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CA Governor Urges Senate Not to Cut State LNG Authority

In the simmering federal-state fight over liquefied natural gas (LNG) siting jurisdiction, California Gov. Arnold Schwarzenegger weighed in earlier this month by writing to U.S. Senate energy committee leaders, urging that they not preempt state jurisdiction.

FERC has asserted its jurisdiction over a proposed LNG terminal in the Port of Long Beach, CA, and the state regulatory commission has sued the federal regulators over the issue, arguing that regasified LNG will be sold only in intrastate commerce.

According to a report in Wednesday's Los Angeles Times, Schwarzenegger wrote to Sens. Pete Domenici (R-NM) and Jeff Bingaman (D-NM), the energy committee ranking members, to "strongly oppose" any new oil and gas leasing off California's coast and any efforts "to weaken the right of California, or other states to protect their coastlines," along with supporting the states having the final say in LNG terminal siting.

Tom Giles, COO of Mitsubishi's Sound Energy Solutions (SES), which is proposing with ConocoPhillips to jointly build and operate the Long Beach LNG facility, told an industry audience in Santa Monica Tuesday that his partnership does not care whether the federal or state government has the final say; the terminal partners just want the dispute resolved quickly.

A Los Angeles-based energy attorney and recognized legal expert on LNG who also spoke at Tuesday's conference, David Huard, said the legal arguments for federal preemption are going to be hard for California to overcome based on the classic arguments of both the Constitutional "supremacy" clause and the "commerce clause" that says the federal government prevails in matters of interstate commerce. California, of course, is arguing that LNG commerce in this case is not interstate.

Schwarzenegger reiterated in his letter that he considered LNG important to California's future, but he thinks there are safety and environmental questions that need to be addressed by the state. Several Long Beach city officials indicated that they were "very encouraged" by the governor's stand on LNG siting, according to the LA Times report. Safety, security and cost issues are all of concern to the local officials and activist groups.

According to the Times, Schwarzenegger was lobbied hard by Long Beach's popular Mayor Beverly O'Neill, who has said that the proposed LNG facility could have a major impact on her city and the surrounding communities. She wants the state and local governments to have a chance to "address critical community concerns."

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