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An LNGTSS White Paper

2008 March 26

LNG safety & need:
NEPA & states trump FERC

The Federal Energy Regulatory Commission (FERC) claims supreme authority over LNG terminal safety issues, indicating that their authority is invested in them by the Energy Policy Act of 2005. FERC claims safety to be a primary concern of the agency. What FERC doesn’t mention, however -- and of what states seem to be largely unaware -- is that states actually have the legal authority, given them by the National Environmental Protection Act (NEPA), to prevent unsafe LNG terminal siting.

Shoreside LNG terminal projects require permitting from several sources: FERC, states, Army Corps of Engineers, and (although, technically, not a permit) the Coast Guard. States’ permitting authority is for air and water quality, as provided by NEPA, as well as coastal zone management. The air and water quality permitting include the trump card that states hold over terminal siting.

FERC wants the public to believe that they are the ultimate determiner of what new LNG facilities will be built. The truth is that they are one of only many determiners. While FERC may issue permits to construct LNG terminals, the fact is that those terminals cannot be built without additional permits -- from the state and from the Army Corps of Engineers. Plus, the Coast Guard must issue a Letter of Recommendation regarding suitability of the waterway.

NEPA requires states to consider two issues that are of particular importance, but are being overlooked: need and human environment.

Need

NEPA requires states to consider project need in vetting air and water quality permits. While LNG speculators argue that there is need for their projects, when comparing actual projected need to the number of projects already permitted, it becomes clear that need has been overwhelmed with LNG capacity -- need no longer exists. Former FERC Chairman Wood stated in 2005 that only seven-to-nine new LNG import terminals are needed, along with expansion of existing terminals and peak shaving facilities. Other, more liberal estimates indicate as many as a dozen. The US already has 30 existing, permitted, under construction, or expanding, LNG import terminals and peak shaving facilities -- far more than are needed, according to FERC officials and LNG industry experts. Since the need to further impact the environment no longer exists, states can deny new permits on that basis, alone.

Safety

Although NEPA terminology doesn’t include the word “safety,” NEPA requires states to consider the “human environment” in the air and water quality permitting process. Since FERC ignores the world LNG industry standards on safety (as published by the de facto world authority on LNG terminal siting, the Society of International Gas Tanker and Terminal Operators -- SIGTTO), FERC does an inadequate job of protecting the human environment.

“Zones of Concern” (Hazard Zones) accompany transiting LNG ships. With many of the existing, permitted, and proposed LNG projects, thousands of people are at risk. Those risks to human life include freezing, asphyxiation, burns, and explosion. The human environment in those Hazard Zones is threatened, and therefore, human environment alone, can also justify state permit denial.

Balance of Power

Since the Energy Policy Act of 2005, what has existed is a heretofore-unrealized balance of power between states and FERC. States have authority that they haven’t realized -- a power that can be used when appropriate to deny LNG facilities that threaten human safety.

LNG Industry Wisdom

It dismays LNG speculators and their supporters when it is pointed out that their projects violate the industry’s own standards. They argue that the LNG industry has a good safety record, and that risks to the public are minimal.

As SIGTTO points out, that good history is the result of research and establishing standards and best practices. By following those standards, the LNG industry continues to operate in the most safe manner possible. By violating those standards, the health of the entire industry is threatened. If an LNG tragedy were to kill civilians, it would likely result in the complete shutdown of the industry. Like falling dominoes, that would lead to energy security failure, and a weakened economy.

States Can Act

Since FERC ignores need in its permitting, and fails to adequately protect human environment, states can use the authority provided by NEPA to establish a permitting threshold. If LNG terminal applicants cannot satisfy SIGTTO LNG terminal siting standards, and prove need, then there is an a priori failure to meet NEPA requirements. States can refuse to allow the applicant to enter the permitting process, or can issue a summary decision against the project.

Setting an Example for Congress

Prior to subjecting citizens, communities, states, and the federal government to effort and great expense on projects that may be superfluous or even harmful, FERC should be required by Congress to recognize and respect these same issues. It’s time for the public to demand that their federal delegates require FERC to act responsibly regarding need and safety, and to adopt SIGTTO LNG terminal siting standards.

In the meantime, to protect the public, the industry, and the nation’s energy security, state and local governments can -- and should -- act now by adopting SIGTTO LNG siting standards as a minimum threshold in their permitting process.


Robert Godfrey represents LNG Terminal Siting Standards Organizatio, taking leadership in advocating that local, state/province, and federal governments adopt world-class SIGTTO LNG siting standards. LNG Terminal Siting Standards Organization can be reached at PO Box 222, Eastport, Maine 04631, (207)853-2922 or by contacting the webmaster.