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Wednesday, December 30, 2009

Liquefied Natural Gas (LNG) Import Terminals: Siting, Safety and Regulation

Paul W. Parfomak
Specialist in Energy and Infrastructure Policy

Adam Vann
Legislative Attorney

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 price volatility, and the possibility of domestic shortages have significantly increased 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.

LNG terminals directly affect the safety of communities in the states and congressional districts where they are sited, and may influence energy costs nationwide. Faced with an uncertain national need for greater LNG imports and persistent public concerns about LNG hazards, some
in Congress have proposed changes to safety provisions in federal LNG siting regulation. Legislation proposed in the 110th Congress addressed Coast Guard LNG resources, FERC’s exclusive siting authority, state concurrence of federal LNG siting decisions, and agency coordination under the Coastal Zone Management Act, among other proposals. Provisions in the Coast Guard Authorization Act of 2010 (H.R. 3619), passed by the House on October 23, 2009, would require additional waterway suitability notification requirements in LNG siting reviews by FERC (Sec. 1117). The Maritime Hazardous Cargo Security Act (S. 1385), introduced by Senator Lautenberg and three co-sponsors on June 25, 2009, would require a national study to identify measures to improve the security of maritime transportation of liquefied natural gas (Sec. 6).

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 or increase supplies of North American natural gas and, thus, the need for new LNG infrastructure.

Date of Report: December 14, 2009
Number of Pages: 29
Order Number: RL32205
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