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[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