Drawing a legal distinction between facilities and companies developing them, the California Public Utilities Commission Thursday unanimously instituted an investigation of the proposed liquefied natural gas (LNG) receiving terminal in Long Beach Harbor, including the determination that the Mitsubishi Corp. subsidiary proposing to build the terminal is a “public utility” under California law and must gain CPUC approval to build the project.
CPUC President Michael Peevey and his four colleagues who rarely agree on major energy issues all were critical of the Federal Energy Regulatory Commission and Mitsubishi’s Sound Energy Solutions (SES) subsidiary for disputing the state’s claims of jurisdiction over the proposed facility and ignoring what Peevey called an “extended hand of cooperation.”
CPUC attorney Harvey Morris, a veteran litigator before FERC, told the five CPUC commissioners that there was “no question” that SES is a “public utility subject to California jurisdiction.” After several meetings with the company since last fall, Morris said it was clear SES “has no intention” of filing an application with the state for approval to proceed with its proposed LNG receiving terminal. The terminal is slated to process up to 1 Bcf/d of LNG and put imported supplies into the Southern California Gas Co. transmission pipeline system at a point two or three miles from the port site on part of a former U. S. Naval Base.
Morris told NGI that the California commission on Friday plans to seek rehearing of a March 24 order in which FERC asserted “exclusive jurisdiction” over Sound Energy’s planned LNG facility. Although the CPUC reserves the right to seek appeal, FERC at the time said its March order represented final agency action on the jurisdictional dispute, and set the stage for the issue to be litigated in the courts.
Tom Giles, SES’s executive vice president, said it was too early to say what action the company intends to take — whether it will comply or challenge the CPUC action. SES agrees with FERC’s March order asserting federal jurisdiction. CPUC’s Morris alleged that there are “many legal errors” in the FERC determination that the state will point out in its request for rehearing.
The CPUC is making the distinction between FERC’s assertion of jurisdiction over the proposed facility, and what it called the state’s jurisdiction over the company, SES, attempting to build the LNG terminal.
Morris indicated that with the CPUC’s 5-0 vote for the order instituting investigation, the state regulatory panel now will proceed with a “formal proceeding requiring SES to apply for a certificate of public convenience and necessity, if it plans to pursue this project in the Port of Long Beach. Otherwise, if it begins construction, it will be contrary to state law.”
While saying that he thinks LNG imports along the Pacific coast would be beneficial to the state, Peevey said the question that “has not been answered to my satisfaction” is where to site the receiving terminal(s). “In my view safety is paramount. He said most of the current proposed LNG facilities in the West are “sited offshore or located away from population centers,” except for SES’s proposed LNG terminal.
Peevey said FERC’s March 24 jurisdictional order attempted to “divest California of any decision making” in regard to LNG. He called FERC’s action “strident determination that has summarily excluded” other California agencies, such as the coastal commission and regional air quality organization. As such, he said that both the California Coastal Commission and the four-county South Coast Air Quality Management District, in which Long Beach falls, will be intervening in the FERC jurisdictional case.
Commissioners Loretta Lynch and Geoffrey Brown both spoke up in strong support of Peevey before the unanimous vote. “It seems FERC sharply rebuffed us,” said Brown, calling LNG a “dangerous commodity if left in the wrong hands.”
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