DALLAS – Regulators would get clearer authority to override state and local opposition in approving import terminals for liquefied natural gas (search) under new energy legislation drafted by House Republicans.
The bill, which lawmakers were beginning to consider in detail Wednesday, mirrors a broad energy package that failed to pass Congress more than a year ago, though it has been scaled back because of budget constraints.
One of the few new provisions would solidify the Federal Energy Regulatory Commission (search) as the final arbiter over approval of LNG import terminals. The expected increase in LNG imports in the coming decade has generated concern over safety and the threat of terrorism.
The FERC, which regulates natural gas transport, contends LNG sites are already under its purview, but the state of California is challenging that authority in federal court in connection with a proposed LNG import and gasification plant in Long Beach. Other communities also have used zoning and other provisions to scuttle LNG projects.
Gas industry groups have argued that LNG -- which is natural gas that has been turned to liquid for transport on tankers and then is turned back to a gas at a U.S. import facility -- is so critical to meeting U.S. natural gas demand in the coming decades that it should be subject to federal, not state or local, control.
Rep. Joe Barton, R-Texas, chairman of the Energy and Commerce Committee that is taking up the energy legislation this week, said in an interview that states will still have "a very legitimate role" on safety issues involving LNG facilities.
But, he added, "ultimately it is a federal issue. ... We can't sit on our hands" as the demand for more LNG imports and import facilities grows. He said the provision, which he predicted would have wide support, seeks to resolve any dispute over FERC's jurisdiction on LNG siting.
While the legislation calls for FERC to consult with state and local agencies on safety issues, it would grant FERC final authority to approve LNG permits, and would require states to complete their review of projects within a year of an application being filed. If states do not meet the federal deadline, the site would get a permit anyway.
The provision "tramples states' rights on behalf of the gas industry," complained Rep. Ed Markey, D-Mass., who said he would try to get the measure stripped from the energy bill.
It "directly undermines the ability of state and local officials to play their proper role in ensuring that any new LNG facility is not sited in an area where it could pose a danger to the surrounding community," said Markey.
More than 50 proposals have surfaced for new LNG import terminals, most of them in the Gulf Coast region but also a number of near population centers in the Northeast and California.
In Maine, three LNG projects have been rejected in local votes, the latest in the town of Perry where residents oppose a project planned for a nearby Indian reservation. Two proposed projects in Alabama and several others in California have been abandoned because of local opposition.
The state of Massachusetts and local officials have gone to court to oppose an LNG import terminal in Fall River, Mass., although FERC has given it preliminary environmental approval.
Massachusetts Attorney General Tom Reilly called the bill's LNG provision "an affront to the states" that will "limit the role we play in addressing environmental and safety concerns posed by LNG facilities."
Those concerns were heightened last December when the federal Sandia National Laboratory warned in a report that a terrorist attack on an LNG transport tanker could cause a massive, intense fire that could burn buildings and cause major injuries a third of a mile away and cause second-degree burns to the skin as far as a mile away.
Industry advocates have said the safety risks are exaggerated, and they cite a 40-year history of more than 35,000 LNG shipments worldwide without a significant release of cargo or a fire. The Sandia study also said risks can be reduced greatly with increased security for incoming tankers.
In papers filed in connection with the California lawsuit, industry representatives argued that uniform federal permitting is needed. They said inconsistent siting decisions or delays by states "will place the United States at a significant disadvantage ... when competing for gas supplies in the worldwide LNG market."
Currently there are four LNG import facilities in Massachusetts, Maryland, Georgia and Louisiana.
The FERC has given final approval to three new ones, all on the Gulf Coast, and preliminary environmental clearance to several others. LNG's share of the U.S. natural gas market is expected to grow from less than 3 percent to more than 21 percent by 2025, the Energy Department says.