TITLE
Recommendation to direct the Port of Long Beach to terminate all negotiations, environmental reviews and safety assessments for a
"proposed" liquefied natural gas receiving terminal and regasification facility, or continue the "non-binding" discussions, per the Memorandum of Understanding of May 13, 2003, regarding the future long-term natural gas contract for the benefits of the citizens of Long Beach.
DISCUSSION
The Port of Long Beach (Port), Sound Energy Solutions (SES), and Long
Beach Energy (LBE) entered into a Memorandum of Understanding (MOU)
regarding a proposed liquefied natural gas receiving terminal and regasification
facility contingent upon SES conducting certain environmental, engineering and
economic feasibility studies, obtaining permits and approvals from the Federal
Energy Regulatory Commission (FERC), the Port and other governmental
agencies. The MOU states, "In order to obtain such permits and approvals, SES
will be required to submit environmental and engineering studies and other
reports and materials to such agencies." The MOU, the concurrent EIR/EIS and
safety assessments must be completed as part of the project approval process.
City Council actions regarding the proposed LNG facility has been limited
to authorizing LBE to execute this MOU for the purpose of discussing an
"arrangement for the benefit of the citizens of Long Beach" and the City. The
Council has also taken advocacy positions regarding pending Federal energy
policy legislation to preserve State and local jurisdiction regarding siting and
permitting authority. Whether FERC or the California Public Utilities Commission
(CPUC) retains siting and permitting authority, the decision to locate the facility
and negotiations on terms of the lease remains under the authority of the Port.
Furthermore, under the Port's MOU, "SES will have the exclusive right to pursue
the development of an LNG receiving terminal in the Port of Long Beach until the
earlier of the time that (i) SES delivers written notice of its determination in its
sole and absolute discretion that the Project is not feasible, (ii) FERC has
affirmatively denied SES the permits and approvals required for the Project, or
(iii) is thirty-seven (37) months after the date of the "Exclusivity Period"." The
Port should be provided the opportunity to exercise its due diligence in
processing the application under the terms of its MOU.
Absent from previous discussions has been a clear City Council position
on the appropriateness of locating the LNG facility in the City. We believe this
question must be addressed in an open and transparent manner, not obscured
behind terminating negotiations for a "preferential assignment agreement" or
legal opinions speculating on federal legislation currently being developed by
Congress. The decision to terminate the MOU has been presented as a vote to
stop the proposed project and to preempt legislative controversies. Prematurely
terminating the "non-binding" discussions would compromise the City's ability to
make an informed decision regarding the economic and environmental impacts
of the proposed project-including a much needed costs/benefits analysis.
In conclusion, we believe terminating the existing MOU would not preclude
the Port from entering into negotiations for a LNG facility - it would merely
negate the existing requirement that the facility provide a benefit to the citizens of
Long Beach, the Energy Department, the City and Port of Long Beach. If in fact
the City Council is opposed to the facility, then it should direct the Port to cease
its involvement with the proposed project.
TIMING CONSIDERATIONS
[Timing Considerations]
FISCAL IMPACT
[Fiscal Impact]
SUGGESTED ACTION
Approve recommendation.
BODY
[Enter Body Here]
Respectfully Submitted,
[Respectfully Submitted,]