State Seeks Final Say on Gas Terminal Plan

In an unusual protest filed with federal regulators this week, the state Public Utilities Commission complained that it had tried -- and failed -- since October to get Mitsubishi to apply to the agency for permission to build a terminal for liquefied natural gas in the Port of Long Beach.

The commission asserted that, under state law, it has broad authority to review and approve the proposed $400-million terminal. In the strongly worded motion sent to the Federal Energy Regulatory Commission, it questions whether such a terminal can be located safely in a highly populated area such as the Los Angeles-Long Beach port complex, which is ringed by homes and businesses.

The move raises questions about which authority -- the state or the federal government -- has the final say over the siting and building of onshore LNG terminals in California. It could set a precedent for an LNG proposal pending in Eureka and for future proposals for terminals around the state.

A Mitsubishi subsidiary executive Wednesday said his firm was waiting to see how federal and state regulators dealt with the issue.

“This is a complicated issue, so we’ll just see over time how it turns out,” said Thomas E. Giles, executive vice president of Sound Energy Solutions. The company hopes to receive federal approval for its project this year so it can begin construction in January.

When asked if Mitsubishi planned to apply to the state as requested, Giles said only that his firm had already started an application with the federal government before discussions with the state began.

“Clearly you have two regulatory bodies who I’m sure are in dialogue with each other,” Giles said.

To California officials, the need for the state’s permission is clear. Harvey Y. Morris, attorney at the state commission, said, “We’re preserving our rights under the California Public Utilities Code to look out for the rights of California’s people.”

The commission’s motion added, “In light of the possibility of an accident caused by human error or of a deliberate act by terrorists, the questions concerning the safety of the citizens and businesses located in the vicinity of the proposed LNG facilities must be very carefully reviewed.”

Mitsubishi officials have said, however, that their plant would include numerous safety protections and that the company had been shipping LNG for many years in Asia without safety problems.

Energy companies are proposing more than 30 import terminals nationwide to keep up with the fast-growing demand for natural gas from overseas. Only four terminals are operating in the U.S. today, and only one, in the Boston suburb of Everett, is located in a populated area.

The flurry of proposals has triggered protests in some cities, as residents question the safety of such plants and whether they might be terrorist targets.

Mitsubishi applied to the federal energy commission last month for permission to build the terminal, which it would use to import chilled natural gas from around the Pacific Rim and to turn it into natural gas to heat and light homes and businesses.

But California regulators, in their 19-page motion of intervention and protest, question how much authority the federal agency really has over the proposal from Mitsubishi’s subsidiary, stating that the company is, in fact, a public utility under California law. As such, the firm is required to apply and receive a “certificate of public convenience and necessity,” the motion said.

Citing past cases, the regulators question whether FERC has jurisdiction over LNG facilities, particularly those -- such as the one proposed for Long Beach -- that would not connect to interstate pipelines of the sort normally overseen by the federal agency.

Attached to the motion is an Oct. 30 letter that state regulators sent to Giles informing him that the state’s public utility commissioners had voted to assert their authority over the Long Beach proposal and stating that the subsidiary must apply for a certificate.

At the PUC, Morris said that although regulators had not said they would delay the process, Mitsubishi still had not filed an application with the commission. “It’s in their interest to apply sooner than later,” he said.

In its motion, the commission reports that thousands of people live close to the proposed LNG terminal site and that a number of institutions -- several schools, the Queen Mary and the Aquarium of the Pacific -- are within two miles.