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Do Conflicts of Interest Infect LNG Proposals?:

Take a good look at the leading advocates of the three major proposals to build multi-billion-dollar liquefied natural gas receiving facilities in California and you can’t help wondering about state agency decisions that make those plans seem feasible.

That’s because some of the same people who made or recommended key LNG reports and rulings by the state Energy and Public Utilities Commissions are now leading players in bids enabled by those decisions.

No one knows if there are any quid pro quos at work here, secret promises made by companies to important regulators for high-paying jobs if they make the decisions those companies want, decisions that promise tens of billions of dollars in corporate profits over 30 years or more if they are allowed to persist.

But it’s very clear where some key players have landed. Most obvious is Joseph Desmond, who was Gov. Arnold Schwarzenegger’s choice to chair the Energy Commission in 2004 and served as Schwarzenegger’s deputy resources secretary for energy after the state Senate refused to approve his nomination. Desmond put in a full year as commission chairman before he was thrown out, and during that time, the commission issued a report saying California will soon need LNG, a conclusion far more urgent than any projection of the federal Department of Energy.

Desmond is now senior vice president for external affairs of NorthernStar Natural Gas, which seeks to build something called the Clearwater Port to import LNG through Ventura County and also wants to build a receiving facility at the mouth of the Columbia River near Astoria, Oregon, with most gas arriving there likely to end up in California.

LNG on this scale is natural gas drilled in faraway foreign locales, then supercooled into a subfreezing liquid and taken by specially-designed tankers across thousands of miles of ocean waters. On arrival, the LNG is rewarmed to a gaseous state and placed into pipeline systems.

So far, there is no hard evidence California will need LNG supplies anytime in the foreseeable future. Federal forecasts indicate natural gas usage in the state will be stable over the next two decades and there are no signs domestic supplies will run out.

But there may be an artificially-created need for LNG. That could be thanks, in part, to Steve Larson, now president of the American wing of Australian-owned Woodside Natural Gas. While Larson was executive director of the Public Utilities Commission, the agency approved new rules allowing California utilities to give up as much as one-fourth of the pipeline space they now use to bring gas from Texas, Oklahoma, Colorado, and other states.

Larson helped facilitate this ruling, done primarily at the bidding of Sempra Energy, which is about to open an LNG facility just north of Ensenada in Mexican Baja California and needs a market for the 50 percent of the plant’s gas that will not be used in Mexico.

Larson went straight from the top staff job at the PUC to being chief advocate for Woodside’s proposal to build an LNG receiving plant in the Santa Monica Bay about 28 miles offshore from the Los Angeles International Airport, a location some claim would be a prime terrorist target.

Then there’s David Maul, manager of the Energy Commission’s natural gas office during Desmond’s tenure as chairman and before. Under Maul, that office produced the only California state government report that has ever indicated the state needs LNG, which would add billions of dollars to consumer gas bills for decades to come, merely to repay energy companies for building ships, receiving plants, and liquefying facilities.

Maul now runs his own consulting firm and serves as prime consultant to Esperanza Energy LLC, a subsidiary of Tidelands Oil and Gas Corp. that seeks to build yet another LNG receiving plant off the shores of Long Beach.

If you say there oughta be a law against this kind of revolving door, where government regulators go to work as high-paid lobbyists or executives for companies they once regulated, you’re right. There is currently no such law in California, where former state legislators abound in the corps of Sacramento lobbyists.

Even under the federal law forcing former government officials to wait three years before lobbying their ex-colleagues, former members of Congress are exempt and there are no rules at all against regulators going to work for companies after making decisions that give them millions or even billions of dollars in profits.

This happens all the time with former top staffers at agencies like the Food & Drug Administration, the Environmental Protection Agency, and many others.

It’s wrong, and it makes suspect every decision these ex-officials ever had a hand in. And California natural gas users may soon be next to wonder if they’ve been victimized by this form of possible political fixing.

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