BILL ANALYSIS
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THIRD READING
Bill No: SCR 40
Author: Lowenthal (D), et al
Amended: 5/19/05
Vote: 21
SEN. ENERGY, UTIL. & COMMUNICATIONS COMM. : 6-3, 5/03/05
AYES: Alarcon, Bowen, Dunn, Kehoe, Murray, Simitian
NOES: Morrow, Campbell, Cox
NO VOTE RECORDED: Escutia, Battin
SUBJECT : Liquefied natural gas facilities
SOURCE : Author
DIGEST : This resolution calls on the President and
Congress to preserve state and local authority over the
siting of liquefied natural gas facilities in effect
opposing provisions of H.R. 6, the energy bill recently
approved by the U.S. House of Representatives, which vests
exclusive authority over liquefied natural gas siting with
the Federal Energy Regulatory Commission and, therefore,
preempt existing state and local authority.
ANALYSIS : Liquified natural gas (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 enables California
consumers to draw gas from major reserves around the world
(e.g., Alaska, Russia, Venezuela, Bolivia, Indonesia,
CONTINUED
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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 percent 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 Public Utilities Commission (PUC) 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
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Necessity (CPCN). The FERC has resisted the PUC's claim,
maintaining it has exclusive jurisdiction under the federal
Natural Gas Act. The PUC/Federal Energy Regulatory
Commission (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 PUC 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 PUC 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.
Related Legislation
SB 426 (Simitian) and SB 1003 (Escutia) were approved by
the Senate Energy, Utilities and Communications Committee
on 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:
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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).
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 5/20/05)
Sierra Club California
NC:cm 5/20/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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