Liquefied Natural Gas (LNG) Import Terminals: Siting, Safety and Regulation
Liquefied Natural Gas (LNG) Import Terminals:
Siting, Safety, and Regulation
Updated October 7, 2008
Paul W. Parfomak
Specialist in Energy and Infrastructure
Resources, Science, and Industry Division
Adam S. Vann
American Law Division
Liquefied Natural Gas (LNG) Import Terminals:
Siting, Safety, and Regulation
Liquefied natural gas (LNG) is a hazardous fuel shipped in large tankers to U.S.
ports from overseas. While LNG has historically made up a small part of U.S.
natural gas supplies, rising gas prices, current price volatility, and the possibility of
domestic shortages are sharply increasing LNG demand. To meet this demand,
energy companies have proposed new LNG import terminals throughout the coastal
United States. Many of these terminals would be built onshore near populated areas.
The Federal Energy Regulatory Commission (FERC) grants federal approval for
the siting of new onshore LNG facilities under the Natural Gas Act of 1938 and the
Energy Policy Act of 2005 (P.L. 109-58). This approval process incorporates
minimum safety standards for LNG established by the Department of Transportation.
Although LNG has had a record of relative safety for the last 45 years, and no LNG
tanker or land-based facility has been attacked by terrorists, proposals for new LNG
terminal facilities have generated considerable public concern. Some community
groups and governments officials fear that LNG terminals may expose nearby
residents to unacceptable hazards. Ongoing public concern about LNG safety has
focused congressional attention on the exclusivity of FERC’s LNG siting authority,
proposals for a regional LNG siting process, the lack of “remote” siting requirements
in FERC regulations, state permitting requirements under the Clean Water Act and
the Coastal Zone Management Act, terrorism attractiveness of LNG, the adequacy
of Coast Guard security resources, and other issues.
Faced with the widely perceived need for greater LNG imports, and persistent
public concerns about LNG safety, Congress is debating changes to safety and
environmental provisions in federal LNG siting regulation. H.R. 2830 would require
the Coast Guard to certify it has adequate resources for LNG security before
approving an LNG facility’s security plan. S. 323 would require LNG terminal
developers to identify employees and agents engaged in activities to persuade
communities of the benefits of the approval. S. 1174 and S. 3441 would require state
concurrence of federal siting approval decisions for onshore LNG terminals. H.R.
2042 includes provisions both for state LNG siting concurrence and for developer
agent identification. H.R. 1564 would prohibit the construction of LNG terminals
employing “a floating storage regasification unit” in estuaries of national
significance. S. 1579 seeks to promote improved coordination among Federal,
regional, state, and local agencies conducting LNG siting reviews under the Coastal
Zone Management Act. S. 2822 would repeal FERC’s exclusive LNG siting
authority. H.R. 6720 would establish a national commission for the placement of
natural gas infrastructure, including LNG infrastructure.
Both industry and government analysts project continued growth in the demand
for natural gas — and a constrained ability for domestic gas producers to meet that
demand. If policy makers encourage LNG imports, then the need to foster the other
energy options may be diminished — and vice versa. Thus decisions about LNG
infrastructure could have consequences for a broader array of natural gas supply
In troduction ......................................................1
Issues Facing Congress.........................................1
Scope and Limitations..........................................2
What Is LNG and Where Does It Come From?.......................2
Expectations for U.S. LNG Import Growth..........................3
Proposed LNG Import Terminals in the United States.................4
Potential Safety Hazards from LNG Terminals...........................5
Physical Hazards of LNG........................................6
Flammable Vapor Clouds...................................6
Other Safety Hazards.......................................6
Safety Record of LNG..........................................7
LNG Hazard Models...........................................8
Hazards vs. Risks.........................................11
LNG Terminal Safety in Perspective..............................11
Other Hazardous Materials.................................11
Civil and Criminal Liability.................................12
Regulation of Onshore LNG Siting...................................13
Department of Transportation...................................13
Federal Energy Regulatory Commission (FERC)....................14
FERC-DOT Jurisdictional Issues.............................16
U.S. Coast Guard.............................................17
National Fire Protection Association (NFPA).......................17
State Regulatory Roles.........................................18
Federal-State Jurisdictional Conflicts.........................18
Key Policy Issues.................................................19
“Exclusive” Federal Siting Authority.............................19
Regional Siting Approach......................................20
“Remote” Siting of LNG Terminals..............................21
Other Statutes that May Influence LNG Terminal Siting..............22
Public Costs of LNG Marine Security.............................27
Conducting More Safety Research............................28
Developer Employee Disclosure.............................29
Reducing LNG Demand....................................30
Appendix: Offshore LNG Terminal Regulation ........................32
Table 1. Recent LNG Hazard Studies..................................9
Liquefied Natural Gas (LNG) Import Terminals:
Siting, Safety, and Regulation
Liquefied natural gas (LNG) historically has played a minor role in U.S. energy
markets, but concerns about rising natural gas prices, current price volatility, and the
possibility of domestic shortages are sharply increasing demand for LNG imports.
To meet this demand, dozens of new onshore and offshore LNG import terminals
have been proposed in coastal regions throughout the United States. But LNG, like
other fossil fuels, is a hazardous1 liquid transported and stored in enormous
quantities, often near populated areas. Concerns exist about the safety of new LNG
import terminals and the federal government’s role in addressing LNG safety in the
terminal siting process. In addition, various energy policy proposals could impact the
need for new LNG terminals by encouraging the development of alternative U.S.
energy supplies and promoting conservation and efficiency.
This report provides an overview of recent industry proposals for new LNG
import terminals. The report summarizes LNG hazards and the industry’s safety
record. It discusses federal laws and regulations related to LNG terminal siting with
a focus on the authorities of key federal agencies and safety provisions in the
permitting of onshore facilities. The report reviews controversial safety issues in
recent LNG siting proceedings, such as safety zones, marine hazards, hazard
modeling, and remote siting. The report outlines policy issues related to LNG
terminal safety, including the Federal Energy Regulatory Commission’s (FERC’s)
LNG siting authority, regional LNG siting, “remote” siting requirements in federal
regulations, state permitting requirements, terrorism, and other issues.
Issues Facing Congress
Proposed LNG terminals will directly affect the safety of communities in a
number of states and congressional districts, and will influence energy costs
nationwide. Faced with the widely perceived national need for greater LNG imports,
and persistent public concerns about LNG hazards, some in Congress are proposing
changes to safety provisions in federal LNG siting regulation. H.R. 2830, which
passed in the House of Representatives on April 24, 2008, would require the Coast
Guard to certify it has adequate resources for LNG security before approving an LNG
facility’s security plan. S. 2822, introduced on April 4, 2008, by Senator Wyden and
eight cosponsors, would repeal FERC’s exclusive LNG siting authority. S. 323,
introduced by Senator Barbara Boxer on January 17, 2007, would require LNG
1 49 C.F.R. § 172.101. List of Hazardous Materials. Office of Hazardous Materials Safety,
U.S. Department of Transportation.
terminal developers to identify employees and agents engaged in activities to
persuade communities of the benefits of the approval. S. 1174, introduced by
Senators Benjamin Cardin and Barbara Mikulski on April 19, 2007, would require
state concurrence of federal siting approval decisions for onshore LNG terminals.2
H.R. 2042, introduced by Representative Dutch Ruppersberger and three cosponsors
on April 25, 2007, includes provisions both for state LNG siting concurrence as in
S. 1174 and for developer agent identification as in S. 323 (for onshore LNG
terminals only). H.R. 1564, introduced on March 19, 2007 by Representative
Timothy Bishop and seven cosponsors, prohibits the construction of LNG terminals
employing “a floating storage regasification unit” in estuaries of national
significance. S. 1579, introduced by Senator Olympia Snowe and two cosponors on
June 7, 2007, would require FERC and the Department of Commerce to report to
Congress regarding improved coordination among government agencies reviewing
coastal energy activities under the Coastal Zone Management Act. H.R. 6720,
introduced on July 31, 2008, by Representative Timothy Bishop and ten cosponsors,
would establish a national commission for the placement of natural gas infrastructure,
including LNG infrastructure. S. 3441, introduced by Senators Olympia Snowe and
Dianne Feinstein on August 1, 2008, would require developers of new LNG facilities
to obtain both federal and state siting approval. If Congress concludes that new LNG
terminals as currently regulated will pose an unacceptable risk to public safety,
Congress may consider additional LNG safety-related legislation, or may exercise
its oversight authority in other ways to influence LNG terminal siting approval.
Alternatively, Congress may consider other changes in U.S. energy policy legislation
to reduce the nation’s demand for natural gas.
Scope and Limitations
This report focuses broadly on industry and federal activities related to safety
in LNG import terminal siting. For a more specific discussion of LNG security, see
CRS Report RL32073, Liquefied Natural Gas (LNG) Infrastructure Security: Issues
for Congress, by Paul W. Parfomak. This report also deals primarily with those parts
of LNG terminals which transfer, store, and process LNG prior to injection to natural
gas pipelines for transmission off site. For more discussion of general natural gas or
pipeline hazards, see CRS Report RL33347, Pipeline Safety and Security: Federal
Programs, by Paul W. Parfomak. Also, this report discusses mostly onshore
facilities and near-shore shipping, since they pose the greatest public hazards.
Offshore LNG terminal siting regulations are summarized in the Appendix.
What Is LNG and Where Does It Come From?
When natural gas is cooled to temperatures below minus 260E F it condenses
into liquefied natural gas, or LNG. As a liquid, natural gas occupies only 1/600th the
2 The Senate rejected an amendment proposed by Sen. Cardin to H.R. 6, the Renewable
Fuels, Consumer Protection and Energy Efficiency Act of 2007, that would have required
state approval of federal LNG terminal citing decisions.
volume of its gaseous state, so it is stored more effectively in a limited space and is
more readily transported. A single tanker ship, for example, can carry huge
quantities of LNG — enough to supply a single day’s energy needs of over 10 million
homes. When LNG is warmed it “regasifies” and can be used for the same purposes
as conventional natural gas such as heating, cooking, and power generation.
In 2007, LNG imports to the United States originated in Trinidad and Tobago
(58.5%), Egypt (14.8%), Nigeria (12.3%), Algeria (9.7%), Qatar (2.3%), and
Equatorial Guinea (2.3%).3 In recent years, some LNG shipments have also come
from Malaysia, Oman, Australia, and other countries.4 Brunei, Indonesia, Libya, and
the United Arab Emirates also export LNG, and may be significant U.S. suppliers in
the future. In addition to importing LNG to the lower 48 states, the United States
exports Alaskan LNG to Japan.
Expectations for U.S. LNG Import Growth
The United States has used LNG commercially since the 1940s. Initially, LNG
facilities stored domestically produced natural gas to supplement pipeline supplies
during times of high gas demand. In the 1970s, LNG imports began to supplement
domestic production. Primarily because of low domestic gas prices, LNG imports
stayed relatively small — accounting for only 1% of total U.S. gas consumption as
late as 2002.5 In countries with limited domestic gas supplies, however, LNG
imports grew dramatically over the same period. Japan, for example, imported 97%
of its natural gas supply as LNG in 2002, more than 11 times as much LNG as the
United States.6 South Korea, France, Spain, and Taiwan also became heavy LNG
Natural gas demand has accelerated in the United States over the last several
years due to environmental concerns about other energy sources, widespread building
of natural gas-fired electricity generation, and low natural gas prices through the
however, so prices have often become high and volatile. At the same time,
international LNG costs have fallen substantially because of increased supplies and
more efficient production and transportation, making LNG more competitive with
domestic natural gas.
In 2003 testimony before Congress, the Federal Reserve Chairman called for a
sharp increase in LNG imports to help avert a potential barrier to U.S. economic
growth. According to the Chairman’s testimony: “... high gas prices projected in the
3 Energy Information Administration (EIA). U.S. Natural Gas Imports by Country. Internet
database. August 29, 2008. [http://tonto.eia.doe.gov/dnav/ng/ng_move_impc_s1_a.htm]
4 Energy Information Administration (EIA). Natural Gas Year-In-Review 2006. Washington,
DC, March 2007. p. 5.
5 Energy Information Administration (EIA). Natural Gas Annual 2005. Tables 1 and 9.
November 16, 2006.
6 Energy Information Administration (EIA). “World LNG Imports by Origin, 2002.”
Washington, DC. October 2003.
American distant futures market have made us a potential very large importer....
Access to world natural gas supplies will require a major expansion of LNG terminal
import capacity.”7 FERC leadership has also spoken about the strategic importance
of increased LNG imports. FERC Commissioner Suedeen Kelly told industry
representatives in 2006 that “the U.S. cannot meet projected demand in the coming
years without LNG unless we shed more industrial load,” and that it was unlikely that
industrial needs would wane. She predicted that “while LNG has made a marginal
contribution to gas supply over the last 30 years, it is poised to make a major
contribution in the future.”8 Recent increases in U.S. natural gas production from
domestic shale deposits have complicated projections about LNG markets, although
most analysts expect continued growth in the U.S. LNG imports over the long term.9
Proposed LNG Import Terminals in the United States
LNG tankers unload their cargo at dedicated marine terminals which store and
regasify the LNG for distribution to domestic markets. Onshore terminals consist of
docks, LNG handling equipment, storage tanks, and interconnections to regional gas
transmission pipelines and electric power plants. Offshore terminals regasify and
pump the LNG directly into offshore natural gas pipelines or may store LNG in
undersea salt caverns for later injection into offshore pipelines.
There are seven active onshore LNG import terminals in the United States:
Everett, Massachusetts; Lake Charles, Louisiana; Cove Point, Maryland; Elba Island,
Georgia; Peñuelas, Puerto Rico; Quintana Island, Texas; and Sabine Pass, Louisiana.
There are also two active offshore import terminals, one located in the Gulf of
Mexico and a second near Boston, Massachusetts. (There is also one export terminal
in Kenai, Alaska.) In addition to these active terminals, some 27 LNG terminal
proposals have been approved by regulators across North America to serve the U.S.
market (Figure 2). A number of these proposals have been withdrawn, however, due
to siting problems, financing problems, or other reasons. Developers have proposed
another 13 U.S. terminals prior to filing formal siting applications.10
7 Greenspan, A., Chairman, U.S. Federal Reserve Board. “Natural Gas Supply and Demand
Issues.” Testimony before the House Energy and Commerce Committee. June 10, 2003.
8 Inside F.E.R.C. “Kelly-LNG Poised for ‘Major Contribution’ to Energy Supply, to Meet
Industrial Demand.” April 10, 2006.
9 Lauren O’Neil. “US Need for LNG Could Diminish Before Ramp up in 2012, Beyond.”
Natural Gas Week. July 21, 2008.
10 Federal Energy Regulatory Commission, “Proposed North American LNG Import
Terminals,” June 19, 2008. [http://www.ferc.gov/industries/lng/indus-act/terminals/
Figure 1. Approved LNG Terminals in North America
Source: Federal Energy Regulatory Commission (FERC), “Approved North American LNG Import
Terminals,” updated June 19, 2008.
[ h t t p : / / www. f e r c . g o v / i n d u s t r i e s / l n g / i n d u s - a c t/ter minals/lng-ap p r o ved .p d f]
Potential Safety Hazards from LNG Terminals
The safety hazards associated with LNG terminals have been debated for
decades. A 1944 accident at one of the nation’s first LNG facilities killed 128
people and initiated public fears about LNG hazards which persist today.11
Technology improvements and standards since the 1940s have made LNG facilities
much safer, but serious hazards remain since LNG is inherently volatile and is
usually shipped and stored in large quantities. A 2004 accident at Algeria’s Skikda
LNG terminal, which killed or injured over 100 workers, added to the ongoing
controversy over LNG facility safety.12
11 Bureau of Mines (BOM). Report on the Investigation of the Fire at the Liquefaction,
Storage, and Regasification Plant of the East Ohio Gas Co., Cleveland, Ohio, October 20,
12 Junnola, Jill, et al. “Fatal Explosion Rocks Algeria’s Skikda LNG Complex.” Oil Daily.
January 21, 2004. p. 6.
Physical Hazards of LNG
Natural gas is combustible, so an uncontrolled release of LNG poses a hazard
of fire or, in confined spaces, explosion. LNG also poses hazards because it is so
cold. The likelihood and severity of catastrophic LNG events have been the subject
of controversy. While questions remain about the credible impacts of specific LNG
hazards, there appears to be consensus as to what the most serious hazards are.
Pool Fires. If LNG spills near an ignition source, evaporating gas will burn13
above the LNG pool. The resulting “pool fire” would spread as the LNG pool
expanded away from its source and continued evaporating. A pool fire is intense,14
burning far more hotly and rapidly than oil or gasoline fires. It cannot be
extinguished — all the LNG must be consumed before it goes out. Because an LNG
pool fire is so hot, its thermal radiation may injure people and damage property a
considerable distance from the fire itself. Many experts agree that a large pool fire,15
especially on water, is the most serious LNG hazard.
Flammable Vapor Clouds. If LNG spills but does not immediately ignite,
the evaporating natural gas will form a vapor cloud that may drift some distance from
the spill site. If the cloud subsequently encounters an ignition source, those portions
of the cloud with a combustible gas-air concentration will burn. Because only a
fraction of such a cloud would have a combustible gas-air concentration, the cloud
would not likely ignite all at once, but the fire could still cause considerable16
damage. An LNG vapor cloud fire would gradually burn its way back to the LNG
spill where the vapors originated and would continue to burn as a pool fire.17
Other Safety Hazards. LNG spilled on water could (theoretically) regasify
almost instantly in a “flameless explosion,” although an Idaho National Engineering
Laboratory report concluded that “transitions caused by mixing of LNG and water are
not violent.”18 LNG vapor clouds are not toxic, but they could cause asphyxiation by19
displacing breathable air. Such clouds may begin near the ground (or water) when
they are still very cold, but rise in air as they warm, diminishing the threat to people.
Extremely cold LNG could injure people or damage equipment through direct
13 Methane, the main component of LNG, burns in gas-to-air ratios between 5% and 15%.
14 Havens, J. “Ready to Blow?” Bulletin of the Atomic Scientists. July/August 2003. p. 17.
15 Havens. 2003. p. 17.
16 West, H.H. and Mannan, M.S. “LNG Safety Practices and Regulations.” Prepared for the
American Institute of Chemical Engineering Conference on Natural Gas Utilization and
LNG Transportation. Houston, TX. April 2001. p. 2.
17 Quillen, D. ChevronTexaco Corp. “LNG Safety Myths and Legends.” Presentation to the
Natural Gas Technology Conference. Houston, TX. May 14-15, 2002. p. 18.
18 Siu, Nathan, et al. Qualitative Risk Assessment for an LNG Refueling Station and Review
of Relevant Safety Issues. Idaho National Engineering Laboratory. INEEL/EXT-97-00827
rev2. Idaho Falls, ID. February 1998. p. 71.
19 Siu. 1998. p. 62.
contact.20 Such contact would likely be limited, however, as a major spill would
likely result in a more serious fire. The environmental damage associated with an
LNG spill would be confined to fire and freezing impacts near the spill since LNG
dissipates completely and leaves no residue.21
Terrorism Hazards. LNG tankers and land-based facilities could be
vulnerable to terrorism. Tankers might be physically attacked in a variety of ways
to destroy their cargo — or commandeered for use as weapons against coastal targets.
LNG terminal facilities might also be physically attacked with explosives or through
other means. Some LNG facilities may also be indirectly disrupted by “cyber-
attacks” or attacks on regional electricity grids and communications networks which
could in turn affect dependent LNG control and safety systems.22 The potential
attractiveness of LNG infrastructure to terrorists as a target is discussed later in this
Safety Record of LNG
The LNG tanker industry claims a record of relative safety over the last 45
years; since international LNG shipping began in 1959, tankers reportedly have
carried over 45,000 LNG cargoes and traveled over 100 million miles without a
serious accident at sea or in port.23 LNG tankers have experienced groundings and24
collisions during this period, but none has resulted in a major spill. The LNG
marine safety record is partly due to the double-hulled design of LNG tankers. This
design makes them more robust and less prone to accidental spills than old single-
hulled oil and fuel tankers like the Exxon Valdez, which caused a major Alaskan oil25
spill after grounding in 1989. LNG tankers also carry radar, global positioning
systems, automatic distress systems and beacons to signal if they are in trouble.
Cargo safety systems include instruments that can shut operations if they deviate
from normal as well as gas and fire detection systems.26
The safety record of onshore LNG terminals is more mixed. There are more
than 40 LNG terminals (and more than 150 other LNG storage facilities) worldwide.
20 Siu. 1998. p. 63.
21 Quillen. 2002. p. 28.
22 Skolnik, Sam. “Local Sites Potential Targets for Cyberterror.” Seattle Post-Intelligencer.
Seattle, WA. September 2, 2002.
23 Center for LNG. “LNG Carrier Safety: A Long Record of Safe Operation.” Internet page.,
September 14, 2008. [http://www.lngfacts.org/About-LNG/Carrier-Safety.asp]; Foss, M.M.
“Introduction to LNG.” University of Texas at Austin, Center for Energy Economics.
January, 2007. p. 28.
24 Foss, 2007; CH-IV International. Safety History of International LNG Operations. TD-
25 Society of International Gas Tanker & Terminal Operators Ltd. (SIGTTO). “Safe Havens
for Disabled Gas Carriers.” Third Edition. London. February 2003. pp. 1-2.
26 Petroplus International, N.V. “Energy for Wales: LNG Frequently Asked Questions.”
Internet home page. Amsterdam, Netherlands. August 4, 2003.
Since 1944, there have been approximately 13 serious accidents at these facilities
directly related to LNG. Two of these accidents caused single fatalities of facility
workers — one in Algeria in 1977, and another at Cove Point, Maryland, in 1979.
On January 19, 2004, a fire at the LNG processing facility in Skikda, Algeria killed
an estimated 27 workers and injured 74 others. The Skikda fire destroyed a
processing plant and damaged a marine berth, although it did not damage a second
processing plant or three large LNG storage tanks also located at the terminal.27 Nor
did the Skikda accident injure the rest of the 12,000 workers at the complex.
Nonetheless, it was considered the worst petrochemical plant fire in Algeria in over
40 years.28 According to press reports, the accident resulted from poor maintenance
rather than a facility design flaw.29 Another three accidents at worldwide LNG plants
since 1944 have also caused fatalities, but these were construction or maintenance
accidents in which LNG was not present.
LNG Hazard Models
Since the terror attacks of September 11, 2001, technical studies have been
commissioned to evaluate the safety hazards of LNG terminals and associated
shipping. The most widely cited of these studies are listed in Table 1. These studies
have caused controversy because some reach differing conclusions about the
potential public hazard of LNG terminal accidents or terror attacks. Consequently,
community groups fear that LNG hazards may be misrepresented by government
agencies, or that certain LNG hazards may simply not be understood well enough to
support a terminal siting approval.
Most hazard analyses for LNG terminals and shipping depend on computer
models to approximate the effects of hypothetical accidents. Federal siting standards
specifically require computer modeling of thermal radiation and flammable vapor
cloud exclusion zones (49 C.F.R. §§ 193.2057, 2059).30 Such models are necessary
because there have been no major LNG incidents of the type envisioned in LNG
safety research and because historical LNG experiments have been limited in scale
and scope. But LNG hazards models simulate complex physical phenomena and are
inherently uncertain, relying on calculations and input assumptions about which fair-
minded analysts may legitimately disagree. Even small differences in an LNG hazard
model have led to significantly different conclusions. Referring to previous LNG
safety zone studies, for example, FERC noted in 2003 that “distances have been
27 Junnola, J., et al. January 21, 2004. p. 6.
28 Hunter, C. “Algerian LNG Plant Explosion Sets Back Industry Development.” World
Markets Analysis. January 21, 2004. p. 1.
29 Antosh, N. “Vast Site Devastated.” Houston Chronicle. January 21, 2004. p. B1.
30 Gas Research Institute (GRI). “LNGFIRE: A Thermal Radiation Model for LNG Fires”
Version 3. GRI-89/0176. Washington, DC. June 29, 1990; “LNG Vapor Dispersion
Prediction with the DEGADIS: Dense Gas Dispersion Model.” GRI-89/00242; “Evaluation
of Mitigation Methods for Accidental LNG Releases. Vol. 5: Using FEM3A for LNG
Accident Consequence Analyses.” GRI 96/0396.5. Washington, DC.
estimated to range from 1,400 feet to more than 4,000 feet for [hazardous] thermal
Table 1. Recent LNG Hazard Studies
Aut hor Sponsor Subj ect
Lloyd’s Register ofaDistrigas (Tractebel)Focused models of possible terror
Shippingattacks on LNG ships serving Everett
Quest ConsultantsbDOE (lead), FERC,Models catastrophic breach of an
Inc.DOTLNG ship tank
James Fay (MIT)cFair Play forModels fire and vapor hazards of
Harpswellproposed Harpswell LNG terminal
Tobin & AssociatesdCity of VallejoReviews general safety of proposed
Mare Island LNG terminal
Lehr and Simecek-eNOAA staffCompares hypothetical LNG and
Beattyfuel oil fires on water
Det Norske VeritasfLNG IndustryModels LNG maximum credible
Comp a n i e s failures
ABSG ConsultinggFERC (lead), DOT,Reviews consequence assessment
USCGmethods for LNG tanker incidents
Sandia NationalhDOETwo reports examine effect of large-
Laboratoriesscale LNG spills on water
Source: Congressional Research Service.
a. Waryas, Edward. Lloyd’s Register Americas, Inc. “Major Disaster Planning: Understanding and
Managing Your Risk.” Fourth National Harbor Safety Committee Conference. Galveston, TX.
March 4, 2002. Summary excerpts are in this presentation.
b. Juckett, Don. U.S. Department of Energy (DOE). “Properties of LNG.” LNG Workshop.
Solomons, MD. February 12, 2002. A Quest study summary is in this presentation.
c. Fay, James A. “Public Safety Issues at the Proposed Harpswell LNG Terminal.” FairPlay for
Harpswell. Harpswell, ME. November 5, 2003.
d. Tobin & Assoc. “Liquefied Natural Gas in Vallejo: Heath and Safety Issues.” Report by the LNG
Safety Committee of the Disaster Council, Vallejo, CA. January 16, 2003.
e. Lehr, W. and Simecek-Beatty, D. “Comparison of Hypothetical LNG and Fuel Oil Fires on Water.”
Journal of Hazardous Materials. v. 107. 2004. pp. 3-9.
f. Pitblado, R.M., J. Baik, G. J. Hughes, C. Ferro, and S. J. Shaw., Det Norske Veritas.
“Consequences of LNG Marine Incidents.” Presented at the Center for Chemical Process Safety
(CCPS) Conference. Orlando, FL. June 29-July 1, 2004. Available at
[ h t t p : / / www. d n v . c o m/ p r e s s / d n v c o m p l e t e s s t u d y o n l n g m a r i n e r e l e a s e s . a s p ] .
g. ABSG Consulting. Consequence Assessment Methods for Incidents Involving Releases from
Liquefied Natural Gas Carriers. GEMS 1288209. Prepared for the Federal Energy Regulatory
Commission under contract FERC04C40196. May 13, 2004.
h. Sandia National Laboratories (SNL). Breach and Safety Analysis of Spills Over Water from Large
Liquefied Natural Gas Carriers. SAND2008-3153. Albuquerque, NM. May 2008; Sandia
National Laboratories (SNL). Guidance on Risk Analysis and Safety Implications of a Large
Liquefied Natural Gas (LNG) Spill Over Water. SAND2004-6258. Albuquerque, NM.
31 FERC. November 2003. p. 4-133.
The LNG hazard studies in Table 1 have been sponsored by a range of
stakeholders and have been performed by individuals with various kinds of expertise.
It is beyond the scope of this report to make detailed comparisons of the
methodologies and findings of these studies and FERC analysis. Furthermore, each
of the available studies (or its application) appears to have significant limitations, or
has been questioned by critics. For example, the ABSG Consulting study released
by FERC in May 2004, which reviewed existing LNG hazard models, concluded that
!No release models are available that take into account the true
structure of an LNG carrier;
!No pool spread models are available that account for wave action or
!Relatively few experimental data are available for validation of
models involving LNG spills on water, and there are no data32
available for spills as large as the spills considered in this study.
The 2004 Sandia National Laboratories study similarly reported that “there are
limitations in existing data and current modeling capabilities for analyzing LNG33
spills over water.” Nonetheless, the Sandia report concluded that “existing
[analytic] tools ... can be used to identify and mitigate hazards to protect both public34
safety and property.”
Uncertainty related to LNG hazard modeling continues. A December 2006
study using yet another LNG computer model of a large LNG fire states that “current
generation models that are being used to calculate the radiant heat ... from the fire are
found to be overly conservative.”35 In February 2007, the Government
Accountability Office (GAO) issued a report comparing six recent unclassified
studies (including studies in Table 1) of the consequences of LNG spills. The GAO
report concluded that36
Because there have been no large-scale LNG spills or spill experiments, past
studies have developed modeling assumptions based on small-scale spill data.
While there is general agreement on the types of effects from an LNG spill, the
results of these models have created what appears to be conflicting assessments
of the specific consequences of an LNG spill, creating uncertainty for regulators
and the public.
32 ABSG Consulting. May 13, 2004. p. iii.
33 SNL. December 2004. p. 14.
34 SNL. December 2004. p. 14.
35 Raj, P.K. Spectrum of Fires in an LNG Facility: Assessments, Models and Consideration
in Evaluations. Prepared for the U.S. Department of Transportation, Pipeline & Hazardous
Materials Safety Admin. by Technology & Management Systems, Inc. Burlington, MA.
December 5, 2006. p. E-4.
36 Government Accountability Office (GAO). Maritime Security: Public Safety
Consequences of a Terrorist Attack on a Tanker Carrying Liquefied Natural Gas Need
Clarification. GAO-07-316. February 2007. p. 22.
Following the GAO report, Members of Congress expressed renewed concern about
the uncertainty associated with LNG hazard analysis.37
Hazards vs. Risks. In reviewing the various LNG hazard studies, it is
important to be clear about the distinction between hazards and risks. Although
theoretical models may try to quantify the effects of “worst-case” hazards, evaluating
the risks associated with those hazards requires an estimate of the probability that
they will occur. Some argue that a significant hazard that is nonetheless highly
unlikely does not represent an unacceptable risk to the public. In this view, worst-
case hazard studies alone do not provide a sufficient basis for evaluating public
safety. Unfortunately, few LNG safety studies comprehensively and convincingly
address the probability of catastrophic accidents or attacks actually occurring.38 In
part, this shortcoming arises from a lack of historical LNG incidents and detailed
terrorist threat information on which to base such probabilities. Faced with this
analytic uncertainty, decision makers are forced to draw the best information they can
get and rely upon their own best judgment to reach conclusions about LNG safety.
LNG Terminal Safety in Perspective
Other Hazardous Materials. LNG terminals and tankers have a high profile
because of extensive media coverage, although there are few of them relative to all
the hazardous chemical plants and ships currently operating near U.S. cities.
According to the U.S. Environmental Protection Agency (EPA), for example, more
than 500 toxic chemical facilities operate in “urban” areas at which worst-case
accidents could affect 100,000 or more people.39 These include chlorine plants in
city water systems and ammonia tanks in agricultural fertilizer production. There are
also oil refineries and other liquefied petroleum gas (e.g., propane, butane) terminals
operating in U.S. ports that pose safety hazards similar to those of LNG. Based on
the most recent data available from the U.S. Office of Hazardous Materials Safety,
there are over 100,000 annual U.S. shipments of hazardous marine cargo such as
ammonia, crude oil, liquefied petroleum gases, and other volatile chemicals.40 Many
37 See, for example Senator Barbara A. Mikulski, testimony before the House
Transportation and Infrastructure Committee, Coast Guard and Maritime Transportation
Subcommittee field hearing on the Safety and Security of Liquefied Natural Gas and the
Impact on Port Operations. Baltimore, MD. April 23, 2007.
38 One attempt at such a study is: Clarke, R.A., et al. LNG Facilities in Urban Areas. Good
Harbor Consulting, LLC. Prepared for the Rhode Island Office of Attorney General. GHC-
RI-0505A. May 2005.
39 Based on facilities submitting Risk Management Plans required under Section 112 of the
Clean Air Act (42 U.S.C. § 7412) and classified in the December 1, 2003, update of the EPA
National Database using EPA’s software RMP*Review (v2.1). EPA states that an entire
population is highly unlikely to be affected by any single chemical release, even in the worst
case. In an actual release, effects on a population would depend on wind direction and many
other factors. In addition, these worst-case scenarios do not account for emergency response
measures facility operators or others might take to mitigate harm.
40 Office of Hazardous Materials Safety, Department of Transportation. Hazardous
Materials Shipments. Washington, DC. October 1998. Table 2. p. 2.
of these cargoes pose a hazard similar to LNG and pass through the same harbors
serving existing or proposed LNG terminals.
Civil and Criminal Liability. One reason LNG tanker and terminal operators
seek to ensure public safety is to avoid civil and criminal liability from an LNG
accident; there are no special provisions in U.S. law protecting the fossil fuel
industry from such liability. As a result of the 1989 Exxon Valdez oil spill, for
example, Exxon has been required to pay over $500 million in criminal and civil41
settlements. In January 2003, the Justice Department announced over $100 million
in civil and criminal penalties against Olympic Pipeline and Shell Pipeline resolving42
claims from a fatal pipeline fire in Bellingham, Washington in 1999. In March
Attorney General reportedly announced a crackdown on companies failing to protect
against possible terrorist attacks on storage tanks, transportation networks, industrial43
plants, and pipelines. In 2002, federal safety regulators proposed a $220,000 fine
against the Distrigas LNG terminal in Everett, Massachusetts, reportedly for security44
training violations. Notwithstanding these actions, some observers are skeptical
that government scrutiny will ensure LNG infrastructure safety.
Even if no federal or state regulations are violated, LNG companies could still
face civil liability for personal injury or wrongful death in the event of an accident.
In the Bellingham case, the pipeline owner and associated defendants reportedly
agreed to pay a $75 million settlement to the families of two children killed in the
accident.45 In 2002, El Paso Corporation settled wrongful death and personal injury
lawsuits stemming from a natural gas pipeline explosion near Carlsbad, New Mexico,
which killed 12 campers.46 Although the terms of those settlements were not
disclosed, two additional lawsuits sought a total of $171 million in damages. The
impact of these lawsuits on the company’s business is unclear, however; El Paso’s
June 2003 quarterly financial report stated that “our costs and legal exposure ... will
be fully covered by insurance.”47
41 Exxon Shipping Co. et al. v. Baker et al. 554 U.S. (2008) (Supreme Court of the United
States of America). June 25, 2008. p. 4.
42 Energy Daily. “Shell, Olympic Socked for Pipeline Accident.” January 22, 2003.
43 Heilprin, John. “Ashcroft Promises Increased Enforcement of Environmental Laws for
Homeland Security.” Associated Press. Washington Dateline. Washington, DC. March 11,
44 “Massachusetts LNG Company Faces RSPA Fines for Security Violations.” Bulk
Transporter. June 28, 2002; Pipeline and Hazardous Materials Safety Admin. “Summary of
Enforcement Actions: Distrigas of Massachusetts Corp.” Web page. May 8, 2008.
[http://primi s.phmsa.dot . go v/ c o mm/ r e p o r t s / e n f o r c e / Ac t i o n s _opid_3411.html #_T P_1_tab_1]
45 Business Editors. “Olympic Pipe Line, Others Pay Out Record $75 Million in Pipeline
Explosion Wrongful Death Settlement.” Business Wire. April 10, 2002.
46 National Transportation Safety Board (NTSB). Pipeline Accident Report PAR-03-01.
February 11, 2003.
47 El Paso Corp. Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. Form 10-Q. For the period ending June 30, 2002. Houston, TX.
Regulation of Onshore LNG Siting
The Department of Transportation (DOT) and FERC are the federal agencies
primarily responsible for the regulation of onshore LNG facilities. Although federal
statutes do not explicitly designate the relative jurisdiction of DOT and FERC, the
agencies have clarified their roles through interagency agreement. These roles and
their relation to other authorities are summarized below.
Department of Transportation
The DOT sets safety standards for onshore LNG facilities. The DOT’s authority
originally stemmed from the Natural Gas Pipeline Safety Act of 1968 (P.L. 90-481)
and the Hazardous Liquids Pipeline Safety Act of 1979 (P.L. 96-129). These acts
were subsequently combined and recodified as the Pipeline Safety Act of 1994 (P.L.
102-508). The acts were further amended by the Pipeline Safety Improvement Act
of 2002 (P.L. 107-355) and the Pipeline Safety Improvement Act of 2006 (P.L. 109-
468). Under the resulting statutory scheme, DOT is charged with issuing minimum
safety standards for the siting, design, construction, and operation of LNG facilities.
It does not approve or deny specific siting proposals, because that authority is vested
with FERC, as discussed below.
The Pipeline Safety Act, as amended, includes the following provisions
concerning LNG facility siting (49 U.S.C. § 60103):
The Secretary of Transportation shall prescribe minimum safety standards for
deciding on the location of a new liquefied natural gas pipeline facility. In
prescribing a standard, the Secretary shall consider the —
(1) kind and use of the facility;
(2) existing and projected population and demographic characteristics of the
(3) existing and proposed land use near the location;
(4) natural physical aspects of the location;
(5) medical, law enforcement, and fire prevention capabilities near the location
that can cope with a risk caused by the facility; and
(6) need to encourage remote siting.
General safety-related regulations may also impact siting decisions and affect
the operation of existing facilities. The Secretary is authorized to order corrective
action if operating an LNG facility could be hazardous to life, property, or the
environment (49 U.S.C. §§ 60112, 60117). DOT’s implementing regulations for the
Pipeline Safety Act, as amended, are in 49 C.F.R.§§ 190-199. Safety standards,
including those on siting, for LNG facilities are in 49 C.F.R. § 193 and are overseen
by the Department’s Office of Pipeline Safety (OPS) within the Pipeline and
Hazardous Materials Safety Administration (PHMSA).
The siting provisions in 49 C.F.R. § 193 incorporate by reference standard 59A
from the National Fire Protection Association (NFPA).48 NFPA 59A requires
thermal exclusion zones and flammable vapor-gas dispersion zones around LNG
terminals (§§ 193.2057, 193.2059). The DOT regulations also adopt many of
NFPA’s design and construction guidelines including requirements for LNG facilities
to withstand fire, wind, hydraulic forces, and erosion from LNG spills (§§ 193.2067,
maintenance (§§ 193.2601-2639), employee qualification (§§ 193.2701-2719), and
security (§§ 193.2901-2917).
Federal Energy Regulatory Commission (FERC)
Under the Natural Gas Act of 1938 (NGA), FERC grants federal approval for
the siting of new onshore LNG facilities.49 Section 7 of the NGA authorizes FERC
to issue certificates of “public convenience and necessity” for “the construction or
extension of any facilities ... for the transportation in interstate commerce of natural
gas” (15 U.S.C. § 717f). Section 7 does not expressly mention LNG facilities,
however, so recent agency policy has FERC exercising LNG siting regulation under
its Section 3 authority.50 Section 3 of the NGA authorizes FERC to approve the
import and export of natural gas (15 U.S.C. § 717b). Specifically, FERC asserts
approval authority over the place of entry and exit, siting, construction, and operation
of new LNG terminals as well as modifications or extensions of existing LNG
The Energy Policy Act of 2005 (P.L. 109-58) amends Section 3 of the NGA to
give FERC explicit and “exclusive” authority to approve onshore LNG terminal
siting applications (§ 311c). The 2005 act requires FERC to promulgate regulations
for pre-filing of LNG import terminal siting applications and directs FERC to consult
with designated state agencies regarding safety in considering such applications. It
permits states to conduct safety inspections of LNG terminals in conformance with
federal regulations, although it retains enforcement authority at the federal level. The
48 National Fire Protection Association (NFPA). Standard for the Production, Storage, and
Handling of Liquefied Natural Gas, 2001 Edition. NFPA 59A. Quincy, MA. 2001.
49 Natural Gas Act (NGA) of June 21, 1938, ch. 556, 52 Stat. 812 (codified as amended at
transferred to the NGA authority to approve siting, construction and operation of onshore
LNG facilities to the Secretary of Energy (§ 301b). The Secretary, in turn, delegated this
authority to FERC.
50 In 1997, FERC reaffirmed its Section 3 authority despite changes to the Natural Gas Act
in the Energy Policy Act of 1992 (P.L. 102-486). For details see 97 FERC ¶ 61,231 (2001).
Also note that FERC’s regulatory power regarding LNG importation under section 3 has
been held to allow FERC to impose requirements equivalent to any in section 7, so long as
FERC finds them necessary or appropriate to the public interest. Distrigas Corp. v. FPC, 495
F.2d 1057, 1066 (D.C. Cir. 1974).
51 See 18 C.F.R. § 153; see also Foley, R., Federal Energy Regulatory Commission (FERC),
Office of Energy Projects. “Liquefied Natural Gas Imports.” Slide presentation. January
including cost-sharing plans to reimburse state and local governments for safety and
security expenditures (§ 311(d)). The 2005 act designates FERC as the “lead agency
for the purposes of coordinating all applicable Federal authorizations” and for
complying with federal environmental requirements, discussed below (§ 313a). It
also establishes FERC’s authority to set schedules for federal authorizations and
establishes provisions for judicial review of FERC’s siting decisions in the U.S.
Court of Appeals, among other administrative provisions (§ 313(b)).
FERC implements its authority over onshore LNG terminals through the
agency’s regulations at 18 C.F.R. § 153. These regulations detail the application
process and requirements under Section 3 of the NGA. The process begins with a
pre-filing, which must be submitted to FERC at least six months prior to the filing
of a formal application. The pre-filing procedures and review processes are set forth
at 18 C.F.R. § 157.21. Once the pre-filing stage is completed, a formal application
may be filed. FERC’s formal application requirements include detailed site
engineering and design information, evidence that a facility will safely receive or
deliver LNG, and delineation of a facility’s proposed location (18 C.F.R. § 153.8).
Additional data are required if an LNG facility will be in an area with geological risk
(18 C.F.R. § 153.8). The regulations also require LNG facility builders to notify
landowners who would be affected by the proposed facility (18 C.F.R. § 157.6d).
Facilities to be constructed at the Canadian or Mexican borders for import or export
of natural gas also require a Presidential Permit.52 According to FERC officials,
applications under their Section 3-based regulations are also sufficient for
Presidential Permit purposes (18 C.F.R. §§ 153.15-153.17).53
Under the National Environmental Policy Act of 1969 (P.L. 91-190), FERC
must prepare an environmental impact statement during its review of an LNG
terminal siting application (18 C.F.R. § 380.6). Applicants must prepare certain
environmental reports to aid FERC in its preparation of the environmental impact
statement (18 C.F.R. § 380.3(c)(2)(i)). These reports require analysis of, among
other things, the socioeconomic impact of the LNG facility, geophysical
characteristics of the site, safeguards against seismic risk, facility effects on air and
noise quality, public safety issues in the event of accidents or malfunctions, and
facility compliance with reliability standards and relevant safety standards (18 C.F.R.
§ 380.12). Once these environmental reports are received, the EPA may become
involved in the approval process. The EPA often assists in the review of the
environmental reports and the issuance of the environmental impact statements.54
In an effort to speed the review process for natural gas infrastructure projects
(including LNG projects), FERC has approved rules to expand eligibility for “blanket
certificates.” Blanket certificates are granted by FERC to companies that have
previously been granted certificates for construction for public convenience and
52 Executive Order No. 10,485 requires that FERC obtain a favorable recommendation from
the Secretaries of State and Defense prior to issuing a Presidential Permit.
53 FERC Office of Energy Projects, Personal communication, December 10, 2003.
54 In July of 2006 EPA issued a “Liquefied Natural Gas Regulatory Roadmap” in an effort
to assist LNG project applicants (both onshore and offshore) in dealing with environmental
regulatory requirements. [http://www.epa.gov/opei/lng/lngroadmap.pdf]
necessity under Section 7 of the NGA. A company that possesses a blanket
certificate may improve or upgrade existing facilities or construct certain new
facilities without further case-by-case authorization from FERC. Regulations
governing acceptable actions under blanket certificate authority can be found at 18
C.F.R. §§ 157.201-157.218.
FERC also has created a Liquefied Natural Gas Compliance Branch to monitor
the safety of operational LNG facilities on an ongoing basis.55 This branch is
responsible for the continued safety inspections and oversight of operating LNG
facilities, and it reviews final facility design and engineering compliance with FERC
orders. The staff comprises LNG engineers, civil and mechanical engineers, and
other experts. The branch coordinates FERC’s LNG Engineering Branch, the U.S.
Coast Guard (USCG), and DOT to address safety and security at LNG facilities.56
FERC-DOT Jurisdictional Issues. Jurisdiction between the two federal
agencies with LNG oversight responsibilities historically has been a point of57
contention. In practice, FERC requires compliance with DOT’s siting and safety
regulations as a starting point, but can regulate more strictly if it chooses. This
working arrangement is not explicitly established under the relevant federal law.
Neither do the statutes and regulations clearly define the roles of the agencies vis-a-
vis one another. The revised Pipeline Safety Act, for example, states:
In a proceeding under section 3 or 7 of the Natural Gas Act (15 U.S.C. § 717b
or 717f), each applicant ... shall certify that it will design, install, inspect, test,
construct, operate, replace, and maintain a gas pipeline facility under ... section
Commission... (49 U.S.C. § 60104(d)(2)).
Despite this provision, which might appear to give DOT full control of gas
safety regulation (including LNG siting authority), the authors of the House
committee report for the revised Pipeline Safety Act indicated their intention to
preserve FERC jurisdiction over LNG.59 Accordingly, FERC has held that the
Pipeline Safety Act does not remove its jurisdiction under the NGA to regulate LNG
safety.60 In 1985, FERC and DOT executed a Memorandum of Understanding
expressly acknowledging “DOT’s exclusive authority to promulgate Federal safety
standards for LNG facilities” but recognizing FERC’s ability to issue more stringent
safety requirements for LNG facilities when warranted. This agreement appears to
55 Press Release, Federal Energy Regulatory Commission, “Commission Establishes LNG
Compliance Branch,” May 2, 2006.
57 S.Rept. No. 96-182. 1979. p. 4.
58 49 U.S.C. § 61018 specifies DOT’s requirements for pipeline facility inspection and
59 See H.Rept. No. 1390, 1968, reprinted in 1968 U.S.C.C.A.N. 3223, 3251. Note, FERC
was known as the Federal Power Commission (FPC) at the time.
60 Chatanooga Gas Co., 51 FPC 1278, 1279 (1974).
have resolved any jurisdictional conflict between the agencies at that time.61 In
February 2004, FERC streamlined the LNG siting approval process through an
agreement with the USCG and DOT to coordinate review of LNG terminal safety and
security. The agreement “stipulates that the agencies identify issues early and quickly
U.S. Coast Guard
The USCG has authority to review, approve, and verify plans for marine traffic
around proposed onshore LNG marine terminals as part of the overall siting approval
process led by FERC. The USCG is responsible for issuing a Letter of
Recommendation regarding the suitability of waterways for LNG vessels serving
proposed terminals. The agency is also responsible for ensuring that full
consideration is given in siting application reviews to the safety and security of the
port, the LNG terminal, and the vessels transporting LNG. The USCG acts as a
cooperating agency in the evaluation of LNG terminal siting applications. The Coast
Guard provides guidance to applicants seeking permits for onshore LNG terminals
in “Guidance on Assessing the Suitability of a Waterway for Liquefied Natural Gas
Marine Traffic” (NVIC 05-05) issued on June 14, 2005.63
National Fire Protection Association (NFPA)
As noted above, LNG terminal safety regulations incorporate standards set by
the NFPA. The NFPA is an international nonprofit organization which advocates fire
prevention and serves as an authority on public safety practices. According to NFPA,
its 300 safety codes and standards “influence every building, process, service, design,
and installation in the United States.”64 The NFPA LNG Standards Committee
includes volunteer experts with diverse representation from industry and government,
including FERC, DOT, USCG, and state agencies. The NFPA standards for LNG
safety were initially adopted in 1967, with 10 subsequent revisions, most recently in
2006.65 According to the Society of International Gas Tanker and Terminal
Operators (SIGTTO), although the NFPA standards originated in the United States,
they were the first internationally recognized LNG standards and are widely used66
throughout the world today.
61 See “Notice of Agreement Regarding Liquefied Natural Gas,” 31 FERC ¶ 61,232 (1985).
62 Federal Energy Regulatory Commission (FERC). Press release R-04-3. February 11, 2004.
63 Available at [http://www.uscg.mil/hq/g-m/nvic/NVIC%2005-05.doc.pdf].
64 National Fire Protection Assoc. (NFPA). About NFPA. Web page. Quincy, MA. 2008.
65 National Fire Protection Association (NFPA). Standard for the Production, Storage, and
Handling of Liquefied Natural Gas, 2006 Edition. NFPA 59A. Quincy, MA. 2007.
66 Society of International Gas Tanker and Terminal Operators (SIGTTO). Personal
communication. London, England. December 19, 2003.
State Regulatory Roles
While the federal government is primarily responsible for LNG terminal safety
and siting regulation, state and local laws, such as environmental, health and safety
codes, can affect LNG facilities as well. Under the Pipeline Safety Act, a state also
may regulate intrastate pipeline facilities if the state submits a certification under
section 60105(a) or makes an agreement with the DOT under section 60106. Under
these provisions, a state “may adopt additional or more stringent safety standards”
for LNG facilities so long as they are compatible with DOT regulations (49 U.S.C.
60104(c)). Of course, if a particular LNG facility would otherwise not fall under
FERC and DOT jurisdiction, states may regulate without going through the
certification or agreement process. Regulation of interstate facilities remains the
primary responsibility of federal agencies. The Office of Pipeline Safety may,
however, delegate authority to intrastate pipeline safety offices, allowing state offices
to act as “agents” administering interstate pipeline safety programs (excluding
enforcement) for those sections of interstate facilities within their boundaries.67 As
of 2008, all 50 states, the District of Columbia, and Puerto Rico were participants in
the natural gas pipeline safety program.68
State regulation of LNG facility safety and siting runs the gamut from piecemeal
to comprehensive. For example, Arizona sets out specific requirements for LNG
storage facilities, including “peak shaving” plants used by regional gas utilities,
consistent with DOT regulations for construction maintenance and safety standards
(Ariz. Admin. Code R14-5-202, R14-5-203, 126-01-001). Colorado and Georgia
have comprehensive administrative systems for enforcing the federal standards (see
Apart from state regulation aimed specifically at LNG facilities, generally
applicable state and local laws, such as zoning laws and permit requirements for
water, electricity, construction, and waste disposal, also may impact the planning and
development of LNG facilities. This is discussed in more detail later in this report.
Federal-State Jurisdictional Conflicts. Federal and state government
agencies have had jurisdictional disagreements specifically related to the siting of
new LNG terminals. In February 2004, for example, the California Public Utilities
Commission (CPUC) disputed FERC’s jurisdiction over the siting of a proposed
LNG terminal at Long Beach because, in the CPUC’s opinion, the terminal would not
be involved in interstate sales or transportation and therefore would not come under
the Natural Gas Act.69 In March 2004, FERC rejected the CPUC’s arguments and
asserted exclusive regulatory authority for all LNG import terminal siting and
67 49 U.S.C. § 601. States may recover up to 50% of their costs for these programs from the
68 Office of Pipeline Safety. “Federal, State and Industry OPS Partners.” Web page. January
69 FERC. “Notice of Intervention and Protest of the Public Utilities Commission of the State
of California.” Docket No. CP04-58-000. February 23, 2004. p. 6.
construction.70 In April 2004, the CPUC voted to assert jurisdiction over the Long
Beach terminal and filed a request for FERC to reconsider its March ruling.71 In June
2004, FERC reasserted its March ruling, prompting a federal court appeal by
California regulators. The Energy Policy Act of 2005 effectively codified FERC’s
jurisdictional rulings, however, leading the CPUC to drop its lawsuit challenging
FERC’s LNG siting authority in September 2005. Notwithstanding the CPUC case,
other state challenges to FERC jurisdiction remain a possibility.
Key Policy Issues
Proposals for new LNG terminal facilities have generated considerable public
concern in many of the communities where the terminals could be built. Some
community groups and government officials fear that LNG terminals may expose
nearby residents to unacceptable hazards, and that these hazards may not be
appropriately considered in the federal siting approval process. Ongoing public
concern about LNG terminal safety has focused congressional attention on the
exclusivity of FERC’s LNG siting authority, proposals for a regional LNG siting
process, the lack of “remote” siting requirements in FERC regulations, state
permitting requirements under the Clean Water Act (CWA) and the Coastal Zone
Management Act (CZMA), terrorism attractiveness of LNG, the adequacy of Coast
Guard security resources, and other issues.
“Exclusive” Federal Siting Authority
As stated earlier in this report, the Energy Policy Act of 2005 (P.L. 109-58)
gives FERC the “exclusive” authority to approve onshore LNG terminal siting
applications (§ 311(c)). Supporters of this provision argue that it is necessary to
prevent federal-state jurisdictional disputes over LNG siting authority, and that it
reduces the possibility that state agencies might prevent or unduly delay the
development of LNG infrastructure considered essential to the nation’s energy
supply. They further argue that states retain considerable influence over LNG siting
approval through their federally delegated permitting authorities under the Coastal
Zone Management Act of 1972 (16 U.S.C. 1451 et seq.), the Clean Air Act (42
U.S.C. 7401 et seq.), and the Federal Water Pollution Control Act (33 U.S.C. 251 et
seq.). They maintain that states have a role in siting reviews under provisions in P.L.
109-58 requiring FERC to consult with governor-designated state agencies regarding
state and local safety considerations prior to issuing LNG terminal permit (§ 311(d)).
A number of lawmakers at the federal and state levels have suggested that
Congress should consider amending or repealing FERC’s exclusive authority under
P.L. 109-58. Critics of this authority argue that it vests too much power in the federal
government at the expense of state agencies, which may have a better understanding
of local siting issues and may bear most of the risks or burdens associated with a new
70 Lorenzetti, M. “LNG Rules.” Oil & Gas Journal. April 5, 2004. p. 32.
71 Gas Daily. “PUC Seeks Rehearing of FERC’s Order on Long Beach LNG Project.” April
LNG facility. They do not believe that FERC adequately seeks state input in its LNG
siting reviews, nor adequately addresses state concerns in its siting decisions.72
Critics question why governors lack the authority to veto onshore LNG terminal
proposals as they can offshore terminal proposals under the Deepwater Port Act (33
U.S.C. § 1503(c)(8)). Some in Congress have proposed granting governors similar
veto authority over onshore LNG terminal proposals, or other legislation to increase
state authority in terminal siting reviews. Accordingly, S. 1174, S. 3441, and H.R.
2042 would require state concurrence of federal siting approval decisions for onshore
LNG terminals. S. 2822 would repeal provisions in the Energy Policy Act of 2005
granting FERC exclusive authority to approve LNG terminal siting applications.
Regional Siting Approach
In areas such as the Northeast, where a number of onshore LNG terminal
proposals have been particularly controversial, some policy makers have sought to
establish a regional approach for identifying suitable sites for such terminals. They
argue that FERC’s consideration of LNG terminals on a proposal-by-proposal basis
does not adequately take into account the regional needs for LNG, public safety
concerns, and environmental impacts. They also argue that the proposal-by-proposal
approach does not adequately account for the relative merits of multiple LNG and
natural gas pipeline facilities proposed in the same region.73 They assert a regional
LNG siting process would be more efficient than FERC’s current process because it
would focus attention on sites and projects with the highest chances of success rather
than having numerous communities and state and local agencies react to individual
plans, many of which are unlikely to be approved.74
FERC officials reportedly have stated that while they are not opposed to
regional siting in principle, the commission cannot adopt such a regional approach
because it has no land-use authority or responsibility and must let the energy market
determine which terminals ultimately are constructed.75 In the past, FERC officials
also have reportedly expressed skepticism about the effectiveness of regional siting
processes, for example, in finding storage locations for low-level radioactive waste.76
As oversight of federal LNG siting activities continues, Congress may be asked to
consider whether legislation that incorporates regional siting in the LNG siting
process could alleviate state concerns about FERC’s current process while supporting
the nation’s needs for new LNG infrastructure. For example, H.R. 6720, which
would establish a national commission for the placement of natural gas infrastructure,
seeks specifically to account for “considerations that are beyond the regulatory scope
72 O’Neill, L. “Senators Drum Up Measure Giving States Authority Over LNG Siting.”
Natural Gas Week. April 14, 2008.
73 See, for example: Sickinger, T. “Governor Ups Ante Against LNG Sites.” The Oregonian.
February 15, 2008. p. A1.
74 Bangor Daily News. “Regional Energy.” December 8, 2006. p. A10.
75 Foster Natural Gas Report. “Northeast States Need LNG, Especially New England; No
Evidence of Regional Planning.” December 15, 2006. p. 5.
76 Howe, P.J. “LNG Supplies, Solutions Lacking.” The Boston Globe. September 26, 2006.
of the current siting agencies” including “regional environmental impacts” (§
2(2)(A)), “the national and regional requirements for natural gas supply infrastructure
in light of other Federal policies” potentially affecting that infrastructure (§ 2(4)(B)),
and “assessing regional versus national economic impacts of natural gas
infrastructure placement” (§ 3(b)(2)), among other provisions.
“Remote” Siting of LNG Terminals
The LNG safety provisions in the federal pipeline safety law require the
Secretary of Transportation to “consider the ... need to encourage remote siting” of
new LNG facilities (49 U.S.C. § 60103). Federal regulations contain no clear
definition of what constitutes “remote” siting, relying instead on safety exclusion
zones to satisfy the remoteness requirements under the Pipeline Safety Act. This
regulatory alternative was criticized by the General Accounting Office (GAO) in
We believe remote siting is the primary factor in safety. Because of the
inevitable uncertainties inherent in large-scale use of new technologies and the
vulnerability of the facilities to natural phenomena and sabotage, the public can77
be best protected by placing these facilities away from densely populated areas.
In 2003, Representative Edward Markey, an original sponsor of the Pipeline Safety
Act, reportedly expressed concern that DOT regulations did not go far enough in78
complying with the congressional intent of the remote siting provisions.
Industry and government officials maintain that exclusion zones do provide
adequate public safety based on the current state of knowledge about LNG. They
argue that LNG terminals are no longer a new technology and face far fewer
operational uncertainties than in 1979. In particular, some experts believe that hazard
models in the 1970s were too conservative. They believe that more recent models
have led to a better understanding of the physical properties of LNG and,79
consequently, a better basis for design decisions affecting public safety. They point
out that LNG terminals like those in Everett, Massachusetts (1971); Barcelona, Spain
(1969); Fezzano, Italy (1969); and Pyongtaek, Korea (1986) have been operating for
decades near populated areas without a serious accident affecting the public. Of the
28 existing LNG terminals in Japan, a seismically active country, most are near major
cities such as Tokyo and Osaka.80 While the Algerian terminal accident was serious,
77 Peach, J.D. General Accounting Office (GAO), Director, Energy and Minerals Division.
Testimony to the Senate Committee on Commerce, Science and Transportation.
Washington, DC. April 25, 1979. p. 10. The General Accounting Office is now known as
the Government Accountability Office.
78 Raines, B. “Congress Wanted LNG Plants at ‘Remote’ Sites.” Mobile Register. Mobile,
AL. November 16, 2003.
79 Tobin, L.T. Remarks at a meeting of the City of Vallejo Seismic Safety Commission.
Meeting minutes. Vallejo, CA. September 11, 2003. p. 5; see also: Federal Register. Vol.
80 California Energy Commission (CEC). “Asia Pacific Countries Liquefied Natural Gas
experts point out that it did not lead to the catastrophic failure of the main LNG
storage tanks and did not cause injuries to the general public. Nonetheless, some
policy makers reportedly have called for amendments to federal energy law
prohibiting new LNG terminals in urban and densely populated areas.81
Other Statutes that May Influence LNG Terminal Siting
Section 311(c) of the Energy Policy Act of 2005 explicitly preserves states’
authorities in LNG siting decisions under the Federal Water Pollution Control Act,
the Coastal Zone Management Act of 1972, and other federal laws. Under the
Federal Water Pollution Control Act, often referred to as the Clean Water Act
(CWA), states have the authority to develop and enforce their own water quality
standards.82 Any federal permit applicant for a project that may discharge pollutants
into navigable waters must provide the permitting agency with a certification from
the state in which the discharge originates or will originate that the discharge is in
compliance with the applicable provisions of the CWA, including the state’s water
quality standards.83 Thus, states could use their certification authority under the
Clean Water Act to influence the siting of an LNG project by attaching conditions to
the required water quality certificate or by denying certification. This certification
authority has become an important tool used by states to protect the integrity of their
waters. It is worth noting that the Energy Policy Act of 2005 created one potential
avenue of relief for potential developers by providing for expedited review in a
federal court of any order or action, or alleged inaction, by a federal or state agency
acting under the authority of federal law.84 Previously, parties seeking to challenge
a state’s decision regarding a water quality certificate had to do so in state court.85
States have been delegated authority under the Coastal Zone Management Act
(CZMA), 16 U.S.C. § 1451 et seq., which also could influence permitting of LNG
terminals. Under the CZMA, applicants for federal permits to conduct activity
affecting the coastal zone of a state must be certified by that state that the proposed
activity complies with the state’s federally approved coastal program and will be
conducted in a manner consistent with that program.86 A state wishing to forestall
the licensing of an LNG terminal in its coastal waters could deny the certification
(LNG).” January 2008. [http://www.energy.ca.gov/lng/worldwide/asia_pacific.html]
81 Energy Washington Week. January 10, 2007.
82 33 U.S.C. § 1251(a),(b).
83 Id. at § 1341(a).
84 EPAct of 2005, P.L. 109-58 at §§ 717r(d)(1)-(2).
85 For further discussion of the water quality certification process and its impact on LNG
siting, see Dweck, J., Wochner, D., and Brooks, M. “Liquefied Natural Gas (LNG)
Litigation after the Energy Policy Act of 2005: State Powers in LNG Terminal Siting.”
Energy Law Journal, Vol. 27, No. 45 (2006). p. 482-85.
86 16 U.S.C. § 1456(c)(3)(A).
required by the CZMA.87 However, unlike the state-issued water quality certificates
required for federal permitting by the Clean Water Act, the CZMA provides an
alternative to applicants who are unable to obtain state certification. Under the
CZMA, applicants may appeal the state’s decision to the Department of Commerce,
which may find that the activity is consistent with the objectives of the CZMA, or is
otherwise necessary in the interest of national security, and thus override the state’s
denial of certification.88 One analyst has suggested that there is a specific set of
circumstances in which a state could create a regulatory stalemate pursuant to its
CZMA authority by rejecting an application as incomplete (rather than rejecting it as
improper or by failing to act). Under these circumstances the statute does not grant
the Secretary of Commerce authority to review the decision. Battles between state
regulatory agencies and applicants for LNG terminals have played out in this manner
on at least two occasions.89
The discussion above suggests that authorities under the CWA and CZMA, at
a minimum, give states the opportunity to have their concerns addressed when
applicants seek federal approval for new LNG terminals. One legal commentator has
ultimately, while the EPAct of 2005 might have streamlined the federal [LNG
siting] review process in some respects and changed the rules under which the
review takes place, it has not dramatically changed the balance of power between90
the federal government and states.
The courts addressed the potential tension between the CZMA and exclusive
federal authority over LNG system in a dispute over a proposed LNG terminal in the91
Baltimore, MD, area. In AES Sparrows Point LNG, LLC v. Smith, the court held
that a recent amendment to the Baltimore County Zoning Regulations prohibiting the
siting of an LNG facility in a particular “critical area” of the Chesapeake Bay was a
part of the state’s Coastal Zone Management Plan and thus not preempted by the
Natural Gas Act as amended by the Energy Policy Act of 2005. The plaintiffs had
claimed that the statutes explicitly gave LNG siting authority to the federal
government, and thus the states could not interfere with FERC authority to rule on
the plaintiff’s LNG facility permit application.92 However, on appeal the U.S. Court
87 The state must actively state its objection to the applicant’s certification; a state’s failure
to act is presumed to be concurrence with project certification. Id.
88 16 U.S.C. § 1456(c)(3)(A).
89 For further discussion, see Ewing, K.A. and E. Petersen. “Significant Environmental
Challenges to the Development of LNG Terminals in the United States.” Texas Journal of
Oil, Gas and Energy Law. November 2006. pp. 21-23; Dweck et al., p. 487-90.
90 Dweck et al. 2006, p. 475.
91 539 F.Supp.2d 788 (D. Md 2007).
92 The same court had previously overturned a Baltimore County zoning ordinance that
prohibited siting of LNG facilities within a certain distance of residential and commercial
facilities on those same grounds. See AES Sparrows Point LNG, LLC v. Smith, 470
F.Supp.2d 586 (D.Md. 2007).
of Appeals for the 4th Circuit reversed the lower court’s decision.93 The appellate
court ruled that the Baltimore County zoning regulation in question was not part of
the state’s Coastal Zone Management Plan because the regulation was never
submitted to NOAA for approval.94 The Supreme Court denied the petition for
certiorari in October of 2008.
Another statute with an emerging role in the LNG siting process is the Wild and
Scenic Rivers Act of 1968 (WSRA).95 The WSRA was enacted with the intention of
preserving certain sections of rivers in the United States “in their free-flowing
condition to protect the water quality of such rivers and to fulfill other vital national
conservation purposes.”96 Under the WSRA, rivers may be designated as additions
to the National Wild and Scenic Rivers system, or as potential additions to the
system.97 Designation of rivers prevents certain future development, including,
potentially, projects licensed by FERC.
The WSRA explicitly prohibits FERC from licensing the construction of
projects under the Federal Power Act “on or directly affecting any river which is
designated ... as a component of the national wild and scenic rivers system.”98
However, projects and developments would be permitted above or below the section
of the river designated under WSRA, if that development would not diminish the
values present at the time of designation.99 With regard to rivers that are designated
as potential additions to the system, FERC similarly is prohibited from construction
of projects along that river and other agencies are prohibited from assisting in such
projects for certain periods of time after the designation to allow for the study and
consideration of the river’s inclusion in the system.100
LNG industry representatives have recently voiced their opinion that the WSRA
may be used as a way to block LNG facility siting.101 These representatives cited a
recent legislative proposal (H.R. 415) to designate segments of the Taunton River in
93 AES Sparrows Point LNG, LLC v. Smith, 5237 F.3d 120 (4th Cir. 2008).
94 Id. at 126-27.
95 P.L. 90-542, codified at 16 U.S.C. § 1271 et seq. For an examination of the purposes,
language and legislative history of this act, and an analysis of its effect on water rights, see
CRS Report RL30809, The Wild and Scenic Rivers Act and Federal Water Rights, by
96 16 U.S.C. § 1271.
97 Rivers designated as “potential additions” are those that warrant further study before full
extension of the protections of the WSRA. 16 U.S.C. § 1276.
98 16 U.S.C. § 1278(a).
100 16 U.S.C. § 1278(b).
101 Clarke, D., LNG Sector Fears Use of NewLegislative Tactic to Oppose Facilities, Energy
Washington Week, July 30, 2008.
Massachusetts as “scenic and recreational” under the WSRA.102 The industry
representatives argue that this bill, if passed, would be an obstacle towards the
construction of the proposed Weaver’s Cove LNG Terminal in Massachusetts.103 The
Center for Liquefied Natural Gas described H.R. 415 as a “congressional hurdle” and
said that it provided a case study of “the gauntlet of things that can be used to oppose
a project.”104 The House of Representative passed H.R. 415 in July of 2008. The bill
is currently on the Senate legislative calendar.
As oversight of the federal LNG siting process continues, Congress may
consider how federal authorities under the Energy Policy Act of 2005, the CWA, the
CZMA, the WSRA, and other federal statutes fit together to achieve their various
objectives. For example, S. 1579 would amend the CZMA to require FERC and the
Department of Commerce to submit a report to Congress regarding development of
a memorandum of understanding for a “coordinated process for review of coastal
energy activities that provides for ... improved coordination among Federal, regional,
state, and local agencies concerned with conducting review under the Coastal Zone
Potential terrorist attacks on LNG terminals or tankers in the United States have
been a key concern of policy makers because such attacks could cause catastrophic
fires in ports and nearby populated areas. A 2007 report by the Government
Accountability Office states that, “the ship-based supply chain for energy
commodities,” specifically including LNG, “remains threatened and vulnerable, and
appropriate security throughout the chain is essential to ensure safe and efficient
delivery.”106 Accordingly, the Coast Guard’s FY2006 budget requested funding for
“additional boat crews and screening personnel at key LNG hubs.”107 To date, no
LNG tanker or land-based LNG facility in the world has been attacked by terrorists.
However, similar natural gas and oil assets have been terror targets internationally.
The Department of Homeland Security (DHS) included LNG tankers among a list of
potential terrorist targets in a security alert late in 2003.108 The DHS also reported
that “in early 2001 there was some suspicion of possible associations between
stowaways on Algerian flagged LNG tankers arriving in Boston and persons
connected with the so-called ‘Millennium Plot’” to bomb targets in the United States.
105 S. 1579 at § 21.
106 Government Accountability Office (GAO). “Maritime Security: Federal Efforts Needed
to Address Challenges in Preventing and Responding to Terrorist Attacks on Energy
Commodity Tankers,” GAO-08-141, December 10, 2007, p.77.
107 Department of Homeland Security (DHS). Budget-in-Brief, Fiscal Year 2006.
108 Office of Congressman Edward J. Markey. Personal communication with staff. January
Although these suspicions could not be proved, DHS stated that “the risks associated
with LNG shipments are real, and they can never be entirely eliminated.”109 The
2004 report by Sandia National Laboratories concluded that potential terrorist attacks
on LNG tankers could be considered “credible and possible.”110 Former Bush
Administration counterterrorism advisor Richard Clarke has asserted that terrorists
have both the desire and capability to attack LNG shipping with the intention of
harming the general population.111
Although they acknowledge the security information put forth by federal
agencies, some experts believe that concern about threats to LNG infrastructure is
overstated.112 In 2003, the head of one university research consortium reportedly
remarked, “from all the information we have ... we don’t see LNG as likely or
credible terrorist targets.”113 Industry representatives argue that deliberately causing
an LNG catastrophe to injure people might be possible in theory, but would be
extremely difficult to accomplish. Likewise, FERC and other experts believe that
LNG facilities are relatively secure compared with other hazardous chemical
infrastructures that receive less public attention. In a December 2004 report, FERC
for a new LNG terminal proposal ... the perceived threat of a terrorist attack may
be considered as highly probable to the local population. However, at the
national level, potential terrorist targets are plentiful.... Many of these pose a
similar or greater hazard to that of LNG.114
FERC also remarked, however, that “unlike accidental causes, historical
experience provides little guidance in estimating the probability of a terrorist attack
on an LNG vessel or onshore storage facility.”115 Former Director of Central
Intelligence James Woolsey has stated his belief that a terrorist attack on an LNG
tanker in U.S. waters would be unlikely because its potential impacts would not be
109 Turner, Pamela J., Assistant Secretary for Legislative Affairs, Department of Homeland
Security (DHS). Letter to U.S. Representative Edward Markey. April 15, 2004. p. 1.
110 Sandia National Laboratories (SNL). Guidance on Risk Analysis and Safety Implications
of a Large Liquefied Natural Gas (LNG) Spill Over Water. SAND2004-6258. Albuquerque,
NM. December 2004. pp. 49-50.
111 Clarke, Richard A. et al. LNG Facilities in Urban Areas. Good Harbor Consulting, LLC.
Prepared for the Rhode Island Office of Attorney General. GHC-RI-0505A. May 2005.
112 McLaughlin, J. “LNG Is Nowhere Near as Dangerous as People Are Making it Out to
Be.” Lloyd’s List. February 8, 2005. p. 5.
113 Behr, Peter. “Higher Gas Price Sets Stage for LNG.” Washington Post. July 5, 2003. p.
114 Federal Energy Regulatory Commission (FERC). Vista del Sol LNG Terminal Project,
Draft Environmental Impact Statement. FERC/EIS-0176D. December 2004. p. 4-162.
115 FERC. FERC/EIS-0176D. December 2004. p. 4-162. Notwithstanding this assertion,
in its subsequent draft review of the Long Beach LNG terminal proposal, the FERC states
that “the historical probability of a successful terrorist event would be less than seven
chances in a million per year....” See FERC. October 7, 2005. p. ES-14.
great enough compared with other potential targets.116 LNG terminal operators that
have conducted proprietary assessments of potential terrorist attacks against LNG
tankers have expressed similar views.117 In its September 2006 evaluation of a
proposed LNG terminal in Long Island Sound, the USCG stated that “there are
currently no specific, credible threats against” the proposed LNG facility or tankers
serving the facility.118 The evaluation also noted, however, that the threat
environment is dynamic and that some threats may be unknown.119 Echoing this
perspective, a 2008 report by the Institute for the Analysis of Global Security states
Proponents are correct in that both safety and security measures currently in
place make LNG terminals and ships extremely hard targets for terrorists.
However, it would be imprudent to believe that terrorists are either incapable or
unwilling to attack such targets. It would be equally imprudent to assume that
these targets are impenetrable. If anything, in today’s environment, insiders will120
always remain a potential threat.
Because the probability of a terrorist attack on LNG infrastructure cannot be
known, policy makers and community leaders must, to some extent, rely on their own
judgment to decide whether LNG security is adequately addressed in FERC siting
application reviews. As oversight of the federal role in LNG terminal siting
continues, Congress may explore policies to reduce this uncertainty by improving the
gathering and sharing of terrorism intelligence related to LNG.
Public Costs of LNG Marine Security
The potential increase in security costs from growing U.S. LNG imports, and
the potential diversion of Coast Guard and safety agency resources from other
activities have been a persistent concern to policy makers.121 According to Coast
Guard officials, the service’s LNG security expenditures are not all incremental,
since they are part of the Coast Guard’s general mission to protect the nation’s waters
and coasts. Nonetheless, Coast Guard staff have acknowledged that resources
dedicated to securing maritime LNG might be otherwise deployed for boating safety,
search and rescue, drug interdiction, or other security missions.
116 Woolsey, James. Remarks before the National Commission on Energy LNG Forum,
Washington, DC, June 21, 2006.
117 Grant, Richard, President, Distrigas. Testimony before the Senate Committee on Energy
and Natural Resources, Subcommittee on Energy hearing on “The Future of Liquefied
Natural Gas: Siting and Safety.” February 15, 2005.
118 U.S. Coast Guard. U.S. Coast Guard Captain of the Port Long Island Sound Waterways
Suitability Report for the Proposed Broadwater Liquefied Natural Gas Facility. September
120 Cindy Hurst. The Terrorist Threat to Liquefied Natural Gas: Fact or Fiction? Institute
for the Analysis of Global Security. Washington, DC. p. 3.
121 See, for example, Representative Peter Defazio, remarks before the House Homeland
Security Committee hearing on Securing Liquid Natural Gas Tankers to Protect the
Homeland. March 21, 2007.
In a December 2007 report, the GAO recommended that the Coast Guard
develop a national resource allocation plan to address growing LNG security
requirements.122 In subsequent testimony before Congress, Coast Guard
Commandant Admiral Thad Allen expressed concern about the costs to the Coast
Guard of securing dangerous cargoes such as LNG and called for a “national
dialogue” on the issue.123 During questioning, Admiral Allen acknowledged that the
Coast Guard did not currently possess sufficient resources to secure future LNG
deliveries to a proposed LNG terminal in Long Island Sound which has subsequently
been authorized by FERC.124
State and local agencies are also seeking more funding to offset the costs of
LNG security. Addressing these concerns, the Energy Policy Act of 2005 requires
private and public sector cost-sharing for LNG tanker security (Section 311d). In
compliance with the act and prior FERC policy, FERC officials require new LNG
terminal operators to pay the costs of any additional security or safety needed for
their facilities.125 FERC has also recommended that LNG terminal operators provide
private security staff to supplement Coast Guard and local government security
forces.126 H.R. 2830 would prohibit LNG facility security plans based upon the
provision of security by a state or local government unless that government has an
LNG security arrangement with the facility operator (§ 720 (b)), and would require
the Coast Guard to certify that it has adequate security resources in the sector where
a terminal would be located before facility security plans for a new LNG terminal are
approved (§ 720(c)). President Bush reportedly threatened to veto H.R. 2830 because
of these LNG security provisions.127
Conducting More Safety Research. Analysts have suggested for several
years that Congress could call for additional LNG safety research to help reduce
122 Government Accountability Office. Maritime Security: Federal Efforts Needed to
Address Challenges in Responding to Terrorist Attacks on Energy Commodity Tankers.
GAO-08-141. December 10, 2007. p. 79.
123 Admiral Thad Allen, Commandant, U.S. Coast Guard. Testimony before the House
Committee on Appropriations, Subcommittee on Homeland Security hearing, “Coast Guard
Budget: Impact on Maritime Safety, Security, and Environmental Protection.” March 5,
124 Admiral Thad Allen, March 5, 2008; Federal Energy Regulatory Commission. “Order
Granting Authority Under Section 3 of the Natural Gas Act and Issuing Certificates.”
Docket No. CP06-54-0000. March 20, 2008.
125 Baldor, L.C. “Federal Agency, R.I. Officials Meet over LNG Terminal.” Associated
Press. March 17, 2005.
126 Federal Energy Regulatory Commission (FERC). “Response to Senator Jack Reed’s
2/1/05 letter regarding the proposed Weaver’s Cove LNG Project in Fall River, MA & the
proposed KeySpan LNG Facility Upgrade Project in Providence, RI under CP04-293 et al.”
March 3, 2005. p. 2.
127 “Bush Warns on LNG Safety Bill.” International Oil Daily, April 29, 2008.
uncertainties about specific LNG terminal or shipping hazards.128 Among the LNG
terminal hazard reports issued by federal agencies, LNG developers, and community
groups, there appears to be widespread agreement that additional “objective” LNG
safety research would be beneficial. The ABSG report states, for example, that
“additional research will need to be performed to develop more refined models, and
additional large-scale spill tests would be useful for providing better data for
validation of models.”129 The 2004 Sandia study similarly concludes that “obtaining
experimental data for large LNG spills over water would provide needed validation
and help reduce modeling uncertainty.”130 Physical testing (as opposed to computer
simulations) of impacts and explosions on LNG tanker hulls could also fill important
gaps in engineering knowledge about the potential effects of terrorist attacks.
In 2008, Congress appropriated $8 million to fund large-scale LNG fire
experiments by the Department of Energy addressing some of the hazard modeling
uncertainties identified in the 2007 GAO report.131 In that report, the GAO stated that
DOE’s proposed research plan at that time would “address only 3 of the top 10 issues
— and not the second-highest ranked issue — that our panel of experts identified as
potentially affecting public safety.”132 In response to the GAO’s concerns and those
of congressional staff, the DOE and Sandia have since modified their test program
to better align with the priorities put forward by the GAO.133 The DOE’s study could,
nonetheless, still be subject to the same types of technical limitations and criticisms
facing existing analysis, so while it may reduce key uncertainties, it may not
eliminate them altogether. As Congressional oversight of DOE or other federal LNG
research continues, Congress may seek to determine whether federal resources are
appropriately devoted to reduce the LNG uncertainties of greatest importance to
Developer Employee Disclosure. Some policy makers are concerned that
LNG terminal developers may engage in non-public community lobbying or other
similar activities promoting individual LNG terminals. Concern arises that these
activities may limit public information and awareness about the proposed terminals
and, therefore, may impede the federal LNG siting review process. Accordingly, S.
323 would require an applicant for siting approval for an onshore or offshore LNG
terminal to identify each of its employees and agents “that are engaged, directly or
indirectly, in activities to persuade communities of the benefits” of approval of the
128 See, for example: Kytömaa, H. and Gavelli, F. “Studies of LNG Spills Over Water Point
Up Need for Improvement.” The Oil and Gas Journal. May 9, 2005. p. 61.
129 ABSG Consulting. May 13, 2004. p. iv.
130 SNL. December 2004. p. 18.
131 Consolidated Appropriations Act, 2008 (P.L.110-161), Division C — Energy and Water
Development and Related Agencies Appropriations Act, 2008, Title III, Explanatory
Statement, p. 570.
132 GAO. 2007. pp. 22-23.
133 Anay Luketa, Sandia National Laboratories. DOE/Sandia National Laboratories
Coordinated Approach for LNG Safety and Security Research. Presentation to the
Committee on Gas, NARUC Summer Committee Meetings. Portland, OR. July 22, 2008.
Physical testing and model development by Sandia are scheduled to be completed in 2009.
siting application. Supporters of such a policy view it as a means of ensuring public
transparency in LNG terminal siting. Disclosure requirements of this type may
trigger some First Amendment concerns, however. The Supreme Court has
recognized that such government disclosure requirements may have a deterrent effect
on the exercise of First Amendment rights.134 In balancing First Amendment
interests, for example, against the government’s interest preserving the integrity of
the legislative process, the Court has generally upheld the constitutionality of
disclosure requirements related to “direct” lobbying of members of Congress.135 It
is unclear how the Court would rule on a disclosure law such as S. 323 related to
“indirect” lobbying efforts targeting constituents or otherwise taking place at the
Reducing LNG Demand. Some policy makers argue that Congress should
try to reduce the need for new LNG terminals by acting to curb growth in domestic
LNG demand, or growth in natural gas demand overall. For example, Congress
could change public and industrial incentives for conservation and efficiency,
switching to other fuels, or developing renewable energy supplies. But other fuels
like coal and nuclear power pose their own hazards to communities and the
environment, so their expansion may not be preferable to additional LNG
infrastructure. Conservation and renewable energy sources are less hazardous,
although they face significant technological and cost barriers to public adoption on
the scale that would be required. Federal investments in renewables research or
conservation subsidies might have to be large, and might not have enough impact to
alleviate the need for LNG expansion altogether. Various provisions in recent
proposed energy legislation would encourage the development of conservation and
other alternatives to natural gas, but critics believe they would not likely go far
enough to significantly affect near-term natural gas consumption.
Another potential way to curb U.S. LNG demand would be to encourage greater
North American production of natural gas. Provisions in the Energy Policy Act of
2005 seek to promote this objective, as do proposals to encourage construction of an
Alaska gas pipeline and to expand natural gas production on the outer continental
shelf. An Alaska gas pipeline would take years to build, however, and would not on
its own be able to meet the anticipated long-term growth in U.S. gas demand.
Increased production from natural gas wells in the lower 48 states could help
alleviate a possible near-term natural gas supply shortage, but may not offer a
sustainable long-term supply solution since it is not known whether domestic gas
reserves will be able to keep pace with rising gas demand.
134 Buckley v. Valeo, 424 U.S. 1, 65 (1976).
135 United States v. Harriss, 347 U.S. 612 (1954).
136 For further discussion on this topic, see CRS Report RL33794, Grassroots Lobbying:
Constitutionality of Disclosure Requirements, by Jack Maskell.
Proposals for new U.S. LNG import terminals are numerous, but LNG imports
pose safety challenges. LNG is inherently hazardous and its infrastructure is
potentially attractive to terrorists. The 2004 LNG terminal fire in Algeria
demonstrates that, despite technological improvements since the 1940s, LNG
facilities can still experience serious accidents. Many lawmakers and the general
public are concerned about these hazards.
The U.S. LNG industry is subject to more extensive siting and safety regulation
than many other similarly hazardous facilities. Federal, state, and local governments
have also put in place security measures intended to safeguard LNG against newly
perceived terrorist threats. Some community groups and other stakeholders fear that
federal siting requirements for LNG facilities are still not stringent enough, but the
responsible federal agencies disagree.
The safety issues associated with LNG terminal siting are both important and
familiar. Every major energy source poses some hazard to public safety. Similar
public concerns have been raised around siting of other types of energy facilities such
as nuclear power plants, oil import terminals, pipelines, and electric transmission
lines. In evaluating new LNG terminal proposals, therefore, policy makers face a full
range of facilities and safety hazards associated with U.S. energy supplies, not only
LNG needs and hazards on their own.
Although LNG terminal regulations are extensive, and the global industry has
decades of experience operating LNG facilities, many stakeholders question LNG
terminal safety. Some of these questions might be resolved through additional
research on key LNG topics. LNG siting decisions are already underway, however,
so any research efforts intended to affect the siting process would probably have to
be completed quickly. Revising LNG safety requirements after completion of a
facility could be disruptive of energy supplies. Some cite the Shoreham nuclear
power plant in the 1980s, which was closed after construction due to new public
safety requirements, as an example of the need to resolve safety concerns before
capital is invested.
Both industry and government analysts project continued near-term growth in
the demand for natural gas — and a constrained ability for domestic gas producers
to meet that demand. Greater LNG imports represent one way to address this growth
in demand, along with increased North American gas production, conservation, fuel-
switching, and the development of renewable energy sources. One way or another
the fundamental gas supply and demand balance must be maintained. If policy
makers encourage LNG imports, then the need to foster the other energy options may
be diminished — and vice versa. Thus decisions about LNG infrastructure could
have consequences for a broader array of natural gas supply policies.
Appendix: Offshore LNG Terminal Regulation
Under the Deepwater Port Act of 1974 (P.L. 93-627) the Secretary of
Transportation is directed to “authorize and regulate the location, ownership,
construction, and operation of deepwater ports” (33 U.S.C. §§ 1501(a), 1503). The
Secretary has delegated this authority to the Maritime Administration (MARAD)
within the Department of Transportation, and to the Coast Guard (USCG), within the137
Department of Homeland Security. Originally, P.L. 93-627 applied only to
offshore oil ports and terminals and not LNG facilities. However, the Maritime
Transportation Security Act of 2002 (P.L. 107-295) amended P.L. 93-627 to include
natural gas facilities, including LNG terminals, developed offshore. As amended,
“deepwater ports” are:
any fixed or floating manmade structure other than a vessel ... located beyond
State seaward boundaries ... intended for use as a port or terminal for the
transportation, storage, or further handling of oil or natural gas for transportation138
to any State... (33 U.S.C. § 1502(9a))
The Deepwater Port Act sets out a detailed process for offshore facility siting
applications. The act also authorizes regulations addressing potential threats to the
environment or human welfare posed by development of offshore LNG facilities (33
U.S.C. §§ 1504, 1508; 33 C.F.R. § 148). The act also requires regulations for the
designation of safety zones around deepwater ports (33 U.S.C. § 1509(d)). Among
the amendments to the act is a provision exempting LNG terminals from the
limitation on the number of “deepwater ports” that can be located in a designated
“application area,” a provision applicable to oil terminals (33 U.S.C. §§ 1504(d)(4),
(i)(4)). Additionally, a preexisting provision of the act allows the governor of a state
adjacent to a proposed offshore LNG facility to have that facility license conform to
state environmental protection, land and water use, or coastal zone management
programs (33 U.S.C. § 1508(b)).
The USCG’s regulations regarding LNG facilities are codified throughout 33
C.F.R., with major provisions in part 127. These regulations detail the requirements
for siting applications, which include information about the proposed location,
design, construction, and operation (33 C.F.R. § 148.109). NEPA analysis is often
instrumental in siting and safety-related decisions at specific proposed facilities and
is facilitated by the Minerals Management Service, the agency responsible for139
offshore minerals extraction and the Outer Continental Shelf leasing program.
Unlike requirements for onshore facilities, the Coast Guard does not appear to
require generally applicable exclusion zones for offshore facilities, but relies instead
137 For a recent LNG siting application, MARAD performed financial analysis and USCG
evaluated environmental impacts; the agencies cooperated on all other aspects of the review.
(“First Offshore Terminal in U.S. is About to Secure Federal License.” Foster Natural Gas
Report. Bethesda, MD. November 20, 2003. p. 21.
138 The statute defines natural gas to include “liquefied natural gas.” 33 U.S.C. § 1502(14).
139 Sierra B. Weaver, Note, “Local Management of Natural Resources: Should Local
Governments Be Able to Keep Oil Out?,” 26 HARV. ENVTL. L. REV. 231, 246 (2002).
on case-by-case designation of safety zones.140 Additional USCG regulations include
agency oversight of emergency procedures, security, fire protection, and design and
construction standards (33 C.F.R. §§ 127.109, 127.701-127.711, 127.601-127.617,
140 See 33 C.F.R. § 165, Regulated Navigation Areas and Limited Access Areas.