State fights for right to veto LNG
presstelegram.com
By Eric Johnson
Staff writer
A battle is brewing in boardrooms and courtrooms far away from Pier T in the Port of Long Beach.
The pier is the site of a proposed $400 million liquefied natural gas terminal that Tokyo-based Mitsubishi Corp. hopes to build by 2007.
The battle is being waged by energy agencies in Sacramento and Washington, D.C., to determine who has ultimate control over whether Mitsubishi can build the proposed LNG terminal.
The outcome of the battle could determine the future of 17 other LNG proposals across the country.
The fight over LNG began in early 2003, when Mitsubishi started filing environmental documentation with the Federal Energy Regulatory Commission before submitting an application to build their project.
A Long Beach-based subsidiary of Mitsubishi, Sound Energy Solutions, wants to build an LNG receiving terminal on 27 acres of Terminal Island. The facility could handle enough LNG to supply 10 percent of California's natural gas needs.
LNG is methane superchilled to minus-256 degrees Fahrenheit, at which point it turns into a colorless, odorless liquid. LNG is 600 times more concentrated than methane in its gaseous form, so it's easier to transport and store.
Long Beach activists have fought the terminal every step of the way, saying it's a seismic hazard and a potential terrorist target.
Meanwhile, the California Public Utilities Commission has been fighting the application for different reasons. CPUC officials and commissioners insist the LNG project should have to garner state approval, which FERC denies.
"We can't say no even if the evidence warrants it. They're saying we have no right to say no," says Harvey Y. Morris, principal counsel for CPUC. "We want that right."
In June 2003, the city of Long Beach signed a letter of understanding with Mitsubishi, allowing SES to explore the possibility of building the LNG terminal.
CPUC determined in October that the terminal would be a California public utility, and therefore regulated by the state, because it would pump natural gas into intrastate pipelines.
In February, SES filed its application with FERC only. In March, in an effort to clear up confusion over who had permitting power, FERC declared it had exclusive authority to approve the project. In April, CPUC challenged that claim and told SES that it had to apply to the state as well.
On June 9, a CPUC request to rehear the case was denied by FERC, with the federal commission reasserting its ultimate authority over the permitting of LNG import facilities nationwide.
Jurisdiction
FERC insists that Section 3 of the 1938 Natural Gas Act gives the federal government sole control over the approval of facilities that import energy.
In 1992, the gas act was amended to give states more leverage, but FERC Chairman Pat Wood III said the power still rests with his commission.
Wood says the state has jurisdiction over the LNG product once the terminal is built, but not whether the terminal is built.
Morris disagrees.
"These pipelines are in the state of California they only connect with intrastate facilities that we regulate," Morris said. "It's part of the sovereignty of the state our right to say no. Our citizens and business should not be affected."
But FERC makes no bones about its authority.
"We try to work with the state, but if the state or local authority tries to thwart the procedure, the federal statutes hold sway," says FERC spokeswoman Tamara Young-Allen. "It's ultimately up to FERC."
That attitude particularly rankles Morris, who says FERC is paying lip service to state concerns. He points to a FERC order issued Monday on a proposed LNG terminal in Freeport, Texas, where the federal agency again asserted exclusive permitting authority.
"They're saying 'Yeah, you can have a say … as long as you do what we want," Morris said. "You'll have a say as long as it doesn't slow down or stop the project. That's what they've said to us."
"We tried to work with FERC on concurrent proceedings," Morris added. "We did that in the 1970s when we tried to site a terminal at Point Conception. We tried to do it cooperatively. There's no reason we couldn't work together when we have the same goal."
Morris insists CPUC is not anti-LNG.
"We aren't interested in delaying this. Our agency is in favor of LNG," he said. "If SES had applied to us in the first place, the process would be well under way. But they still refuse to apply to us."
SES officials have said they are simply following the filing protocol as it's been explained to them by FERC. They also note that numerous state agencies, including the state Lands Commission and Coastal Commission, will review the project.
Could appeal
CPUC has until July 8 to request another rehearing by FERC. It has until Aug. 7 to petition the U.S. Court of Appeals in Washington, D.C. The state commission next meets July 8 and may have a decision by then, Morris said.
"If FERC wins, this will set rules for all coastal states," said Bry Myown, a Long Beach activist opposed to the LNG project. "It would mean local utilities commissions will have no control over siting."
Morris agrees.
"FERC has insisted on making this the test case," he said. "They'd never come out and said 'exclusive authority' before us. Never had they been so bold before.
"We believe what they're doing is unprecedented. There's never been a court case that pre-empted state law when intrastate commerce was involved. The Natural Gas Act was never meant to take away state power."
But what does this legal tug-of-war mean to Long Beach residents who may favor or oppose the project?
"There's no public hearing for FERC, just what's called a technical conference," Morris said. "CPUC will have a very public process with a greater opportunity for participation.
"This affects the state, not just Long Beach," Morris said. "It'll provide 10 percent of the state's natural gas. And if it's a safety risk, it doesn't affect communities in other states or other countries. That's why California should have a say in this." |
