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SB 426: State Energy Resources Conservation and Development (2005)


SB 426 (2005) would have required the California Energy Commission (CEC) to evaluate, compare, and rank the permit applicants vying to construct LNG facilities on the California coast. The analysis would have included:

  • A demand analysis of natural gas needs;
  • A supply analysis of existing and projected resources;
  • A comparison of environmental impacts of the projects;
  • A comparison of human health impacts;
  • A review of necessary security requirements for the public and environment;
  • An economic comparison with a “no-build” alternative;
  • A comparison of the sustainability of the proposed supplies;
  • A requirement that the CEC confer and consult with various Federal, State, and local governments before making its findings;
  • A requirement that the CEC hold public hearings;
  • SB 426 would have required the CEC to issue a permit(s) only pursuant to the results of the analysis completed under this Act.

    Final Status and Text

    SB 426 is no longer active. Its final status was:
    Did not pass the Legislature

    You can read its final text on the Legislature's Bill Information site.

    Background Information

    Need for the Bill:

    Natural Gas is the cleanest fossil fuel (coal, oil, nuclear) currently available. It is the fossil fuel of choice among those concerned with California’s unhealthy air. Existing pipelines supply California with natural gas primarily from Texas and Alberta, Canada. Over the past year supplies have tightened and prices have surged. Projections for the future by the California Energy Commission indicate this will be a continuing trend and could have substantial impacts on California’s economy and environment if immediate steps are not taken to increase supply. Opportunities to increase supplies available to California from domestic sources are limited and pressures will continue to increase from other states for those resources.

    Foreign supplies of natural gas are abundant according to energy industry analysts. These gas beds exist in Australia, South America, The Persian Gulf, as well as Indonesia and Central Asia. However, transporting the resource is expensive unless the gas is cooled to liquid form before export. Economic transport of the liquid gas requires terminals at the receiving end to re-gasify the liquid. This can be done off-shore or on-shore. The gas is then injected into existing natural gas pipelines. 

    The LNG terminals are highly controversial. The energy industry, business interests, and some environmentalists believe LNG to be a safe clean fuel that will be the energy bridge to a prosperous California future free from supply shortages and unpredictable price spikes.

    Opponents contend LNG is a dangerous untested technology with large security risks as well as unknown environmental impacts that will compete with capital that might otherwise be available to develop and utilize cleaner more sustainable energy resources. They also point to the fact that Russia and Iran alone control 42.6% of world natural gas reserves and the figure rises to 61.3% if Quatar and Saudi Arabia are included. (Fortune Magazine, August 30,2004).  They argue natural gas reserves are vulnerable to the same supply/demand problems that currently affect petroleum reserves.

    There are currently four active permits for LNG facilities to be sited on the California Coast. There is an additional facility located in Mexico in Baja California being developed by Sempra Energy to theoretically supply California markets

    The previous (1977) LNG Siting Act was repealed in 1987 leaving no clear authority at the state level for reviewing applications for LNG plants;

    1. Existing California Environmental Quality Act requirements review applicants on a site by site basis but contain no authority to examine impacts of multiple plants on the California coast; or to compare the various proposals to each other or to determine need.
    2. There is continuing dispute between State and Federal authorities over jurisdiction and control of the plants with differing control mechanisms for on-shore and off-shore facilities. The Federal Energy Regulatory Commission (FERC) and The California Public Utilities Commission (CPUC) are currently litigating this issue;
    3. Existing timelines under Federal law are insufficient to allow adequate review, and state agencies lack the resources to review and mitigate prospective impacts.