BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 426
                                                                  Page  1


          SENATE THIRD READING
          SB 426 (Simitian)
          As Amended August 31, 2005
          Majority vote 

           SENATE VOTE  :24-14  
          
           UTILITIES AND COMMERCE         6-5                  NATURAL  
          RESOURCES           7-2         
           
           ----------------------------------------------------------------- 
          |Ayes:|Levine, Pavley, De La     |Ayes:|Hancock, Ruskin, Laird,   |
          |     |Torre,                    |     |Nava, Saldana, Wolk,      |
          |     |Jerome Horton, Montanez,  |     |Lieber                    |
          |     |Jones                     |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Bogh, Baca, Blakeslee,    |Nays:|La Malfa, Harman          |
          |     |Keene, Wyland             |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           APPROPRIATIONS      12-4                                        
           
           ----------------------------------------------------------------- 
          |Ayes:|Chu, Bass, Berg,          |     |                          |
          |     |Karnette, Klehs, Leno,    |     |                          |
          |     |Nation, Oropeza, Laird,   |     |                          |
          |     |Saldana, Yee, Mullin      |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Sharon Runner, Emmerson,  |     |                          |
          |     |Nakanishi, Walters        |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Requires the California Energy Commission (CEC) to  
          evaluate and rank every proposed liquefied natural gas (LNG)  
          terminal and directs the Governor to disapprove an application  
          for a license to construct and operate an LNG terminal if the  
          project does not meet identified criteria.  Specifically,  this  
          bill :

          1)Requires CEC to evaluate and rank each proposed LNG terminal  
            and provide the results to the Governor and the Legislature by  
            April 1, 2006.








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          2)Requires the Governor to disapprove an application for a  
            license to construct and operate a LNG terminal unless the  
            facility is evaluated and ranked by CEC, and is one of the two  
            highest ranked sites.

          3)Provides that CEC may only require applicants to provide  
            documents prepared to comply with federal licensing  
            requirements, and precludes CEC from requesting confidential  
            financial or market information from any applicant for the  
            purpose of the evaluation and ranking.

          4)Requires the State Lands Commission or legislatively  
            designated grantee to consider an application for an LNG  
            facility proposed on state tide and submerged lands, in  
            accordance with the evaluation and ranking. 

           EXISTING LAW  :   

          1)The federal Deepwater Port Act of 1974 precludes the U.S.  
            Secretary of Transportation from issuing a license for the  
            construction and operation of an  off-shore  natural gas  
            structure in federal waters without the approval of the  
            Governor of each adjacent coastal state, and can condition the  
            license on making the project consistent with state  
            environmental, land-use, water, and coastal management  
            programs.

          2)The Energy Policy Act of 2005 provides the Federal Energy  
            Regulatory Commission (FERC) exclusive authority to approve or  
            deny an application for the siting, construction, or operation  
            of an LNG facility located  on-shore  or in state waters.

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee analysis, for the initial assessment and ranking in  
          2006, CEC would need $250,000 for 3.0 personnel years (PYs) and  
          up to $1 million for consulting contracts.  For evaluation of  
          subsequent LNG proposals, CEC would likely need $85,000 for 1.0  
          PY and about $100,000 for consulting contracts.

           COMMENTS  :  The purpose of this bill is to ensure that state laws  
          and regulations that address safety and environmental impacts of  
          LNG facilities are not preempted by less-protective federal laws  
          and regulations.  Current law permits the Governor to approve or  








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          disapprove an off-shore LNG facility using discretion.  This  
          bill would limit the Governor's decision-making authority and  
          require him to disapprove a project unless it is evaluated by  
          CEC for, among other things, its effectiveness of meeting energy  
          needs and its mitigation of environmentally damaging effects. 

          There are currently three active proposals to build LNG  
          terminals; two off-shore and one on-shore.  Each is in various  
          stages of development.  Proponents of this bill would like to  
          provide more state input into the LNG siting and certification  
          process to ensure the three facilities are evaluated using  
          specific criteria identified in this bill.  Opponents assert  
          that new supplies of LNG would decrease costs of energy, by  
          increasing the supply of natural gas because natural gas fuels  
          most California power plants. 


           Analysis Prepared by  :  Gina Mandy / U. & C. / 319-2083



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