NGI The Weekly Gas Market Report / NGI All News Access

Coast Guard Bill With LNG Provisions Up to Senate

The House last Thursday overwhelmingly approved a bill (HR 2830) that would require, among its provisions, that the U.S. Coast Guard enforce security zones around the nation's liquefied natural gas (LNG) terminals and arriving tankers. The 397-7 vote is more than enough to override a promised veto by President Bush.

Bush has criticized the legislation, saying the LNG requirements would stretch too thin the Coast Guard's resources and interfere with its authority. The seven voting against the bill were all Republicans. The Senate is considering its own version of the bill.

The White House also said the $8.4 billion bill would divert the Coast Guard from high-priority missions and provide a subsidy to the LNG industry. However, Democratic proponents of the bill said Bush is ignoring the homeland security threat posed by the potential for terrorists targeting LNG terminals and tankers.

The legislation would require a determination by the Coast Guard that adequate resources exist to handle security risks at LNG sites before security plans for those sites could be approved.

"In general, the Commandant of the Coast Guard shall be responsible for ensuring appropriate waterside security services, based on the threat, vulnerability, and consequence of a terrorist attack, around liquefied natural gas terminals and around tankers transporting liquefied natural gas in security zones established by the Coast Guard," the legislation, reads.

Rep. Edward J. Markey (D-MA) was successful in amending the bill to require input from the Department of Homeland Security (DHS) in decisions about placement of LNG facilities. "In Boston, we've always known the LNG facility in my congressional district was a huge potential fire hazard, but after the Sept. 11th attacks, we also know that it is a huge potential terrorist target." The terminal in his district is Distrigas of Massachusetts LLC's Everett facility.

Markey's amendment calls for DHS to assess whether the waterway leading to a proposed waterside LNG facility meets security and safety concerns and would be suitable for the increased marine traffic that would result from any LNG facility. DHS would then communicate their assessment to the Federal Energy Regulatory Commission (FERC) and FERC, in turn, would be required to tell DHS what action FERC will take on the LNG application within 90 days or the expiration of any available appeal, whichever is later.

"The need for this kind of commonsense coordination between DHS and FERC has been highlighted recently by the situation in Fall River, Massachusetts, where the FERC has approved a license for an LNG facility that the Coast Guard says shouldn't be built because the waterway to the facility is not suitable. Despite this action by the Coast Guard, which effectively blocks the facility, the FERC license remains in place. This lack of coordination makes no sense and my amendment will ensure that this doesn't happen in future siting decisions," said Rep. Markey.

The Fall River terminal is backed by Weaver's Cove Energy, which says it will continue to pursue the necessary permits (see NGI, April 7).

Republicans have countered that the security requirements of the bill would impose an undue burden on the flow of LNG.

"The administration strongly opposes House passage of HR 2830 in its current form because it would adversely affect homeland security, protection of the marine environment, and maritime safety and would unreasonably intrude upon the [Coast Guard] commandant's authority and discretion to command and control the Coast Guard," the administration said.

The White House called for the elimination of the LNG provision "because it provides an unwarranted and unnecessary subsidy to the owners of private infrastructure that is contrary to the existing assistance framework and would divert finite Coast Guard assets from other high-priority missions, as determined by the commandant."

In January the Government Accountability Office (GAO) called for greater security of ports as LNG tanker traffic continues to grow. According to GAO, the challenges facing the federal government include resource constraints (insufficient boats and personnel); the need to integrate plans for addressing fuel spills and terrorist attacks on tankers; and the need to redistribute U.S. Coast Guard resources to the U.S. ports where LNG shipments are expected to be the greatest. The GAO's report was released to the public for the first time in January (see NGI, Jan. 14) although a restricted version of the report containing sensitive information was released to the government in March 2007.

"I am simply appalled that this administration would refer to protecting our families as an unwarranted and unnecessary subsidy [to the LNG industry], said Rep. Elijah Cummings (D-MD), as reported by The Associated Press.

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus