshore near Ensenada) - Sempra and
Shell
5. Terminal Mar Adentro (offshore of Tijuana) -
Chevron/Texaco
A few other projects have been announced, but not formally
proposed. Recent proposals to build terminals at Mare Island and
Humboldt Bay have been withdrawn due to community opposition.
The California Public Utilities Commission (CPUC) has asserted
jurisdiction over the terminal now proposed at Long Beach, finding
that the terminal owner is a public utility and the project
requires a Certificate of Public Convenience and Necessity (CPCN).
The FERC has resisted the CPUC's claim, maintaining it has
exclusive jurisdiction under the federal Natural Gas Act. The
CPUC/FERC dispute is pending in the 9th Circuit Court of Appeals.
The basic question is whether FERC has jurisdiction over a
facility for importing natural gas which is for intrastate
commerce (as the Long Beach terminal would be), rather than
interstate commerce.
Meanwhile, opponents of state review have taken the fight to
Congress. H.R. 6, approved April 21 by the House, contains a
provision intended to give FERC exclusive jurisdiction over all
LNG import facilities. This gambit has been driven by FERC and
developers anxious to proceed with LNG terminals without
interference from state authorities like the CPUC and the Coastal
Commission. If this provision is enacted in federal law, existing
or proposed state and local roles in LNG permitting may be
preempted.
The current process for permitting an LNG terminal in California
depends on the project's location. For the Long Beach project,
the Port of Long Beach is the lead agency for CEQA review, the
FERC is the lead federal agency, and the CPUC may be responsible
for the environmental, safety and economic review associated with
a CPCN, depending on the outcome of the 9th Circuit case and/or
H.R. 6. For the offshore projects, where the terminal itself is
to be outside California waters, the U.S. Coast Guard is the lead
federal agency, although federal law grants the Governor authority
to determine consistency with coastal protection policies. For
all projects, the Coastal and State Lands Commissions have
discreet roles associated with project impacts in the coastal zone
and on state lands and authority to issue coastal development
permits and leases for state lands, respectively.
COMMENTS
1. Technical amendments. The author and the committee may
wish to consider updating this resolution to reflect actions
since its introduction, such as House approval of H.R. 6, as
well as minor technical amendments to correct spelling.
2. Related legislation. SB 426 (Simitian) and SB 1003
(Escutia) were approved by this committee April 19 and are
pending in the Senate Appropriations Committee. The two
bills lay out a three-step process for the CEC to evaluate
and permit LNG terminals:
Step 1 - Assessment of need for LNG, due November 1, 2006 (SB
426).
Step 2 - Comparison and ranking of proposed LNG terminals (SB
426).
Step 3 - Selection and permitting of best project(s) (SB
1003).
POSITIONS
Support:
Sierra Club California
Oppose:
None on file
Lawrence Lingbloom
SCR 40 Analysis
Hearing Date: May 3, 2005