Hearing of Subcommittee on Energy on Liquefied Natural Gas

Hearing of Subcommittee on Energy on Liquefied Natural Gas

STATEMENT OF HON. JACK REED, U.S. SENATOR FROM RHODE ISLAND

Senator Reed. Thank you very much, Mr. Chairman, members of the committee, Senator Dorgan. Thank you for holding this very important hearing on safety and security issues regarding LNG development.

It is my pleasure today to welcome Mayor David Cicilline of the city of Providence to testify before the subcommittee. He
brings a unique perspective on the issues that the committee is considering today. David is a graduate of Brown University and
the Georgetown Law School, and he is an extraordinarily effective representative of the people of Providence.

This issue has taken on critical importance for the mayor, for myself, for our Attorney General, Patrick Lynch, and for
all the people of Rhode Island because as we speak, the Federal Energy Regulatory Commission is considering proposals to
establish LNG receiving terminals in Providence, Rhode Island and Fall River, Massachusetts. Both of these projects would place LNG terminals in urban communities and require LNG tankers to pass by 11 Rhode Island towns and cities and more
than 25 miles of densely populated coastline, literally all the way up Narragansett Bay. In my written testimony, I have outlined my major concerns with FERC's current process for siting LNG terminals. Perhaps most important, I believe that FERC is not serving the American people well by simply processing LNG proposals submitted by energy companies on a first-come/first-serve basis without regard to the relative public policy benefits of one site over another, particularly in places like New England.

FERC should, instead, consider a regional approach to LNG terminal siting. FERC should step back and take a comprehensive look at all the options, including offshore terminals, remote facilities that are being built in Canada, and other sites in the northeastern United States that are not in the heart of densely populated urban communities. Unfortunately, so far FERC has rejected our pleas for such an approach.

Second, major change is needed to be made in the way FERC coordinates its permitting process with the Coast Guard safety and security reviews. For example, FERC is moving rapidly toward finalizing its environmental impact statement on the
KeySpan project in Providence, yet the Coast Guard has not completed its security plan that will answer significant questions about the Federal, State, and local resources that will be required to protect the 950-foot long LNG tankers that
will transit the bay up to 100 times per year. With all these questions unanswered, the public's opportunity to comment on
the KeySpan project has already ended.

I have many other concerns, which I do not have time to go into today, such as lack of thermal and vapor exclusion zones
around LNG ships, the pre-9/11 mind set of DOT and National Fire Protection Association standards for LNG terminals, and
the erosion of States' rights to participate in the permitting process. I would like to explore these options with the
committee in the legislation that they are preparing for the energy bill.

But I am particularly, again, delighted to welcome Mayor Cicilline. He will be an articulate and effective spokesperson
for the city of Providence and the people of Rhode Island.

Thank you, Mr. Chairman, and thank you, Senator Dorgan, and members of the committee.

[The prepared statement of Senator Reed follows:]

Prepared Statement of Hon. Jack Reed, U.S. Senator From Rhode Island

Mr. Chairman, Ranking Member Dorgan, members of the Subcommittee, thank you for holding this important hearing on the prospects for liquefied natural gas (LNG) in the United States and safety and security issues related to LNG development.

The siting of LNG terminals is an issue that has taken on critical importance for me and for the people of Rhode Island in recent months, as the Federal Energy Regulatory Commission (FERC) is now considering proposals by KeySpan Energy and Weaver's Cove Energy to establish LNG marine terminals in Providence, Rhode Island and Fall River, Massachusetts, respectively.

While I recognize that natural gas is an important and growing component of New England's energy supply, I am extremely concerned about the safety and security risks associated with siting LNG marine terminals in urban communities and requiring LNG tankers to pass by eleven Rhode Island towns and cities and more than 25 miles of densely populated coastline.

I and my colleagues in the Rhode Island delegation have attempted to work with the FERC to identify safer ways to deliver needed LNG to our region. Unfortunately, at every turn, FERC has rejected our proposals. The Commission refused to consider a regional approach to LNG terminal siting, one that would step back and take a comprehensive look at all the options, including offshore terminals, remote facilities that are being built in Canada, and other sites in the northeastern United States that are not in the heart of densely populated urban communities.

Not only did FERC reject these considerations, the Commission even denied our request to extend the public comment period on the Draft Environmental Impact Statement (EIS) for the KeySpan project, even though KeySpan did not object to the extension and the 600-page document came out over the holidays.

FERC's approval process for LNG terminals is deeply flawed and leaves too many questions unanswered. We do not know exactly what impact the arrival and departure of 100 or more LNG tankers each year will have on recreational and commercial traffic on the Bay--or whether any of our bridges will need to be closed during transits--because the Coast Guard has not completed its safety and security reviews. The Coast Guard is working diligently with KeySpan and with its state and local partners to complete those reviews, and I commend all the participants in the working groups for these ongoing efforts, but the
Coast Guard has told my office repeatedly that it does not have the resources to adequately secure these LNG tankers and marine terminals, while fulfilling its other post-9/11 responsibilities. The arrival of 950-foot long LNG vessels will require a whole new level of personnel and infrastructure, yet we have no cost estimate and no guarantee these new federal resources will be made available.

Similarly, a tremendous new burden will be placed on our state and local law enforcement and first responder agencies. I recognize KeySpan's commitment in its recent filing before FERC to develop a mechanism to provide recovery of ``direct transit-related costs'' faced by federal, state and local agencies ``on a per-transit basis.'' I disagree with KeySpan's assumption, however, that other sources of funding will cover the bulk of additional costs associated with the security of the proposed KeySpan terminal. As stated above, the availability of new Coast Guard resources is very uncertain, particularly in the current federal budget climate. In addition, the federal grant programs KeySpan offers to help state and local agencies pursue are all facing dwindling resources, and at least one mentioned in the company's filing, the Urban Area Security Initiative, is not
available to Rhode Island.

With all of these questions still unanswered, the public's opportunity to comment has now formally ended. It is my understanding that FERC may go to print on the KeySpan Final EIS prior to the completion of the Coast Guard's safety and security reviews. There is no justification for the KeySpan FEIS or the Weaver's Cove FEIS to proceed without incorporating the critical resource requirements that the Coast Guard will forward to FERC after completing both its waterways safety assessments and security workshops, not to mention the workshops for consequence management and emergency response planning that are just beginning in cooperation with the states of Rhode Island and Massachusetts. As the Army Corps of Engineers stated in its January 24th filing with FERC on the KeySpan project, ``It is essential that your FEIS fully evaluate the Coast Guard plan and discuss potential navigation impacts and economic consequences both at the facility and as ships maneuver through Narragansett Bay.''

I am also concerned about the underlying safety standards for LNG facilities and the KeySpan proposal's compliance with those standards. The 1979 Pipeline Safety Act directs the Secretary of Transportation to consider the ``need for remote siting'' of LNG terminals, but the Department's safety regulations (49 CFR 193) fail to address this statutory requirement. Moreover, the National Fire Protection Association standards that DOT uses for LNG terminals (NFPA 59A) were written prior to September 11, 2001 and do not even mention a terrorist attack as one of the possible emergency scenarios. The DOT regulations and the NFPA standards do, however, require KeySpan and other LNG plant operators to have in place procedures that address an ``uncontrollable emergency'' and the ``possible need for evacuation of the public in the vicinity of the LNG plant.'' I have asked FERC to identify what specific steps KeySpan has taken to comply with 49 CFR 193.2509(3), which calls for ``coordinating with appropriate local officials in preparation of an emergency evacuation plan, which sets forth the steps
required to protect the public in the event of an emergency, including catastrophic failure of an LNG storage tank.'' I would urge the Subcommittee to make a similar inquiry of FERC, and to inquire whether the Commission will address such a plan in the FEIS.

I am particularly concerned that KeySpan's facility, which has operated for 30 years under the grandfather provision of the Pipeline Safety Act of 1979, may be substantially modified to establish a marine terminal without bringing the plant up to current federal safety standards. Indeed, FERC's Draft EIS states that ``the current proceeding provides the opportunity to re-evaluate the existing facility and to raise the level of safety to that required for new LNG facilities.'' I am disappointed that KeySpan's response to FERC argues that in virtually every area mentioned by the Commission, including Thermal Radiation Exclusion Zones, Vapor Dispersion Zones, Impoundment Capacity, Seismic Design Requirements, it would not be ``practically or
economically feasible'' for KeySpan to comply with new construction standards.

I want to emphasize to the members of the Subcommittee that I appreciate the important role LNG plays in Rhode Island's energy infrastructure, and I look forward to continuing to look for alternative means to increase the supply of natural gas to our region. It is regrettable that the lingering questions about safety and security standards for LNG, as well as FERC's unwillingness to work with Rhode Island's congressional delegation on comprehensive, regional solutions to our natural gas supply challenges, have brought us to the point where I must oppose the proposed KeySpan and Weaver's Cove LNG
terminals.

I again want to thank Chairman Alexander and Senator Dorgan for holding this hearing, and I look forward to working with the Subcommittee to explore a broad list of alternatives--including offshore LNG facilities--to bring more natural gas to our region while minimizing the risk to our citizens.

Thank you.

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