While KeySpan LNG has filed a federal court lawsuit to smooth the path for its proposed Rhode Island LNG import terminal, FERC Chairman Pat Wood is taking a jawboning approach, setting a meeting in Washington later this month with federal and state political leaders.
The battle over KeySpan's plans to expand its LNG storage facility in Providence, RI, into an import terminal centers on the same question of federal or state jurisdiction that is in the courts in California over an LNG terminal proposed for Long Beach, CA. It essentially pits the federal drive to ensure regional energy availability against the safety or NIMBY (not-in-my-backyard) concerns of local citizens and politicians.
A delegation led by Sens. Lincoln Chafee (R-RI) and Jack Reed (D-RI), and Reps. Patrick Kennedy and James Langevin, both Democrats from Rhode Island, as well as the state's Attorney General Patrick Lynch and Providence Mayor David Cicilline will meet with Wood at 9 a.m. March 17 at Federal Energy Regulatory Commission (FERC) headquarters.
Rhode Island Gov. Donald L. Carcieri has opposed the project, at the same time acknowledging that New England has "significant needs" for more natural gas in the coming years. In a statement last month calling on FERC to reject the project, Carcieri said he was aware that "LNG facilities appear to be the only viable short- or mid-term solution for the region, whether located onshore in New England, offshore and/or in southeastern Canada."
But siting marine terminals in populated areas like the city of Providence "is not part of the solution, given the overriding safety and security concerns," he said. Siting an LNG terminal so close to densely populated Providence would expose the city and its residents to potential harm and destruction from terrorist attacks on LNG tankers or facilities, state officials claim (see NGI, Feb. 21).
This will not be the first time Wood has met with local politicians from a state over a controversial LNG facility. In January, the chairman met with Mayor Edward Lambert Jr. of Fall River, MA, where the heavily contested Weaver's Cove LNG terminal is to be located, to discuss his city's opposition to the $250 million facility.
Meanwhile, KeySpan LNG filed a lawsuit late last month in federal court to clarify the permitting process for an upgrade of its 600,000-barrel peak shaving facility to a 525 MMcf/d LNG import terminal. KeySpan wants a federal court to verify the appropriate process to be used by the Rhode Island Coastal Resources Management Council (CRMC) for its review. Constructed in 1974, the KeySpan facility in Providence is a federally regulated energy storage facility overseen by the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Transportation.
The Rhode Island CRMC is the agency responsible for reviewing activities that would affect the coastal zone of the state. As part of the upgrade of its facility, KeySpan is seeking a determination from the CRMC as to the proposal's consistency with the state's Coastal Resources Management Plan.
In response to the suit, Carcieri vowed that his state will fight, stating that the lawsuit seeks to block the CRMC from "exercising its federally-stipulated jurisdiction" to review the KeySpan proposal. "This lawsuit is without any legal foundation and it does not serve any legitimate business or governmental purpose," Carcieri said. "KeySpan is simply trying to circumvent the federally required process designed to protect Rhode Island coastal waters. This is a matter of federal and state law, not KeySpan's preference."
Carcieri said the people of Rhode Island have a right to determine whether KeySpan's proposal will harm the state's sensitive coastal areas. The governor added that he "fully supports" CRMC's efforts to protect its statutory rights, delegated by the federal Coastal Zone Management Act (CZMA), to grant or deny KeySpan's terminal application.
Carcieri has said that there is no basis for KeySpan's claim in the lawsuit that Federal law, specifically the Natural Gas Act (NGA), preempts the jurisdiction of the state to protect its coastal waters and shoreline under the federal CZMA.
"In fact, the Federal Energy Regulatory Commission (FERC), which also is reviewing KeySpan's terminal application, has consistently said that the CZMA and the NGA are laws of equal dignity and should be read to complement rather than preempt one another," said Carcieri. "One wonders why KeySpan is unwilling to subject its project to lawful scrutiny by the responsible Rhode Island agency." The project won a favorable draft environmental impact statement from FERC staff in December 2004. It still is awaiting final environmental clearance and a certificate.
In its suit, KeySpan pointed out that there are two types of review processes under Rhode Island's CRMC. In August 2004, the company filed an application under both processes -- for both a "Category B assent" under state law and a "CZMA consistency determination" under the CZMA. Both processes require thorough reviews of the project by the CRMC and give the state the power to grant or deny the application.
"After waiting several months for action on its pending application, and to insure that its required consistency determination would be made in a reasonable time frame, KeySpan filed a substitute application with CRMC in December 2004 asking for the required CZMA consistency determination," KeySpan said.
The company noted that the CZMA consistency determination process has a specific timetable for the completion of the review, while the Category B assent does not. KeySpan said that following that December filing, CRMC officials informed KeySpan on Jan. 31 that the company must also file for a Category B assent and that KeySpan's CZMA application would not be processed without the additional filing.
"We have been working closely with state officials, agencies and community groups over the past 18 months," said David J. Manning, executive vice president and chief environmental officer for KeySpan. "We are subject to all government approval processes, and have provided answers to numerous requests for information about our project.
"We will continue to work with governments at every level," he added. "However, all determinations on the project must be approved within a defined timetable in order to assure energy reliability for Rhode Island and the region. We trust that the court will render a decision that will insure both the State's and KeySpan's rights related to this application process are appropriately addressed."
Manning added that he wants to emphasize that the state will have the power to "grant or deny" his company's application on the merits. He noted that KeySpan is simply seeking clarification of the process and the timetable.
The proposed KeySpan LNG upgrade would boost the facility's vaporization capacity to 525 MMcf/d from 150 MMcf/d, and would provide 375 MMcf/d of additional firm baseload supply of natural gas to Rhode Island and the greater New England region. KeySpan LNG signed an agreement in October 2003 with BG LNG Services to undertake the $50 million conversion project.
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