Given that the Port of Long Beach has halted further review of the project, FERC last Wednesday asked SES Terminal LLC to justify why the agency should continue processing the company’s application for its proposed liquefied natural gas (LNG) terminal to be sited in the harbor, a project that has been troubled from its very inception in 2004.

“By letter dated Jan. 22…the executive director of the Port of Long Beach informed you that its board of harbor commissioners declined to lease a site to SES Terminal LLC for the construction and operation of SES’ proposed LNG import facility. The board also directed the port’s staff to stop processing SES’ application for a harbor development permit. Because SES’ ability to security the terminal site is essential for the project to go forward, please provide a response within seven days…explaining why we should continue to process your application,” the FERC’s Office of Energy Projects said in a letter to the company.

The board of commissioners voted last month to cease environmental review of the proposed 700 MMcf/d SES terminal (see NGI, Jan. 29). “After deliberation, based upon an opinion from Long Beach City Attorney Robert Shannon, who concluded that the environmental impact report [EIR] on the proposed LNG project ‘is and in all likelihood will remain legally inadequate,’ and since an agreement between [SES] and the city does not appear to be forthcoming, the board of harbor commissioners disapproves the project and declines to pursue further negotiations,” the Long Beach port said in a statement.

Pointing a finger at the Federal Energy Regulatory Commission, which has been jointly conducting the environmental review for more than three years with the port, Shannon said the prospective final EIR documents were “fundamentally flawed” and he that did not believe the flaws would ever be “adequately remedied.” The city attorney’s conclusion accused FERC staff of choosing to “defer certain environmental evaluations and to withhold certain critical information from the public.”

The proposed Sound Energy Solutions’ (SES) LNG terminal is a joint project of Japan’s Mitsubishi Corp and ConocoPhillips. It has triggered strong emotions on the West Coast and in Washington, DC. In 2004, when the project was first proposed, FERC and the California Public Utilities Commission battled over who would have jurisdiction over the facility (see NGI, June 14, 2004). Congress eventually settled the dispute in the Energy Policy Act of 2005, which gave exclusive jurisdiction over LNG projects to FERC.

With the jurisdictional issue settled in Washington, the terminal project still faced insurmountable obstacles in California from regulators, port and local officials and the public.

In June 2005, the Long Beach port’s board of harbor commissioners in a closed session decided to let expire an ongoing exclusive rights agreement with SES on the designated 25-acre site in the harbor. The five-member board at the time said it would await a final EIR on the project before taking any further action. But Shannon, in his legal opinion last month, said the port commissioners could reject the project without the need to complete a final EIR.

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