<DOC> [109 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:32211.wais] OVERSIGHT HEARING TO REVIEW THE PERMITTING OF ENERGY PROJECTS WEDNESDAY, MAY 25, 2005 U.S. Senate, Committee on Environment and Public Works, Washington, DC. The committee met, pursuant to notice, at 9:30 a.m. in room 406, Dirksen Senate Building, Hon. James Inhofe [chairman of the committee] presiding. Present: Senators Inhofe, Warner, Chafee, Isakson, Vitter, Jeffords, Carper, Clinton, and Obama. Chairman Inhofe. The Committee will come to order. Let me start by recognizing Senator Vitter. He has to preside in just a few minutes. So if you would like to do an opening statement, I will defer to you for that purpose. OPENING STATEMENT OF HON. DAVID VITTER, U.S. SENATOR FROM THE STATE OF LOUISIANA Senator Vitter. Thank you very much, Mr. Chairman, and thank you for holding the hearing today. I think this is very important. I also want to thank all of our witnesses for coming to testify today about this very important issue. As our economy continues to grow and create more opportunities for more Americans, clearly our energy consumption continues to grow, even as efficiency grows significantly. So improving our permitting process and making it more efficient is very important. It is important to develop new energy sources, and that is critical to fuel the growth of jobs and the economy. By refining the permitting process, our Nation could focus on producing more energy domestically and reducing our reliance on foreign energy sources. Unfortunately, the way it is structured now, the National Environmental Policy Act, NEPA, has created obstacles that are very costly and slow progressing and even block projects rather than assess their environmental impact and move them forward. Again, in saying this, I do not quarrel with the stated goals of NEPA; I quarrel with how it is achieved in practice, which is very cumbersome, very inefficient, very uncoordinated, and that tends to not achieve the stated goals of NEPA but simply slow down all projects that must go through that process. So the permitting process needs to be realistic and achievable if we intend to reduce our Nation's dependence on foreign energy sources and increase our domestic energy productivity. Cooperation among all Federal and State agencies could simplify the permitting process by focusing on common energy objectives that would eliminate conflicting agendas that hold up the approval and review process. Participating agencies working together can improve factors such as certainty and timeliness that impact that permitting process. However, a definite time line would provide greater certainty for the review process since it is frustrating when not all of the participating agencies respond in a timely manner when issuing permits. Without processing the permits in a timely manner, development of necessary energy infrastructure is delayed and even financially crippled in many cases. In Louisiana this has significant impact. We need to take advantage of advancements in technology to increase domestic production of our natural gas reserves, and that has a big impact in Louisiana. So once again, Mr. Chairman, I applaud you for bringing a lot of focus and resources to bear on this very important project. I think the bottom line is really this: it is fair and reasonable and necessary to set these environmental and other permitting processes, but once we establish those goals, it should be all of our goal to get that done in an efficient and coordinated manner. Once we establish the policy, folks should not then go and make the process as complicated and inefficient as possible, quite frankly, to frustrate that policy and to essentially reopen the policy debate. We should make the process efficient once we set the parameters and the policy. I think the White House's efforts at streamlining the process and you efforts in terms of your leadership position as Chairman are moving us in that direction. I thank you. [The prepared statement of Senator Vitter follows:] Chairman Inhofe. Thank you, Senator Vitter, and thank you for your loyal attendance here. OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM THE STATE OF OKLAHOMA This is a very significant Committee hearing. Before you leave, I will tell you one story. Back in real life I was a developer and I can remember building down in South Texas on the coast. At one time, I actually had to go to 26 governmental agencies to get a doc permit for a condo development. I got to thinking, in this information age, it is just not necessary, it should not be necessary. So I come, I am afraid to say, Ms. Buccino, with a little bit of a bias toward over-regulation as a general principle. I believe that this Nation really needs an energy policy. It is ironic that we are having this meeting right now when the Energy Committee is in the process of working on the energy bill in a different room. The lack of a comprehensive energy policy has detrimentally impacted the country in several was, and ultimately slowed down economic recovery. I have long said and I maintain that having a strong energy policy is a national security issue. I can remember when many years ago, back during the Reagan Administration, Don Hodell, who served as both Secretary of Interior and then also as Energy Secretary, he and I had a song and dance where we would go around and try to explain to consumption States that our dependence upon foreign countries for our ability to fight a war is not an energy issue, it is a national security issue. Nobody believed it at that time. I was alarmed because we were dependent upon foreign countries for 33 percent of our oil. Today, it is twice that. So we have been moving in the wrong direction. Environmental policies have had a significant and varying effect on many of the energy problems this country faces--the high natural gas prices, the lack of refining capacity, which we have dealt with here in this Committee at several hearings over a number of years, and the insufficient energy infrastructure, just to name a few. With great foresight, President Bush recognized the need for a comprehensive national energy plan some 4 years ago this month but implementation of many of his recommendations has been frustrated in Congress. Environmental concerns are among the principal reasons for Congress' failure to address America's energy needs. Even the Federal Reserve Board Chairman Alan Greenspan noted as much, stating, ``We have been struggling to reach an agreeable tradeoff between environment and energy concerns for decades . . . it is essential that our policies be consistent.'' And Chairman Greenspan delivered this warning 2 years ago before another Senate Committee. I would ask my friends to remember that the Senate has been trying unsuccessfully to move an energy bill since the 107th Congress. I am hopeful that we will be able to develop the needed consistency and send an energy bill to the President this year. The purpose of today's hearing is to review the permitting of energy projects, and to consider whether permitting has incorporated the consistent approach Chairman Greenspan referred to; that is, balancing the needs of the environment and the energy needs. As an Oklahoman and someone very familiar with the oil and gas industry, it might surprise my friends that this hearing is energy source neutral. We are not here to discuss the environmental merits of one type of energy over another. Rather than focusing on any one energy source, I am concerned about the entire process. I think that the following quote from an energy interest summarizes the issues permit ``review needs to be completed in a timely manner'' and ``slippage undermines the credibility of the process and drains the energy and resources of the members of the public; indefinite delay harms not only the project proponent and those who see the benefits flowing from the project, but also damages stakeholders.'' The fact of the matter is that the country needs all forms of energy and requires a diverse fuel mix to maintain economic progress and ensure a clean environment. Regardless of the type of energy, producers cannot find, harness, extract, or transport energy unless they can secure the necessary environment-related permits. The collective energy industries consistently claim that the requisite Federal permits and legal challenges from special interest opposition groups have prevented them from producing energy or delivering it to consumers and businesses. President Bush recognized the complexities involved in the permitting process in issuing Executive Order 13212, which called for Federal agencies to expedite permitting and established a White House Task Force on Energy Project Streamlining. And the Federal agencies have improved their permitting but a lot more can be done. I am not a bird expert. I do not know how much bird research should be done before building electricity-generating wind turbines. Is 6 months of state-of-the-art radar research sufficient, or is 3 years too much? I do not know. However, I am confident that the project's proponents would like to know with certainty the proper reasonable approach at the beginning not at the end of the Federal permitting process. A lot of you do not understand that it is predictability that is necessary. You cannot make the necessary investments and do the necessary things, very similar to our highway bill that we are doing right now, you cannot just operate on 6 months extensions, you have to have a five or 6 year bill where you can plan in advance what to do and you can venture your capital and sell your story. Environmental regulations have increased demand for natural gas. Several special interest environmental groups celebrated natural gas over other energy fuels. Indeed, nearly all new electricity generation is fueled by gas over coal. Yet today, some of these same groups have worked against building the necessary infrastructure to transport their clean-burning bridge fuel. For example, the California and Nevada chapters of the Sierra Club voted to oppose both on and offshore LNG facilities even though the club favors gas over coal and nuclear energy. Similarly, some of the States that have the greatest demand for gas have not increased the infrastructure to deliver it. California, for example, has opposed the permitting of Liquefied Natural Gas and pipeline infrastructure even though, according to California's Energy Commission, local air quality regulations require natural gas generation. California certainly is not alone in contributing to or facing a regulatory paradox. According to a report from the New England ISO, the nonprofit operator of New England's power grid, natural gas in the region was increasing from 16 percent in 1999 to a projected 45 percent in 2005; however, the States lacked the needed infrastructure to transport and distribute the gas. The ISO Chairman Berry stated that ``the long and complicated Federal permitting process for building new interstate pipelines is a greater obstacle than the technical construction work.'' Some special interest groups would like oil and gas companies to go above and beyond what are required by environmental regulations. They would also like for operators to monitor potential environmental impacts. Council on Environmental Quality Chairman Jim Connaughton has suggested incorporating adaptive management, which includes monitoring, to a wide variety of projects. These are fine goals in concept, but how do current permitting requirements provide for and encourage such a flexible approach? Lastly, I would like to recall Chairman Greenspan's warning. He framed the issue as a tradeoff between energy and the environment. It is unfortunate that anyone describes balancing these two critical interests in terms of a tradeoff, sometimes that is thought of in disparaging ways. So I look forward to hearing from both sides of those individuals who are here representing environmental concerns as well as for those who are involved in the permitting process and those trying to get permits. [The prepared statement of Chairman Inhofe follows:] Chairman Inhofe. For the record, I would like to enter Senator Lieberman's statement in its entirety as if he were here and delivered it. [The prepared statement of Senator Lieberman follows:] Chairman Inhofe. With that, let me just go over who we have here. Mark Robinson, a Federal non-partial witness, is the director of Office of Energy Projects, permitting pipelines and liquefied natural gas, the Federal Energy Regulatory Commission. Dennis Duffy is the vice president of CapeWind, and Mr. Duffy will discuss how the permitting process of the proposed wind farm off Cape Cod has been overly burdened and allowing opponents to use stall and delay tactics. Sharon Buccino--is that pronounced right--is the attorney for the NRDC, and she will testify that existing Federal permitting process is adequate, and we will be looking forward to her testimony. And then Ron Hogan is the general manager of Questar, another one who has been involved in the permitting process. Why not start, Mr. Robinson, with you. Let me tell you, even though we do not have many members now, members will be coming in and out, and all members are represented by staff. So there will be questions that will be submitted to you for the record. We will go ahead and start with you, Mr. Robinson. STATEMENT OF J. MARK ROBINSON, DIRECTOR OF THE OFFICE OF ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION Mr. Robinson. Mr. Chairman, thank you very much. My name is Mark Robinson and I am the director of the Office of Energy Projects at FERC. We are responsible in our office for 1,600 hydro-electric projects, their licensing, inspections, safety and security of those projects. We also are responsible for certificating about 500 to 2,000 miles of interstate natural gas pipelines per year and storage facilities, and also the authorization, safety and security of LNG terminals. I would like to make sure that I identify my bias, I think we all have those. I have been involved with siting energy infrastructure for the Commission for 28 years now. Over those 28 years I have watched this process become more byzantine with every passing year. My concern is that we may be getting to a point in the complexity of the permitting process where ultimately the first dollar of investment will not occur and those dollars will migrate elsewhere, including overseas. My testimony goes specifically to three issues that I think need to be addressed in enhancing the permitting process. One is the parochial interests that sometimes override regional needs; two is what I call agency creep, where different agencies use an aspect of the project and their authority concerning that aspect of the project to make the overall public interest determination; and three is what I term distributed decisionmaking. I would like to focus in these oral comments on distributed decisionmaking and how that affects permitting of energy infrastructure. By distributed decisionmaking, I mean that everybody has a bite of the apple at this point. If you look at my testimony and the charts that I have attached to it, you will see for LNG facilities, as an example, in some States you are looking at 30, 40, 50 permits that have to be acquired by the proponent of that project before they can go forward. That in itself is a problem. But when you look underneath just the chart to see how that works, you can see how there is sort of an insidious aspect of permitting that can stop projects. One is the aspect that one agency will wait for another. They will say we cannot do this until they do that. So you end up with a sequential aspect of the permitting process that seems to go on and on and on. Two, everybody seems to want to take their particular permit and make that the last action that occurs. They want to wait until everybody else sees what is going on and then they take action. Well, if you have several agencies that are trying to do that, it becomes almost a bidding contest to see who gets to be the last person to say yes or no. That can also affect the ability for a project to move forward. The effect of this distributed decisionmaking is that ultimately that projects that are in the public interest are not constructed. They die a death of a thousand cuts, with everybody taking a little bit of the project away as they go through the permitting process until the project just dies and goes away. And I have seen that over and over again and with increasing frequency. The cure for this, of course, is pretty plain--you vest all authority with one agency for all the laws that are affected and hold them responsible. That is never going to happen. The genie is way too far out of the bottle for us to ever go back to having an agency decide whether or not energy infrastructure should or should not be built, there are too many interests involved. But that does not mean you cannot discipline that distributed decisionmaking, and that is what I would call for today. If we lack that discipline, if we do not acquire it--and Memorandums of Understandings, and MOAs, and administrative actions all seek to do this but they do not have the force of law, if we do not discipline that process--what we will end up with is no decisions at all as this becomes increasingly more complex. To discipline that process, we are calling for a three-pronged approach to rational siting. The first prong of that is identification of an agency having exclusive jurisdiction for the overall siting decision. That does not mean that anyone else loses their authority--the Clean Water Act would still apply, the Endangered Species Act would still apply--but those projects and those agencies dealing with that would have to recognize that is an aspect of the project, not the overall public interest determination. The second prong is the development of one Federal record. This is just good government. It is a matter of taking all those agencies that have a role in this, who play a role, forcing them through law to work together to develop one record and then everybody acts from that record in a timeframe set by the lead agency. If they fail to make that decision in that timeframe, their decision will be conclusively presumed. That is the discipline applied to them to take an action within a timeframe set by the lead agency. The third prong of that rational siting process is direct appeal to the court of appeals. It does not do any good to have all those agencies make their decisions and then all of the appeal processes run off into various different arenas to try to be resolved over years and years of process. We need immediate appeals, a one-stop to go to the court of appeals to review those actions by those permitting agencies. If we have rational siting that would affect any type of energy infrastructure, what we will gain from that is certainty of the decisionmaking process. And with certainty, that first dollar that people want to invest to develop infrastructure will be invested, it will not migrate overseas, and we will get decisions on what is and what is not in the public interest to develop in this country. Thank you, sir. [The prepared statement of Mr. Robinson follows:] Chairman Inhofe. Thank you, Mr. Robinson. What is good about your opening statement is you actually come out with a specific recommendation. We do not hear that very often. I appreciate that very much. Mr. Robinson. Well, I have been dealing with this a long time but I feel very strongly that is about the only thing we can do to try to bring some sanity to the process. Chairman Inhofe. We will be interested to explore that. We have been joined by Senator Warner, who is the senior member on this Committee; however, I Chair it because he is the Chairman of the Armed Services Committee. Senator Warner, do you have an opening statement? Senator Warner. Thank you, no. I would like the opportunity when Mr. Duffy completes his opening comments, if I could just spend a few minutes with him. Chairman Inhofe. In some questions, you mean? Senator Warner. Yes. I will not take long, and I thank you for the courtesy, Mr. Chairman. Chairman Inhofe. All right. We will go ahead and move on to Mr. Duffy. And after that, I know Senator Warner cannot stay very long, we would recognize Senator Warner to pursue his request. Mr. Duffy. STATEMENT OF DENNIS DUFFY, VICE PRESIDENT OF REGULATORY AFFAIRS, CAPEWIND ASSOCIATES, LLC Mr. Duffy. Thank you, Mr. Chairman. My name is Dennis J. Duffy. I am the vice president of regulatory affairs for CapeWind Associates. For the past 5 years, CapeWind has been developing the Nation's first offshore wind generation project. The project would be located approximately five to ten miles off the nearest point of land on the coast of Massachusetts. It would generate up to 468 megawatts of clean and renewable energy, with no fuel requirements and no air emissions. This amount would represent approximately 75 percent of the annual electric needs of Cape Cod and the Islands of Martha's Vineyard and Nantucket. The principals of our company have been in the energy business for more than twenty-five years. We have developed and operated some of the most efficient gas-fired plants now operating in the United States. Now, in direct response to State mandates for renewable energies, the so-call ``renewable portfolio standards,'' we are focusing upon wind energy development. We are confident that wind technology has now advanced to the point where it is both proven and reliable and can play a much more meaningful role in our national energy supply. In order to realize the full potential of this source, however, we need to ensure that our national energy and environmental policies are implemented in a consistent manner. The CapeWind project would consist of 130 wind turbines located in Federal waters connected to the land-based power grid via two submerged cables. Although this is the first offshore wind energy farm proposed in the United States, in Europe offshore projects of this type have been operated successfully for more than a decade. The CapeWind project------ Senator Warner. Excuse me. I missed what you said. What had happened not in a decade? Mr. Duffy. The European projects have been operating for a decade or more now. The project would be located on a shoal out of shipping lanes and would impose no restrictions on current uses of the area. CapeWind enjoys strong support from environmental, consumer advocacy, and labor groups, and a Cape- based grassroots support organization with now over 4,000 members. The Federal regulatory process under current law is both thorough and comprehensive, but, importantly, it lacks any requirement that would limit the duration of project review period, which in some cases can open the door for opponents to try to use delay as an end in itself. After extensive analysis of potential sites, we submitted our application to the Army Corps in November of 2001. The project has been undergoing regulatory and public scrutiny for more than three and one-half years, including the preparation of an Environmental Impact Statement under the NEPA. The Army Corps has acted as the lead Federal agency in a process that has included 17 Federal and State participating agencies and which has afforded exceptional opportunities for public involvement, including nine public hearings. During this process, an exhaustive record has been put together under a public interest standard which has included a whole range of issues, from environmental impacts, project aesthetics, cost implications, and the need of the public. At the same time, there has been an extensive parallel proceeding. In 2002, we filed with the Massachusetts Energy Facilities Siting Board for authorization for the transmission facilities which would cross the waters of the Commonwealth. I am happy to report that after a two and a half year review, with 20 days of expert testimony and over 50,000 pages in an evidentiary record, on May 10 the Massachusetts Energy Facilities Siting Board approved our petition based largely on a finding that our energy would be needed for three purposes: to meet the growing need for the region's power; to lower the prices to electric ratepayers; and to offset air emissions from fossil generation. Notwithstanding the review we have gone through over the last three and a half years, however, we still face additional processes of uncertain duration. In particular, the Army Corps issued a draft EIS in November of 2004 and has received more than 5,000 comments on the draft. While most of those comments were positive, the comments also included continued demands from project opponents that multiple years of additional field studies now be completed. Some, for example, call for the Corps to now evaluate nuclear and fossil plant proposals on an equal footing, notwithstanding the fact that we proposed this project in specific response to mandates for renewable energy. In conclusion, CapeWind and the other wind projects that will follow present great potential for meeting the multiple objectives of national energy and environmental policy, including decreased reliance on imported fuel, reducing and offsetting air emissions, and lowering the cost of electricity to the ratepaying public, all with minimal environmental impact. Based on our experience, we have two suggestions for improving the process. First, we believe that national policy objectives would be better served if environmental review of proposed energy facilities were conducted in a more timely manner, perhaps pursuant to statutory timeframes that would prevent delay tactics from crippling an otherwise worthy project. And I point out in that case, for example, many of the New England States have adopted energy facilities siting acts which specifically limit the review period to a 12-month process for major energy projects. Second, because the process involves so many agencies with often conflicting agendas, it is important that the process appropriately recognize the clearly stated Federal and State energy objectives, as well as the societal tradeoffs inherent to any major energy project. Thank you. [The prepared statement of Mr. Duffy follows:] Chairman Inhofe. Thank you, Mr. Duffy. Senator Warner? Senator Warner. Thank you, Mr. Chairman. I will not be too long. I will put a number of things with unanimous consent in today's record. Let me make it clear, Mr. Duffy, you do not know me, I do not know you, and this by no means is any personal criticism to you. But I became involved in this issue, as you probably know, because of several concerns. First, I think I have got to digress a moment to speak about a personal aspect of this. For many years I was married to a wonderful person whom is still a very dear and valued friend, I guess it was about 25 years ago now, 26 years ago when we unfortunately parted ways, but she does have a home in the Cape and I was actually married there to that wonderful woman. Every time I try and get into this fray, they conjure up this woman, who is very private, and three children of mine who occasionally visit the house. I just think it is fine for anyone to heap criticism on me, but I really resent, and it is not a part of your organization, but the local press has seized on this as why I have questioned this thing. I have not been to the Cape personally for a number of years, although I plan to go this year to a wedding for 3 days. So when I make a sighting, I am sure they will conjure up some more stories. But let us put that to one side. Here is my concern with this. Because it really grabbed my interest in several ways. One, yes I have seen the Cape for many years, and that part of America to me is one of the great treasures--the next witness, Ms. Buccino, if you could listen to this--one of the great natural treasures in America is that confluence of islands up there, Martha's Vineyard and the Cape and so forth. It is a marvelous sanctuary for birds and wildlife. It is a sailor's haven, a fisherman's dream. And I could go on and on about that part of America. In my years, I have been to every place in this country one way or another just about. I have been very disturbed about the environmental community not focusing on this. The environmental community has sort of taken the hear no evil, see no evil, speak no evil, put hands over their face and look the other way because they realize that possibly some modest measure of energy can be derived from wind power and, therefore, all the evils of the other sources of energy is where they direct their attention. But I have never quite understood why they did not step in to look at this magnificent piece of America and speak on it in a more objective and authoritative way. But put that aside. That is one concern I have is that it is just a treasure of this country. Second, let us go back--and I am going to put in today's record a letter I wrote, Mr. Chairman, to the Army Corps of Engineers. Chairman Inhofe. Without objection. Senator Warner. As a member of this Committee, I have some say about the Corps, and as a member of the Armed Services Committee, we have some things to say about the Corps. And we had before this Committee, Mr. Chairman, the former Assistant Secretary of the Army, not the former, he is currently again acting, for Civil Works, Mr. Woodley, and I am going to put in today's record the full testimony of the Assistant Secretary. Chairman Inhofe. Without objection. Senator Warner. He stated that he did not believe the Corps has clear statutory authority to grant Federal permits for wind power projects in the Federal offshore shelf waters. And this is what I wrote to the Corps of Engineers, they are having this open hearing on this: ``The Corps is reviewing an application for a navigation permit under section 10 of the Rivers and Harbors Act of 1899''--1899. The only windmills or wind power that the Member of Congress had any knowledge about then maybe was Don Quixote, as you know, and a few local farmers' windmills and something else. They never envisioned this. And to think that you are moving forward on this project under that ancient statute, which in my judgment and the judgment of the Acting Assistant Secretary of the Army for Civil Works, just does not have the statutory framework to support this decision. I go on: ``The stated purpose of this statute is clearly to prevent obstructions to navigation in waters of the United States. It does not provide authority to the Corps of Engineers to grant property interests in those CS lands, as would be the result should this permit application be granted. The legislative history of the 1899 Rivers and Harbors Act shows that section 10 was originally enacted to remedy the inability of Federal common law to prevent obstruction to navigation. The law and implementing regulations have been broadened somewhat over the years and now includes a public interest test. But its essential purpose has not changed. ``The jurisdiction of the Corps of Engineers as provided in the 1899 Rivers and Harbors Act and implied authorities under the Outer Continental Shelf Lands Act are wholly inadequate to evaluate the construction proposed of 130 windmill towers in U.S. waters to properly protect our environment, to ensure that navigation on our seas is not impeded, to guarantee that public assets are not granted to private developers for free, to provide for appropriate compensation to the Federal taxpayer for the private use of public lands, and to ensure the careful management of other Federal interests. The 1899 statute simply cannot, and should not, be stretched 100 years later to embrace the unique concepts of the proposed project.'' I am not against the concept of wind power. I simply say, if it is going to be done, do it right. And the responsibility in large measure falls upon the Congress. When the energy bill, Mr. Chairman, is brought up, I intend to address this issue on the floor. I tried last year in the context of the Military Act, which the Chairman and I worked on, to ask for a 1 year moratorium to give Congress the opportunity to step in and establish a regulatory framework for these offshore lands, such that you could proceed under a current law of Congress specifically designed to take care of the wind power. Now these wind units are proposed off the shore of Virginia, and that is really the underlying reason why I am so involved in this. I do not understand how you can put this much private capital behind a project that really has no foundation in statutory law for the regulatory process. Yes, you have been at this for 3 years-plus. I guess I am slightly amused by that. I have been for 15 years trying to get a dam in Virginia with the Corps of Engineers. I have not given up by any measure, but these processes are somewhat slow. So I have stated my case, Mr. Chairman, and I would like to have our distinguished witness reply, to the extent that he wishes. And to save time, you can have a chance to look over my letter, and I would ask that maybe you would like to expand your remarks and place them in today's record after you have had an opportunity to reflect on this. [The referenced materials follow:] Mr. Duffy. Thank you, Senator, I would welcome that opportunity. Let me just say, I fully appreciate your concerns, but on the legal analysis I think we respectfully disagree on a couple of points, which I can explain somewhat. The way we have read section 10 of the Rivers and Harbors Act is that it was always intended to be a general delegation of authority to the Army Corps and not limited to any specific type of structure or for a specific purpose. And for example, we looked back over a long history of courses of dealing where the Army Corps has used its section 10 authority for whole host of different types of projects. Some have included things like rerouting rivers; others, highway construction projects, bridge construction projects; and others offshore have included things such as filling hundreds of acres of waterways of the Federal waters for things such as airport expansions. And more specifically going offshore, the section 10 authority has been used for a whole range of authorities which have been recognized by court decisions which have included things such as offshore cable projects, weather towers, radio stations. There is a whole range of things that the Corps has done historically with an established course of dealing which has been upheld in the courts. I would also point out that we, more than two and a half years ago, got a preliminary permit to place an offshore weather station with a 200-foot tower for taking wind data, which has been in service now for over 2 years. The opponents to our project appealed the grant of that permit under some of the very same reasons, arguing that the Army Corps' offshore structure was intended to be very narrow and limited, and in fact limited only toward extractive operations. We have now gone through 2 years of Federal court litigation with two decisions at the district court in Massachusetts, and two decisions at the first circuit, which we think confirm our original reading that the congressional grant of authority to the Corps was not meant to be limited but it was general in nature and extends beyond extractive structures. But I think probably more importantly to the policy question, we feel that under current law the structure is in place to give a full and fair regulatory review to the substantive issues. Senator Warner. What structure is in place? Mr. Duffy. Well, I would say the structures are the public interest review that the Army Corps applies under any section 10 review process, which includes the whole range of all likely detriments and benefits that might result from the project, which are going to include issues such as aesthetics, tourism, conservation, fish and wildlife impact, as well as current uses of the area. And that is why the draft EIS which was released after the first phase of the project included over a 4,000 page analysis of all these issues. And I would point out that, in addition to the process being driven by the broad public interest test of the Corps' statute, it is also being done pursuant to the National Environmental Policy Act, where it is proceeding in line with the rules and procedures established for an environmental impact statement, which has involved 19 participating agencies both from the Federal and the State level. So I recognize fully the type of issues that you raised in particular. I know the Cape very well. It is very special to me as well. But I feel that when you stop and look very closely at the process which has happened so far, including the Massachusetts review and approval which we just got a couple of weeks ago, as well as the Federal process, I think the analysis really shows a careful balancing which recognizes that there are going to be detriments to this project, like any energy project, but tends to view those in the overall scheme where they are at least weighed and measured against the potential benefits. We just think when people see the final environmental impact statement we really believe that the merits of the projects are going to be far in excess of the detriments. We do not dismiss the detriments, but we think on balance the project makes sense. Senator Warner. I came within a millimeter of getting my statute of a year's moratorium through. I will not tell you what happened in the wee hours of the morning, but one individual was able to stop it in the other body. That is the way we do business up here. I am not complaining. I have done it myself. But I came up through the legal profession and I just say to myself, if I were in your position, as an industry, not just your company, as an industry, you should have come to the Congress and said, look, we are first cousins to the oil and gas industry and there has been a framework of law and regulation covering their offshore drilling for years and it sets out clearly the criteria, the environmental concerns, a whole framework is there. You should, in my judgment, be treated fairly under that type of framework of law, rather than fumbling around and trying to squeeze an 1899 statute to get under. Because some Federal court someday might just slam you down and say, you know, those Members of Congress never were envisioning this type of energy, the source, as fitting into a navigation statute. And there you are, and all your shareholders and the rest of the world, and all the turbulence in the Cape, and everything else either comes to a standstill or collapses. Why has the industry never come to the Congress and said come on Congress, this is a potential source of energy, we would like to do it in the proper way, give us a framework of laws? Mr. Duffy. I understand your concern there, Senator, and to some extent I do share it. But I think on one level we do feel sound in our legal position. But we, both our project as well as the industry generally, have been supportive of some of the legislative proposals which have been circulating for the last 2 years, including the Administration proposal which was introduced last session originally as the Cuban amendment, now included in the House version of the energy bill and I believe also in the version that is circulating in the Senate. Senator Warner. Well, we will see what comes out of that. That has sort of made my point. But there is also the interest of the Federal taxpayer. I think you will grant me the common ground of agreeing that in the oil and gas situation that taxpayer is protected when U.S. property is used for purpose by the private sector to create a product, whether it is oil and gas or, in this instance, wind. But the taxpayer is not protected as you are proceeding. Am I not correct there? Mr. Duffy. You are correct, Senator. Under current law, only extractive uses of the Outer Continental Shelf pay a royalty back to the Government, oil and gas extractions under a mineral lease. Non-extractive activities such as the Ocean Thermal Energy Act, cables, communications systems, are permitted but they do not pay a royalty. And we do not oppose that. The current provisions within the bill that would address offshore would provide for compensation to the Government, and we have no problem with that. Senator Warner. I thank you for your indulgence and your courtesy. We will continue to work away. And I thank the Chair. I will put some things into the record. I will provide you with a copy of my letter to the Corps of Engineers which sort of states the case, maybe you have it, I do not know, but I will give you a copy. And thank you very much. Mr. Duffy. Thank you, Senator. Chairman Inhofe. Thank you, Senator Warner. So the other members who have arrived will know where we are, we have completed opening statements, and we have heard the opening statements of Mr. Robinson and Mr. Duffy but not from the other two witnesses yet. At this point, if any, or all of you, want to make an opening statement, I only ask that you try to confine it to four or 5 minutes. In order they came in, I believe Senator Chafee is first. Senator Chafee. I will submit mine for the record, Mr. Chairman, so we can continue with the hearing. [The prepared statement of Senator Chafee follows:] Chairman Inhofe. Thank you, Senator Chafee. Senator Carper? Senator Carper. I have a statement I would like to submit for the record, sir. I will say that among things I discuss in my statement for the record is the siting of LNG facilities around the country and the concern that we have certainly in Delaware and the Delaware Valley about the siting of those facilities without listening to the input of State and local governments. [The prepared statement of Senator Carper follows:] Chairman Inhofe. Thank you, Senator Carper. Senator Isakson? Senator Isakson. I will submit a statement for the record. [The prepared statement of Senator Isakson follows:] Chairman Inhofe. Thank you very much. Ms. Buccino, we are finally around to you. You are recognized. Please try to confine your statement to 5 minutes if you could. STATEMENT OF SHARON BUCCINO, SENIOR ATTORNEY, NATURAL RESOURCES DEFENSE COUNCIL Ms. Buccino. Good morning. My name is Sharon Buccino. I am an attorney with the Natural Resources Defense Council. NRDC is a nonprofit organization. We have over half a million activists and members across the country. We work to protect the environment, but for the humans living in it. I, like you, want to make energy permitting work better. I have had the privilege to work with ranchers, farmers, homeowners across the West as energy development has come to their communities. Domestic energy production, the work of companies like Questar, is important. The permitting process is what allows this development to go forward in a way that identifies community concerns and addresses them. The permitting process is what gives citizens a voice in the government decisions that affect their lives. I would like to spend the few minutes I have here to address the National Environmental Policy Act, known as NEPA. NEPA was signed into law in 1970 by President Nixon. Since then it has served as a valuable tool to produce both informed and accepted Government decisions. It has helped citizens protect their communities and enhance the quality of their lives. NEPA has also helped Federal officials better meet the needs and interests of the public they serve. NEPA improves projects. I was involved in a seismic exploration project in the Nine Mile Canyon region of Utah. This is an area that the State of Utah has described as ``an outdoor museum.'' The Bureau of Land Management describes the area as ``the greatest concentration of rock art sites in the U.S.'' This project involved 60,000 pound trucks and they used explosives to collect data about oil and gas resources. It was in a very sensitive, arid area in Utah's canyon lands. And as a result of the review process under NEPA and also under the National Historic Preservation Act, the company conducting this exploration took additional steps to protect those natural and cultural resources that were in the area. The company agreed to additional monitoring and mitigation. In fact, just recently in a USA Today article, the BLM manager for that project said, ``I can't imagine this project without a process like (this).'' NEPA gives people a voice. You will find that many of your constituents, from city council members to homeowners, care deeply about NEPA. They care about having a say when the LNG facility may be coming into their area, when a gas company wants to put a coal-bed methane well in their backyard, when a highway is proposed through their neighborhood. I urge this Committee and Congress to work to enhance the public's voice and not silence it. There are several provisions that have actually been introduced and passed on the House side in the energy bill, H.R. 6, that take us in the wrong direction. I will just highlight one, which is section 2055. It removes completely from the NEPA process numerous oil and gas activities, including the seismic exploration that I just described. It provides that those activities shall not be subject to review under NEPA. Rather than working to improve the review process, this provision simply eliminates it. Instead of using the NEPA process to identify and address concerns and potential adverse impacts on the public's health, livelihood, and communities, this provision excuses the Government and industry from listening. I urge you to fight to keep energy legislation clean of provisions that compromise environmental protections and public participation. In the past, this Committee has stood strong in defense of NEPA, the Clean Water Act, the Clean Air Act, the Safe Drinking Water Act, and I urge you to stand strong now. Finally, one last point I would like to make is that we can increase domestic energy production without weakening environmental protections. Getting permits is not preventing oil and gas companies from drilling. In fact, the Bureau of Land Management is issuing record numbers of permits. In the last fiscal year, they issued over 6,000 permits, which was up from about 3,800 the previous fiscal year. And many of these permits are actually going unused right now. So in conclusion, because of the increasing demands being made on our public lands and our shrinking open space, NEPA is needed now more than ever. I remain inspired by that vision that was in NEPA--it is a future where man and nature can exist in productive harmony. It is a future where our valuable public lands serve diverse interests. I hope that this is a vision that you all share and will fight for as well. Thank you. [The prepared statement of Ms. Buccino follows:] Chairman Inhofe. Thank you, Ms. Buccino. We have been joined by some other members. They have agreed not to have opening statements. So we will move right along. Mr. Hogan. STATEMENT OF RONALD E. HOGAN, GENERAL MANAGER, QUESTAR EXPLORATION AND PRODUCTION COMPANY Mr. Hogan. Good morning, Chairman, and members of the Committee. My name is Ron Hogan, general manager for the Pinedale, Wyoming division of Questar Market Resources. I would like to describe our efforts to obtain permission to reduce our environmental impact to levels substantially below existing regulations, while increasing worker safety and stabilizing our contribution to the local community. Some of the special technology and innovative solutions I will describe shortly may or may not be applicable to other oil and gas development projects, but perhaps our experience can help this Committee understand the challenges we face in today's complex regulatory environment. Pinedale is a small community in Sublette County, Wyoming. According to the current estimates, there are over 20 trillion cubic feet of recoverable natural gas in the Pinedale anticline, which is about 1 year's supply of natural gas for the entire country. In July of 2000, the Pinedale field office of the Bureau of Land Management published a record of decision that outlined the guidelines and restrictions for oil and gas exploration and development on the Pinedale anticline. This decision was the result of a comprehensive NEPA process that included significant public involvement. Among the many guidelines imposed by the record of decision was a restriction prohibiting drilling operations during the winter to minimize possible disruption to deer herds, other wildlife, and their habitat. To meet these restrictions, Questar was forced into a condensed, summer-only drilling schedule. Under these restrictions, we projected it would take nearly two decades just to fully develop the gas reserves available on our acreage, thereby delaying the delivery of much needed gas. While operating within these restrictions, we witnessed some of the unintended consequences of the summer-only schedule. For instance, the shortened season made it unfeasible and cost-prohibitive to apply available disturbance-limiting technologies like drilling directionally multiple wells from a single well pad. Also, it was difficult for us and our contractors to hire, train, and retain quality employees due to the seasonal part- time nature of the work. This, in turn, created an annual boom- and-bust economic impact on the local community. And perhaps most importantly, winter restrictions made better environmental mitigation measures economically unattractive or, in many case, physically unattainable. We did not feel these unintended consequences were the goal of the BLM's record of decision. Therefore, Questar voluntarily offered to engage in a multiyear, multimillion effort to explore ways that we could leverage the benefits of new technology, minimize environmental impacts, enhance the safety of operations, stabilize the impact on the local economy, and meet or exceed the established goals for the protection of local wildlife and habitat. The first step in our effort was to submit a request to the BLM for a permit to operate one drilling rig during the winter of 2002-2003. This would allow us to gain valuable scientific data and technical insight into whether a year-round development project could help avoid the unintended consequences of summer-only restrictions. In addition, we also voluntarily agreed to fund a University of Wyoming and Wyoming Game and Fish study that would help determine the real impact, if any, of natural gas development on wintering deer populations. Our request for an exception to the winter drilling restriction was approved by the BLM for the winter of 2002- 2003, as was a similar request for a one rig, one winter exception for 2003-2004. On April 15, 2004, we formally submitted a comprehensive proposal for long-term year-round operations, with certain restrictions, on Questar's acreage. I want to provide some quick highlights of our proposal so you can get an idea of the scope of our request. First, we proposed investing more than $200 million in directional drilling, thereby greatly minimizing surface disturbances and associated environmental impact. Second, we proposed expanding both the scope and the duration of the ongoing deer study to help design energy development projects that minimize disruption to wildlife and habitat. Third, we proposed building a $25 million water and liquid condensate pipeline system. This pipeline system eliminates the need for truck transport of produced water and condensate off the winter habitat area. At peak production from just our acreage, this system will eliminate more than 25,000 tanker truck visits in a single year. The result will be a significant reduction in traffic and air emissions from levels originally anticipated by the BLM. Fourth, we eliminated the need for flaring, which is used to clean up the production stream from new wells to remove the water and sand we use during the completion process. And last, we invested in busing our contractor's employees during the winter months and trucking necessary materials in bulk to the rigs in the fall to decrease traffic in the wintering wildlife areas. In summary, our proposal included investments of more than $200 million in onsite mitigation and outlined an approach that was scientifically based, field tested, and offered substantial benefits over the restrictions imposed by the 2000 Pinedale record of decision. To facilitate a thorough review and analysis of our proposal, we worked closely with local BLM officials, biologists, and experts from Wyoming Game and Fish, and elected officials. We received formal support of our proposal from Wyoming's Governor Dave Freudenthal, the Wyoming Game and Fish Department, U.S. Senator Craig Thomas, Wyoming State Representatives Monte Olsen and Stan Cooper, Pinedale Mayor Rose Skinner, as well as the Sublette County commissioners, the North American Grouse Partnership, and Trout Unlimited. We also recognized that the Pinedale community needed to be involved in the decisionmaking------ Chairman Inhofe. Try to wrap up, Mr. Hogan, if you would. Mr. Hogan. Yes, sir. In November 2004, the Bureau of Land Management officially approved our request for the site- specific limited year-round operations. I am proud of Questar's Pinedale project. Our company is committed to invest over $200 million to achieve the benefits significantly above and beyond those required by existing regulations. But even with this commitment, our proposal is constantly at risk. We continue to get bogged down in a complex web of overlapping jurisdictions and a maze of regulatory requirements that many times simply defy logic. When you add to the equation those that take advantage of regulatory complexity to delay, litigate, and obstruct any energy project------ Chairman Inhofe. Mr. Hogan, I am going to have to interrupt you. You are almost 2 minutes over. We have got to keep some time discipline here. Mr. Hogan. Thank you. [The prepared statement of Mr. Hogan follows:] Chairman Inhofe. Let me share with my panel members up here that the order of early bird and, going back and forth, will be myself, then Senators Carper, Chafee, Jeffords, Isakson, and Clinton. I will go ahead and start off. In my opening statement I made a statement that I will read again. I am going to ask each one of you whether you agree or disagree with this statement. So listen very carefully. What I said in my opening statement is, ``Environmental review needs to be completed in a timely manner and slippage undermines the credibility of the process and drains the energy and resources of the members of the public. Indefinite delay harms not only the project proponent and those who see the benefits flowing from the project, but also damages stakeholders.'' I will start with you, Mr. Robinson. Do you agree with that? Mr. Robinson. Agree wholeheartedly. Chairman Inhofe. Mr. Duffy? Mr. Duffy. Absolutely. Chairman Inhofe. Ms. Buccino? Ms. Buccino. I agree with that statement. Chairman Inhofe. Mr. Hogan? Mr. Hogan. I agree, Chairman. Chairman Inhofe. Thank you very much. I thought that would be the case. This actually was a quote from a letter that came from 13 environmental groups, advocacy groups. So it seems that we do all agree, we have one area where we agree. Mr. Robinson, after your opening statement, I complimented you because you came out with something that was very specific. If you could abbreviate that for the members who were not here at the time, and then I am going to ask the other three if they agree with your comments on what I consider to be a reasonable solution. Mr. Robinson. First, I would like to make it clear that this proposal for a rational process for siting energy infrastructure does not in any way reduce the authorities of any other agency. What it does is to try to provide discipline to that process, something that we all work on and have worked on for years through administrative procedures, MOAs, and things of that sort. The first leg of that rational siting process is exclusive jurisdiction designated to a lead agency. What this would do would make it clear to all agencies that one agency is responsible for the overall public interest determination. Everyone else should focus on their aspect of the project, be it dredging for the Corps of Engineers, or water quality for the States. The second leg of the rational siting process is one Federal record development. All agencies involved in the decisional process should work together to create one record. That record would be used for all decisions at a single point in time under a schedule set by the lead agency. Should an agency fail to exercise their authority within that schedule-- keeping in mind that the lead agency has to look at all aspects of the project, so any schedule that would satisfy them should satisfy an agency that only has one aspect of the project--they would lose that authority. Their authority would be conclusively presumed. The third leg of that rational siting process is direct appeal of all of those decisions to the U.S. Court of Appeals. Instead of going off to the State administrative agency, then the State's courts, or to another Federal agency, and then the Federal courts, everybody would go at one time. It would shorten the timeframe and give a certainty to the decisionmaking process. Chairman Inhofe. OK. Mr. Duffy, what do you think of that? Mr. Duffy. I had not thought of it before today, but I like that approach very much, and let me just tell you why. It sounds to me very similar to the approach on energy projects that most of the New England States have taken for their State environmental review of energy projects. By adopting energy facility siting acts which delegate to a specific board the primary, the ultimate authority for the decisions for energy projects, all the other entities that would otherwise have jurisdictional roles are still involved in the process but when they review the project, rather than each issuing their own opinion or their own decision, they issue an advisory decision to the State siting board which then makes a decision based upon all the relevant factors. I think the important thing to keep in mind is that when it operates in that way, the substantive standard should not have changed, the degree of examination and review should not have changed. But what you get is a single decisionmaker who is in a position to make a public interest determination after considering all of the other authorities which otherwise could give you conflicting results. Chairman Inhofe. Thank you. Ms. Buccino? Ms. Buccino. I guess the way I react to that is, first, I would like to emphasize that I am for spending more money on protection rather than paper. And as I said, I am for making the system, the process work better. I think maybe this takes us in the right direction. I would just like to flag a couple concerns that I think need to be looked at carefully if you consider moving in this direction. One is, I think that while the statement has been made you are not taking authority away from existing State or local governments, there is very real concern that that is the result. At least in the version that I have seen, I think it is in H.R. 6, at least it has been articulated there, you are making a clear change. You are concentrating authority in FERC. So my approach would be to give the resources that are needed to the agencies to provide their input in a timely manner rather than create a system that may put them at a disadvantage. And you can look to the transportation act ISTEA where it was first used, where you have transportation funds going to resource agencies, wildlife agencies to help them get their job done. So my approach is help the agencies provide their input in a timely manner rather than silencing those voices. Chairman Inhofe. All right. Mr. Hogan, I am going to let you answer for the record because we are running short of time here and I had one more question I wanted to ask in my turn here. Mr. Duffy, I found it to be interesting after Senator Warner asked you some questions, in your opening statement, do I understand that 75 percent of the electricity in Cape Cod, Martha's Vineyard, and Nantucket is wind? Mr. Duffy. No. If our project were to come online. Chairman Inhofe. If it were to come online. How long would that take? Mr. Duffy. Oh, probably 2 years from the time of a favorable decision. We have to work around winter construction seasons, but basically 2 years. Chairman Inhofe. You always hear that the technology is not there, it is not going to work, and I have heard a lot of gloom and doom about wind energy. I would like to see it work. Where do you think we are in technology? Mr. Duffy. Obviously, we have been in the energy development business for 25 years and we are putting our private capital at stake in this project. We have invested very heavily in this and, prior to doing that, we had to come to the conclusion that it was both technically viable and economically viable. I think in particular looking at the offshore projects, it is a proven technology, it has been commercially successful in operation in the European market for more than a decade. There are numerous projects under development in the European markets today. Off the coast of New York, the Long Island Power Authority is proposing a project very similar to ours. And we are just absolutely convinced that the technology is proven. Chairman Inhofe. Thank you, Mr. Duffy. Senator Carper is not here. Let us just go ahead and come back to him. Senator Chafee? Senator Chafee. Thank you, Mr. Chairman. It is a pleasure to join you here at this hearing on an important issue of the siting of energy facilities. Certainly, New England has been mentioned not only with CapeWind, but LNG being very important to us also. We all know the abundance of natural gas in the world. The problem is getting it to market. It certainly burns cleaner than coal and oil, so it is advantageous to try and get it to market. Thus the dilemma. And we have got several fairly controversial proposals in Narragansett Bay; one on the Massachusetts side, one on the Providence side. But my question is to Mr. Robinson. In response to Ms. Buccino's assertion that under H.R. 6, numerous gas and oil activities on public lands shall not be subject to review under NEPA, has FERC taken a position on that? Mr. Robinson. It is amazing how this proposal has generated criticism that has no application to the proposal. No one is calling for any changes to the NEPA process. The only thing that we are asking for is to discipline the process by allowing an agency, be it FERC or any other agency, who is designated as that lead, to set a schedule and have all other agencies act under their authorities whatever actions they want to take to grant or deny within that schedule. So there is no diminution of authority in any other agency whatsoever. And as far as resources go, I think that was one of the other criticisms that we heard, that we should just apply more resources. I will guarantee you, as a regulator of 28 years, working with every agency that you can think of, State, local, or Federal, that we will consume those resources and we will design even more complicated processes administratively to try to do what we should do. It is not a matter of resources. It is a matter of discipline. And I think that is what we are calling for in our proposal. Senator Chafee. Thank you. Mr. Hogan, I know you had interesting testimony, but because of time constraints could not get through it, of what is happening in Pinedale. I think there is a ranch there, the Box R. Mr. Hogan. I have heard of it, yes. Senator Chafee. The Logier family. I think Mrs. Logier came from Rhode Island from years back. So I am familiar with Pinedale. A beautiful area of the world. But you were going to say that you were trying to get the proposal to drill into the winter, at least one well during the winter. How has that proceeded so that you could diversify? You said it was a boom and bust economy, all the people come in for the summer, and you are trying to diversify the impact on the community. Has that process concluded? Are you getting that one well in the winter? Mr. Hogan. Yes. We received two opportunities to drill with one rig during the winter season to try and establish a baseline that we could, in fact, do what we want to do, which is to have three pads with two rigs on each pad drill during the winter. When we receive that, we have had that approved, but when we are actually able to implement it this coming winter, then we are estimating that will establish the beginning of our 9 years of drilling on a year-round basis, which will provide opportunities for members of the crews to be able to identify long-term employment and therefore move their families into the area. Senator Chafee. And what year are you in in that process? Mr. Hogan. Excuse me? Senator Chafee. What year are you in the winter drilling process? Mr. Hogan. We just received approval in November to start. We were unable to start the three pad winter proposal until this coming winter. So we currently have commenced the pipeline portion of the project. Senator Chafee. And how was the regulatory process at trying to make that proposal? Mr. Hogan. It was a fairly long, drawn out procedure. We identified early on that there was a certain element of timidity, I guess, on behalf of the BLM to try and take a leading edge. I want to say that the BLM office in Pinedale is an excellent office. I do not take anything away from them. But they were a little skittish about going forward with our proposal fairly independently. So we took it upon ourselves to meet with the public on a very concentrated basis, explain our project, answer any questions that they would have to try and make sure that really the critical mass that the BLM needed in order to make a positive type of determination was there. Senator Chafee. And was there concentrated public opposition initially? Mr. Hogan. Well, I would not say it was concentrated. But there was some opposition. We spent a lot of time with the conservation groups and I think it was a matter of education. Once we got over the hurdle of educating them as to the benefits of our proposal, we did not receive any opposition. At this point, we have not had any litigation filed against our project. So we take that as a form of endorsement. Senator Chafee. I am sure in all these siting proposals public involvement has its pros and cons. Having been a mayor and going through zoning processes, you have to make sure you reach out to the neighborhood as the proposal comes forward. I know CapeWind has tried to do that, and the liquid natural gas people have as they come up Narragansett Bay, but nonetheless, as politicians, we sure hear from our constituents on these issues. Thank you, Mr. Chairman. Chairman Inhofe. Thank you, Senator Chafee. Only we former mayors understand that. Senator Chafee. Front lines. Chairman Inhofe. Senator Carper left. We will come back to him when he comes back. Senator Jeffords, do you have some questions? Our distinguished Ranking Minority Senator Jeffords. Senator Jeffords. That is better. Thank you. Mr. Robinson, in your testimony, you provide a chart that lists the number of State and Federal approvals and permits needed for liquified natural gas facilities. Can you clarify for the Committee which of these are actual permit requirements as opposed to some other review status? Mr. Robinson. I think we were using the term permit in its broad sense. But I believe all of them are, in fact. It is a process, a certificate, an authorization, a permit, an OK from an agency that our applicants have to go through. Now there is a distinguishing aspect of those permits that is not identified in that chart. Some of those are permits that are pursuant to Federal statutes--the Clean Water Act, the Clean Air Act, the Coastal Zone Management Act, and others--and many of those are legal predicates for an action to occur at the project, others are not. So there is a distinction there. But there is at least a half a dozen of those permits which by Federal statute must be acquired prior to any construction of a project. Senator Jeffords. Mr. Duffy, I would be interested in your thoughts about how the NEPA process has affected your project so far. Do you feel that the process of developing the draft Environmental Impact Statement has increased local community acceptance of the project? Mr. Duffy. I think it has, Senator. NEPA is always a double-edge sword. It is a difficult, long process, but I think the level of public support, in particular from the environmental community, has been much stronger now that the draft EIS has been issued. I mean, we have always had the strong support of the most respected environmental organizations. But until the draft EIS came out, it always was subject to the caveat that it is a good idea provided that the EIS is favorable. Now that it is out and it is showing a very favorable conclusion, it has absolutely solidified our support in the public. Senator Jeffords. Thank you. Ms. Buccino, in your experience, do you think that the current Clean Water Act, Safe Drinking Water Act, and National Environmental Policy Act provide enough protection for landowners that live near the energy-productionsites? Ms. Buccino. Well, those Acts provide a core of protection that is essential. There are issues related particularly to the split estate situation, where a company that leased the mineral rights underneath the land actually legally right now those rights trump private property rights on the surface. So there is quite a bit of conflict occurring right now primarily around coal-bed methane development where drill pads are being put in people's backyards, and the current legal framework does not address adequately those concerns. Senator Jeffords. To what extent has changing administrative guidance on NEPA fueled litigation in an effort to clarify the requirements regarding the content of the Environmental Impact Statement? Ms. Buccino. There has been quite a bit of work, actually, administratively to help improve the process. For example, the White House, under this Administration, had a NEPA Task Force that focused on implementation, improving implementation, and I think they are moving forward with some of those recommendations. The White House Task Force on Energy Project Streamlining was referred to earlier, and they have actually done a lot of work within the existing statutory framework. In fact, they issued a report, it was December 2002, reporting on the proceedings of their first year. In that report they reaffirmed that improvements can be made within the existing statutory framework, there is no need to change that statutory framework, and they have moved forward with Memoranda of Understanding to address deep water ports and also pipelines. Senator Jeffords. Thank you very much. Chairman Inhofe. The next would be Senator Isakson. I have asked if he would Chair the remainder of the meeting, which will just go for one round of questions because of something that has come up. So I appreciate your willingness to do that, Senator Isakson, and you are recognized for your questions. Senator Isakson. Thank you, Mr. Chairman. Out of respect for Senator Carper, in case he does not come back, I will ask a question I think he rhetorically asked in his brief opening statement. I guess, Mr. Robinson, it would be for you. What I heard him say was a discussion of giving the State a role in the siting of LNG facilities. That implied to me that the States do not now have a role. I am not knowledgeable either way. Would you tell me? Mr. Robinson. I would like to give you one example. We have a project proposed in California, the Port of Long Beach, it is the SES project. There, the State designated agency for their CEQA responsibilities, the NEPA equivalent, is the Port of Long Beach Authority. They are supposed to gather the information for all the other State agencies and act as the agency that prepares the Environmental Impact Statement. They are a cooperating agency with the Federal Energy Regulatory Commission in preparing the NEPA document that we are doing. We were prepared in October of last year to go forward with our draft EIS on that project. The Port Authority was not. There were more studies that they wanted to do. We agreed, and continue to agree, to wait while the Port Authority continues their State process before we go forward with our NEPA document. The State has a vital role in the siting of LNG facilities integrated into the NEPA process, certainly, as I just demonstrated, but also in terms of the permitting that goes on. No LNG facility can be sited unless it receives a Coastal Zone Management Act permit granted by the State. The State can stop any LNG facility they wish just with that one Act, and that is one of three that they can stop a project with. Senator Isakson. Thank you. I want to be sure to get that in the record in case Senator Carper did not get back in. I do not know if he had a follow up question, because I am not a mind-reader. Mr. Hogan, I would like to ask you a question. Does Questar--is it Questar, is that right? Mr. Hogan. Yes, sir. Senator Isakson. Do you do offshore drilling for natural gas? Mr. Hogan. No, Senator, we do not. Senator Isakson. All right. If anyone at the dais is knowledgeable about offshore drilling, and this again is educational and informative for me, what are the environmental concerns, I understand those with regard to petroleum, but what are the environmental concerns with regard to drilling for natural gas offshore? Ms. Buccino? Ms. Buccino. I will just highlight a few. A lot of them are similar, and it starts with the exploration stage, not just at the production end. There are concerns about the impacts on marine mammals from the seismic exploration, and I think there are also concerns that relate to impacts on tourism and local economies. I know there has been a debate about whether the potential impacts are really the same with gas versus oil drilling. And I think again that illustrates the importance of the environmental review and public participation process, to allow that information to come out, to allow the public to digest it, and if the case is made, the public accepts it and you can move forward with a project that is not controversial and not opposed. Senator Isakson. Well that was my reason for asking the question. Georgia has about a 123-mile coastline and natural gas is a real premium today and is going to be in shorter supply than it now is because of the amount being consumed just in generating electricity. And as the pressure grows on that, I just was not familiar with what the environmental--I know on petroleum, it would obviously be the oil spill and the fracturing and everything else that goes on. But it primarily would be to the marine wildlife and the esthetics, I take it, more than anything else. Is that correct? Ms. Buccino. I think that is true. I think it is an area that has not been explore fully and the review process can help do that. Senator Isakson. Thank you very much. Senator Clinton? Senator Clinton. Thank you, Mr. Chairman, and I thank the witnesses who are here with us today. I wanted to just add something for the record, because I know my friend Senator Warner was here earlier to discuss his concerns with the current permitting process for offshore wind farms, and there are several proposals under consideration as part of the energy bill debate to revise that permitting process, which is currently being done by the Corps under section 10 of the Rivers and Harbors Act. I just want to state for the record that we have a proposal that is in the pipeline in New York. The Long Island Power Authority has selected Florida Power and Light to build a 140 megawatt wind farm off the Long Island coast. This project enjoys strong local support, and the permitting process is in midstream. So I think it is extremely important that whatever we might do in the context of any energy bill, or any other bill where this issue is addressed, we take into account some of the projects that are strongly supported and already on their way to going into production. I understand Senator Warner's concerns and I appreciate them. And whatever the adequacies or inadequacies of the Corps current authorities may be, my concern is that I do not want LIPA to have to start all over again if we change the permitting rules. So I hope that the Chairman and all of our colleagues will work with me on that in the spirit of this hearing, which is to reduce unnecessary roadblocks to energy projects. I would look forward to working with Senator Warner and others on the Committee. I have a few questions for Mr. Robinson, and, Mr. Robinson, it is in line with what you have already been testifying about. As I believe you know, Broadwater Energy has proposed building an offshore LNG terminal in the New York waters of Long Island Sound. There are many concerns on both sides of the Sound about the impact such a facility would have. It is not a huge body of water. It is not out in the open ocean. It is an important environmental, recreational, and economic asset. Given the importance of this issue, I laid out a number of concerns in a letter that I sent to FERC Chairman Wood last week. Twenty million people live within 50 miles of the Sound. Obviously, for anybody who has ever been to Long Island, you know we have some of the most beautiful beaches, some of the most picturesque towns and villages. The first time, Mr. Chairman, I went to Long Island, I told some people where I was going and they said how can you be going to the beach in New York. And so there is a lot of education that needs to be done. But it is an incredible resource and it is something that we care deeply about, because it is also not just recreational and environmental, but economic. There are a number of people who make their livelihoods from the Sound. So we have specific concerns about the safety and security risks associated with the presence of an anchored LNG terminal that could hold up to eight billion cubic feet of natural gas. So I would like to ask, Mr. Robinson, what is the size of the area around the proposed terminal in which release of gas by either accident or attack could result in pool fires or flammable vapor clouds? Mr. Robinson. Well there are two aspects to safety and security that you have to consider when you are thinking LNG. One is the tanker safety and security, and the other is the terminal itself. We actually commissioned a study by ABS about a year, gosh, I guess it was a year and a half ago now. That calculation that they came up with, which we use as a model for site-specific calculations, was in the range of around 4,500 feet for a radiant heat zone of 1600 BTU per square foot per hour. That is a heat rate that if you left your skin exposed to it between 30 and 40 seconds and just waited, you would get a second degree burn; your clothing would protect you. So that is the perimeter of that 1600 BTU per square foot per hour is about 4500 feet for a tanker spill at its worst extent, the biggest pool expression. Sandia Laboratory did a follow up study on that in December of last year, and I think their number came out, again in general, it has to be applied specifically with the winds and the humidity and all the different types of factors that go into the calculation, and I believe it was around 5200 feet for that same 1600 BTU expression. Senator Clinton. That is the immediate area where there might be pool fires. But the impact would go beyond that immediate restricted area in terms of impact in the water. So how would access around the terminal be restricted? What would be the size of a restricted area around this terminal? Mr. Robinson. That is something that will be looked at in the analysis of the specific project, so I cannot answer that now. But typically, we are looking at an area for an on-ground land terminal of about 21 acres being about what you need to ensure that you have exclusion zones that will protect the public in case you have a worst case accident. Senator Clinton. And do these calculations take into account a deliberate attack on the terminal from missiles or aircraft? Mr. Robinson. It is hard to imagine how you would get the worst case example that we are analyzing in any way other than if there was a direct attack. Senator Clinton. And Mr. Robinson, how would this area be patrolled, and by whom? Mr. Robinson. Well, again through the NEPA process that we go through, we involve the State and local experts in this, the first responders, and the Coast Guard is heavily involved in this and they develop a waterways security assessment that we incorporate into our analysis, and then ultimately the Coast Guard and ourselves puts conditions on the proponent that includes the development with the local responders exactly how the project would be protected, right down to do you need to close a bridge while a tanker passes under, or do you need six boats around the tanker as it comes in, with what type of protective measures that those boats have to employ. All of that is worked out with the site-specific characteristics of the project and the people that would be intimately involved in that protection. Senator Clinton. My time has expired. But I find it hard to imagine how, given the potential site for this project, those kinds of concerns could be satisfied. But I appreciate your answers, and I would look forward to receiving a response to my letter to Chairman Wood. Mr. Robinson. Certainly. Senator Clinton. Thank you. Senator Isakson. Thank you, Senator Clinton. Senator Carper? Senator Carper. Mr. Chairman, thank you. Mr. Robinson, I welcome you and the other witnesses here today. Thank you all for being here and for your comments. I seem to recall a number of years ago I think GAO recommended that there be a requirement that all new large LNG facilities be built in remote areas, and I think some kind of prohibition against transportation through densely populated areas. I do not know when that recommendation was made but I am told there was such a recommendation. I think in your testimony you suggest that in order to effectively site natural gas infrastructure, and this may be a quote, a ``rational siting process should be adopted.'' I think those are your words. I would just suggest that the first step in that rational siting process should be rational siting. I understand the economic motives for companies, and I do not blame them, to try to get their facilities as close as they can to population centers, and if I were in their shoes I would be doing that, too. But I just do not understand why those same motives should also drive FERC. That is not clear to me. I just wonder why does, and if I am alleging something that is not true, correct me, but why does FERC continue to consider locations like the Delaware River, across the river from where we live, or in places like Fall River, Massachusetts? Would not many of the problems with State and local governments that you cite be lessened, not by overpowering them but by trying to rationalize the sites that you do approve? Mr. Robinson. OK. I am trying to think where to start on that. The rational siting process is a process that tries to bring officials------ Senator Carper. First of all, go back to the GAO. Any recollection------ Mr. Robinson. I am totally unaware of a GAO recommendation like that. What I think you may be speaking of is in 1979 the Pipeline Safety Act had a provision which required the development of regulations for remote siting of LNG facilities. DOT promulgated those regulations in 1980, and the response to that, the definition of ``remote siting'' was the development of these exclusion zones which we just discussed. So that constitutes remote siting if you can put a terminal in place and look at the impacts associated with the 1600 BTU per square foot per hour radiant heat flux and protect people from that, that was considered to be remote. That went through a review process and it was appealed and all that, and it has stuck ever since. So that is the only thing prior to about now, because people really have not talked about LNG much in the last 30 years, that I know where remote siting came up, and that is how it was handled. Senator Carper. All right. All right. Mr. Robinson. Now as far as rational siting, first, I would like to make it clear that the Commission does not have the profit motive aspect in looking at the siting, but we do have some knowledge of the infrastructure needed to deliver gas to regions of the country. In New England, in particular, the problem is that I doubt if we will ever see another pipeline cross the Hudson River, I just do not know that will ever happen. If you do not, then your capacity for delivery of gas to New England is set. The gas that comes down from Canada is dwindling, the play off Nova Scotia did not come in the way they thought; the Maritime Northeast pipeline is running I think about two-thirds full. The only option--and you have no underground storage in New England--is LNG. Underground storage is not geologically possible. Senator Carper. Say that again. Mr. Robinson. You have no underground storage in New England. It is geologically impossible. That is a big component of a good gas delivery system which you just really do not have. Your storage is all above ground, about 40 LNG tanks spread around New England right now, with 10,000 truckloads of LNG moving around New England every year right now. The only real addition to natural gas that you have in New England that is available is LNG. Now the problem becomes, where do you find a deep water port in New England that can accommodate these ships? There are not many available that are not already in use or protected in some fashion. So you are basically looking at existing ports with existing industrial uses bringing in existing cargos that, in my estimation, in many instances are much more hazardous than an LNG tanker. Senator Carper. Are you at all familiar with the Delaware River? Mr. Robinson. I have crossed it. Senator Carper. Did you pay the toll? Mr. Robinson. Most times. Senator Carper. Our friends from BP, and they are a good company, as you know, but they are interested, along with some folks in New Jersey, in building a pier that would stick a couple of thousand feet out into the Delaware River, at least initially they were and I think they are having some second thoughts about it. And the Delaware River is not all that wide in that point and as you go further north. The idea of having a pier that sticks a couple thousand feet out into the river is just a cause for concern for a lot of reasons, not the least of those could involve homeland security and potential for some kind of terrorist attack. Is that the sort of thing that you all think about? Mr. Robinson. Oh, absolutely. In fact, that will be a key component of our environmental analysis, to look at river congestion, the effects on the economy, if there are any, and how it might be mitigated. Those are the types of public interest concerns, and they range from wetlands to economic impacts to endangered species, that the Commission has to look at in total in making the judgment whether it is in the public interest to grant an authorization for an LNG terminal. Senator Carper. I would kind of like to go back and sort of ask this again and ask you to think about it one more time. My final question, it is kind of a restating of my earlier question, would not many of the problems with State and local governments that you cite I think in your testimony be lessened, not by overpowering them, but by trying to rationalize the sites that you approve? Mr. Robinson. Certainly, there is a difference in siting regionally across the country. We have LNG proposals that are in populated areas where we have absolutely no opposition to them whatsoever. We have the same technology being proposed for areas where there is enormous opposition, and you are aware of those. That has to be accounted for, that has to be taken into consideration, but it has to be analyzed in terms of exactly what those impacts are and how those people would be inconvenienced, and then that judgment made. I do not think we can have a national network of energy infrastructure that supports our economy that is based upon a vote at the local level. I think that lowest common denominator aspect of that would eliminate the ability for regionally significant energy projects to be developed where local concerns of ``we do not want it here'' would override that. Senator Carper. All right. Thanks very much. Thanks, Mr. Chairman. Senator Isakson. Thank you, Senator Carper. I have never chaired a Committee before, but I think I am supposed to leave the record open for 5 days in case any member wants to submit any additional questions for the record. [The referenced materials follow:] Senator Carper. Why do we not bring up some legislation and see if we can get it through. [Laughter.] Senator Isakson. I know I am not supposed to do that. I suggest the absence of a quorum on that. Senator Carper. Unanimous consent, what do you think? Senator Isakson. I want to thank all the witnesses who testified today, and thank the members who attended. The Committee stands adjourned. [Whereupon, at 11:06 a.m., the committee was adjourned.] [Additional statements submitted for the record follows:] <GRAPHICS NOT AVAILABLE IN TIFF FORMAT> STATEMENT OF: PAGE HON. JAMES M. INHOFE, U.S. SENATOR FROM THE STATE OF OKLAHOMA 4 HON. DAVID VITTER, U.S. SENATOR FROM THE STATE OF LOUISIANA 2 WITNESSES: J. MARK ROBINSON, DIRECTOR OF THE OFFICE OF ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION 10 DENNIS DUFFY, VICE PRESIDENT OF REGULATORY AFFAIRS, CAPEWIND ASSOCIATES, LLC 14 SHARON BUCCINO, SENIOR ATTORNEY, NATURAL RESOURCES DEFENSE COUNCIL 27 RONALD E. HOGAN, GENERAL MANAGER, QUESTAR EXPLORATION AND PRODUCTION COMPANY 30