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The New Balance of Power

Do states have any rights in siting LNG terminals?

Fortnightly Magazine - June 2007

order authorizing construction of the Freeport LNG Terminal in Brazoria County, Texas, 13 required in regards to environmental concerns, that Freeport employ a team of environmental inspectors, prepare a final dredging plan and comply with revegetation methods. Also, in regards to safety concerns, the order required Freeport to file operation and maintenance procedures, emergency plans, and safety procedure manuals; to establish safeguards to protect above-ground, fire-water piping; and to file security personnel requirements for prior to and during LNG carriers unloading.

Similarly, FERC’s order granting authorization for the construction of the Cameron LNG facility near Hackberry, Louisiana 14 required that Cameron prepare a wetlands mitigation plan in consultation with federal and states agencies including the Louisiana Department of Wildlife and Fisheries, the Louisiana Department of Natural Resources, and the Louisiana Department of Environment Quality.

Also, FERC’s order granting authorization for the Weaver’s Cove LNG facility in Fall River Massachusetts 15 required that Weaver’s Cove “develop and implement an environmental complaint resolution procedure.” Also, in regard to safety concerns, FERC acknowledged that the construction of this facility raised “significant, unresolved safety issues, especially in the event of an intentional breach of an LNG vessel as it passes by densely populated shoreline communities.” Due to these concerns, the order required that Weaver’s Cove “develop emergency evacuation routes for the areas along the route of the LNG vessel transit prior to construction and to develop an initial Emergency Response Plan, including evacuation, prior to initial site preparation, in cooperation with local groups.”

As a matter of law and national energy policy, AES Sparrows Point got it right in its reading of EPACT. The energy supply/demand balance is a national and not a local issue, and as a consequence, FERC, a federal agency, must have the final permitting authority. However, national decision-makers should not give the states input mere lip service, but should assign it credibility particularly as to issues involving local knowledge affecting the environment and safety. If those local issues turn out to be significant, it does not mean that a permit for an LNG terminal should be denied, but that FERC should use its conditioning authority to mitigate any potential damage.

 

Endnotes:

1. In contrast, Russia and Iran, in the aggregate, have over 40% of the world’s proved reserves of natural gas. Russell Gold and Gregory L. White, Russia and Iran Discuss A Cartel For Natural Gas , WALL ST. J., Feb. 2, 2007, at A1.

2. Robert Ineson and Michael Zenker, Making Over an Industry: North American Natural Gas , WALL ST. J., Feb. 14, 2007 at A5-6.

3. AES Sparrows Point LNG v. Smith , 2007 WL 184736, *1 (D. Md. Jan. 23, 2007).

4. National Estuary Protection Act, H.R. 1564, 110th Cong. § 2 (2007).

5. Jacob Dweck, David Wochner & Michael Brooks, Liquefied Natural Gas (LNG) Litigation After the Energy Policy Act of 2005: State Powers in LNG Terminal Siting , 27 Energy L.J. 473, 474 (2006).

6.A bill, H.R. 1564, has been introduced to prohibit the siting of the Broadwater LNG project on the Long Island Sound.