June 22. 2005 8:10PM
Senate agrees to give feds power
on liquefied natural gas
By H. JOSEF HEBERT
Associated Press Writer
The Senate voted Wednesday to let the federal government override objections
from California and other states to the location of liquefied natural gas
terminals.
Supporters argued that LNG imports will help meet a growing demand for natural
gas and lower prices. But opponents of the provision, part of a wide-ranging
energy bill the Senate hopes to complete this week, said states should get more
of a say in locating terminals because of concerns about tanker spills and
terrorists.
The Senate rejected, 52-45, a proposed amendment by Sen. Dianne Feinstein, D-Calif.,
that would have allowed governors to veto a final LNG siting decision by the
Federal Energy Regulatory Commission.
"States must have a role in siting LNG facilities in order to protect the
welfare of their citizens," Feinstein said. "States will be
responsible for the safety of these facilities for a long time after they're
sited."
California has been the focus of a legal fight over the authority of FERC to
approve an LNG terminal in Long Beach despite state objections.
The energy bill includes a provision clarifying that FERC has the
"exclusive" authority to make a final decision on an LNG import
facility. Similar language was included in the House-passed version.
"Any governor that wants to participate ... has ample opportunity to do
that," maintained Sen. Pete Domenici, R-N.M., adding that there were a
"myriad" of zoning, environmental and other permits that a project
still must obtain.
But he said the country is dependent on natural gas and will need a growing
amount of LNG imports to meet demand.
"The country can't wait around and say we'll wait until this matter is
litigated to see how many governors will say no until we find one that will say
yes," said Domenici.
California and a growing number of other coastal states, especially in heavily
populated areas of the Northeast and West, have raised concerns over siting LNG
sites because of the potential for a spill or possible terrorist attack against
a site or incoming LNG tanker.
A report last year by the Sandia federal lab concluded terrorists could tear one
or more holes in a tanker that would release LNG and create an intense fire
capable of causing significant property damage and serious burns as far as a
mile away.
"I admit this is a small probability, but nonetheless it is such and
therefore it has to be considered," said Feinstein.
There are four LNG import facilities currently operating in the United States:
in Massachusetts, Maryland, Georgia and Louisiana. More than 40 additional
facilities have been proposed, including three in California: two offshore sites
off the coast of Ventura County, and the onshore Long Beach facility that's
being pursued by Mitsubishi Corp.
The energy bill language would not affect governors' ability to veto offshore
projects, an authority they have under the Deepwater Port Act. But it would
apply to onshore sites like the one in Long Beach that's generated growing local
opposition from residents concerned about safety.
Mitsubishi hasn't gotten a final OK from Long Beach for the land to proceed with
the project, and state and federal environmental impact reports won't be issued
until fall.
But the project sparked a legal fight between FERC and the California Public
Utilities Commission when FERC rejected the PUC's attempt to assert jurisdiction
over the project. The dispute is now before the 9th U.S. Circuit Court of
Appeals.
The energy bill language appears designed to bolster FERC's side of the lawsuit,
and could profoundly affect California's case, said Harvey Y. Morris, principal
counsel for the Public Utilities Commission.
"This is a slap in the face of the states," Morris said. "They're
saying states can't even have a say over where an LNG site can be located, it
can be two miles from the downtown of a major city, on landfill with earthquakes
around, like the Port of Long Beach, and the state has no say."
While currently LNG accounts for only about 3 percent of U.S. natural gas use,
the Energy Department estimates the market share will grow to more than 20
percent by 2025 because of a decline in domestic natural gas supplies.
LNG is natural gas that is cooled to minus-260 degrees Fahrenheit to liquid form
so it can be shipped on a specially designed tanker. At an import facility that
liquid is stored in tanks before being gradually warmed and returned to a
gaseous state and shipped through conventional pipelines.
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Associated Press Writer Erica Werner contributed to this report.