BILL ANALYSIS Ó
SB 1496
Page 1
Date of Hearing: July 2, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 1496 (Simitian) - As Amended: May 25, 2012
SENATE VOTE : 29-10
SUBJECT : State Energy Resources Conservation and Development
Commission: natural gas
SUMMARY : Requires the California Energy Commission (CEC) to
conduct, update and publish specified assessments of liquefied
natural gas (LNG). Imposes specified analytical requirements
for an environmental impact report (EIR) for an onshore or
offshore LNG terminal in California.
EXISTING LAW :
1)Requires the CEC to assess electricity infrastructure trends
and issues facing California and develop and recommend energy
policies for the state to address and resolve such issues as
part of its biennial Integrated Energy Policy Report (IEPR).
As part of the IEPR, the CEC is required to forecast natural
gas supply, demand and prices and evaluate a wide range of
related factors. (SB 1389 (Bowen), Chapter 568, Statutes of
2002)
2)The Liquefied Natural Gas Terminal Act of 1977 authorized the
California Public Utilities Commission (PUC) to issue a permit
for the construction and operation of an LNG terminal pursuant
to a prescribed permit procedure. The terminal was to be at a
remote site selected by the California Coastal Commission.
(SB 1081 (Alquist), Chapter 855, Statutes of 1977, repealed in
1987)
3)The California Environmental Quality Act (CEQA) requires lead
agencies with the principal responsibility for carrying out or
approving a proposed project to prepare a negative
declaration, mitigated negative declaration, or EIR for this
action, unless the project is exempt from CEQA. CEQA requires
significant effects on the environment to be identified and
mitigated.
4)The Federal Energy Policy Act of 2005 provides exclusive
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jurisdiction to the Federal Energy Regulatory Commission
(FERC) to regulate the siting of onshore LNG terminals and
approve applications for such terminals.
THIS BILL :
1)Requires an EIR for an onshore or offshore LNG terminal in
California for which an application submitted to FERC or the
United States Maritime Administration has not been deemed data
adequate on or before January 1, 2013 to a comparative
analysis of feasible alternative project technologies, an
analysis of potential disproportionately high and adverse
human health or environmental effects on minority and
low-income populations, and a full life-cycle analysis of the
impacts of greenhouse gas (GHG) emissions.
2)Requires the CEC, as part of the IEPR, to compile data on
worldwide LNG market prices and flows as well as imports and
exports to onshore or offshore LNG terminals located on the
west coast of the United States, Mexico and Canada.
3)Requires CEC on or before July 1, 2013 to create a matrix,
updated quarterly, on its website containing comparative
information on existing or proposed LNG terminals on the west
coast of North America, summary of environmental impacts and
mitigation measures.
4)Requires an LNG terminal project applicant to include in the
application evidence that it has consulted with the United
States Department of Defense regarding potential impacts on
national security.
5)Enacts related findings.
FISCAL EFFECT : According to the Senate Appropriations
Committee, minor and absorbable costs from the Energy Resources
Program Account (General Fund) to incorporate additional
information in the IEPR.
COMMENTS :
LNG is natural gas that has been liquefied by cooling it to
minus 259 degrees Fahrenheit. Liquefaction reduces its volume
by a factor of 600, allowing it to be transported overseas by
tanker then re-gasified. In the early 1970's, California's gas
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utilities identified the Port of Los Angeles, Oxnard and Point
Conception as possible sites for an LNG import terminal.
However, the three agencies involved in site approval could not
agree on a preferred site. To address the conflict, the project
proponents turned to the Legislature, which enacted the LNG
Terminal Act in 1977. Under the Act, the PUC, with input from
the Coastal Commission and the CEC, could approve one site. The
site was to be remote from human population and selected
according to a ranking by the Coastal Commission. Reflecting
the utilities' plans, the statute limited the terminal's
capacity and specified the natural gas was to be imported from
Indonesia or south Alaska. The PUC approved a remote site at
Point Conception, but the proponents cancelled the project when
LNG became uneconomical. In 1987, the Legislature repealed the
Act.
In the early and mid-2000's, when domestic natural gas prices
were historically high, a new wave of LNG import terminals was
proposed on the west coast, including several onshore and
offshore in California. None of the proposed California
terminals were approved or constructed.
The current process for permitting an LNG terminal in California
depends on the project's location. For a previously proposed
Long Beach project, the Port of Long Beach was the lead agency
for CEQA review and FERC the lead federal agency. For an
offshore project, where the terminal itself is to be outside
California waters, the U.S. Coast Guard is the lead federal
agency, although federal law grants the Governor a say in
project approval. For all projects, the Coastal Commission and
State Lands Commission have discreet roles associated with
project impacts in the coastal zone and on state lands.
LNG terminals in the United States originated as import
terminals when gas prices were high and proven U.S. gas reserves
were declining. Today, the ability to extract natural gas from
hydraulic fracturing has greatly increased the ability to
harvest natural gas, with U.S. shale gas production doubling in
the past two years, according to industry data. At the same
time, natural gas prices in the U.S. have continued to drop,
creating an incentive for companies to look to exporting LNG if
better prices are available abroad. International demand for
LNG is rising, in large part due to Japan relying less on
nuclear energy since the Fukushima disaster and increasing LNG
imports by about a third.
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As a result, a growing number of LNG terminals are seeking
approval to operate as export terminals. As of February 2012,
FERC reported three proposed LNG export terminals - one in
Louisiana and two in Texas. However, no LNG terminals are
currently proposed in California.
This bill is substantially similar to four prior bills by the
same author: SB 37 (2011) - held in the Senate Appropriations
Committee, SB 376 (2010) - held in the Assembly Appropriations
Committee, SB 412 (2007) - held in the Assembly Appropriations
Committee, and SB 426 (2005) - failed in the Assembly. This
bill differs from the prior bills in that this bill requires the
CEC to consider the impacts of both imports and exports of LNG
instead of just imports.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092