LNG Liquefaction in RI Likely to Go Forward Despite Environmental Racism Claims

Matthew K. Stiles, Michigan Journal of Environmental and Administrative Law

National Grid, Providence, Rhode Island’s gas and electric provider, wishes to build a liquefaction plant that will turn natural gas from the Algonquin Pipeline into liquefied natural gas (LNG) and store it in an adjacent 127-foot tall storage tank at Fields Point in the South Side of Providence. National Grid will need a permit from the Federal Energy Regulatory Commission (FERC) to construct and operate the liquefaction plant. Meanwhile, the new plant faces opposition from two distinct groups of protestors: those that are opposed to fossil fuels and neighborhood residents who are tired of more industrial facilities being added to their largely minority-based community. However, FERC is not likely to see deliberate environmental racism in the permitting process and will likely approve the plant.

 

Providence, the capital of Rhode Island, is a city of about 180,000 people, sitting at the confluence of the Providence and Seekonk Rivers, which combine to form Narragansett Bay. The Port of Providence[1] is located along the eastern shore of Narragansett Bay on the South Side, which is comprised of roughly half Hispanic residents and a quarter African-American residents. By comparison, the city itself is about a quarter Hispanic and 16% African-American, with non-Hispanic whites comprising almost 40% of the population. The adjacent neighborhood of Fox Point (in the East Side), one of the oldest and most affluent parts of the city, is about 80% white and less than 10% Hispanic and African-American combined.[2]

 

Currently, besides National Grid’s LNG storage facility (which opened in 1974[3]), the Fields Point section of the South Side of Providence hosts a scrap yard, heating oil storage, propane storage, the metropolitan area’s wastewater treatment plant, a cement plant, a chemical packager, and storage for much of the area’s road salt. Interstate 95 bisects the South Side, running in between the neighborhoods and the port, bringing all of its noise and pollution, too.

 

Meanwhile, the more affluent East Side is home to Brown University, several public parks, and many valuable historic homes. Granted, industry exists in other parts of the city, but no other part of the city has as high a concentration of industry in one place as does the Port of Providence in the South Side.

 

The storage tank gets the LNG from tanker trucks, which deliver the gas around the clock.[4] In recent years, the storage tank has been vitally important to the area, since between 2000 and 2014, New England has shifted from getting 14% of its electric from natural gas to 44%.[5] At the same time, more and more customers are using natural gas to heat their homes, since it is generally cheaper than fuel oil. Every winter, though, the combination of almost half of the area’s power being generated from natural gas and people turning up their thermostats creates constraints on the pipeline, leading to shortages and price increases.[6] This is where the LNG tank is crucial, as it regasifies the LNG and pumps it into the local distribution system, making up almost 40% of the natural gas used on the coldest nights.[7]

 

All of the LNG in the tank is currently imported from overseas (particularly Yemen and Trinidad and Tobago), which is more expensive than gas from the Marcellus shale region of Pennsylvania. Gas from these countries is also subject to severe price volatility, both because of the relative instability of the countries themselves, and the increased demand in places like Japan that are switching to natural gas from nuclear power in light of Fukushima.[8]

 

National Grid’s current plan is to build a liquefaction plant on the site of the storage tank to take gas from the pipeline during shoulder months (those months that do not require as much for electric and heating, such as spring and fall months) and liquefy it.[9] Truck traffic would continue as before, but instead of putting gas into the tank, the trucks would remove it and take it other LNG storage tanks National Grid owns nearby.[10]

 

The Providence LNG facility has tried to expand twice before, but failed to do so in both cases. The more recent expansion attempt came a decade ago when the facility (under different ownership) tried to get a permit for a terminal for tanker ships to deliver the LNG instead of trucks.[11] While finding no significant environmental impacts, FERC refused to issue a permit because, even though the facility met all safety standards when it was built, it was not up to FERC’s current standards regarding impoundment capacity.[12] While LNG itself has an excellent safety record,[13] including no spills, FERC believed public policy concerns mandated current safety standards for an import terminal.[14]

 

In an earlier proceeding, FERC authorized National Grid’s predecessor to build a liquefaction plant on site, the very same action National Grid is trying to take now.[15] Noting that the environmental impact would be minimal due to the plant’s siting in an area “dedicated to industrial use for over a century” and its proximity to the pipeline,[16] FERC authorized a liquefaction plant to be built.[17] FERC was also persuaded in part by the owner’s assertion that, absent the plant, customers would “increase their use of oil or other less environmentally benign fuels.”[18] However, the prior owners never built the liquefaction plant due to changes in the market for natural gas.[19]

 

National Grid applied preliminarily to FERC for a permit to build the liquefaction plant.[20] Under the National Environmental Policy Act, FERC has to consider environmental impacts in issuing its permit and must “discover and address concerns the public may have[.]”[21]

 

In August of last year, National Grid hosted an open house to educate the community about the proposed liquefaction plant.[22] Protestors from various environmental and community groups showed up to voice their concern with the proposed liquefaction plant.[23] Some of the protestors were concerned with the added emissions that the plant would bring to the South Side, while other were protesting based on a general disapproval of fossil fuels.[24] One group thought the facility would be a danger if it exploded, while one thought it was moving the area in the wrong direction away from reduced demand for fossil fuel-based energy.[25] Then, in October, many protestors attended FERC’s open meeting in which they solicited public comment.[26] Again, some of the protestors were more concerned with the use of fossil fuels generally, while many were concerned with the air quality in the South Side particularly.

 

Currently, FERC is conducting an environmental assessment, as required under the Natural Gas Act. It can then either order a more in-depth environmental impact study or rule based on the assessment. If approved, National Grid expects to begin construction in 2016 and finish in 2018.[27]

 

Under the Natural Gas Act, FERC has “the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal.”[28] Opponents probably dislike that FERC has nearly all of the decision-making power, but natural gas is a national commodity.[29] Having one agency in charge of its infrastructure and distribution ensures that America has the capacity to meets its demand.[30]

 

Here, however, this national scheme leaves some (albeit, little) power for the state to step in and halt the liquefaction plant project itself. Even though FERC has exclusive jurisdiction for the facility itself, Rhode Island could still hold up the project based on powers it retains under the Clean Air Act and Coastal Zone Management Act, because those acts allocate to the states how to implement the federal law.[31] Rhode Island still needs to issue a water quality permit from the Coastal Resources Management Council due to the sites proximity to the Providence River and an air quality permit from the Department of Environmental Management for the backup power generator.[32] Rhode Island, though, recognizes that it gets 95% of its power from natural gas-fired power plants[33] and is already supporting a pipeline expansion and new natural gas-fired power plant in the northwest corner of the state.[34] It will likely not stand in the way of this project.

 

Meanwhile, FERC’s past decisions would seem to indicate that the protestor’s arguments will not get much traction. First, protestors argue that the liquefaction plant is a form of environmental racism, as practically all of the city’s emitting facilities are in the mostly minority-based South Side. FERC is not likely to agree with this notion. In a recent docket, FERC approved another liquefaction plant in Louisiana in an area that was also largely poor and minority.[35] FERC refused to believe that racial motivations were at play due to the proximity to the existing pipelines and utility rights of way.[36] Here, when FERC looks at the social impact of building a liquefaction plant, it will likely be swayed by the fact that National Grid is proposing to build the plant on property they already own adjacent to the existing storage tank and very close to the existing pipeline. If anything, FERC is likely to see this as convenience more than any racial motivation.

 

Second, the protestors’ claims about increased emissions are largely exaggerated. The plant itself will not emit pollutants during normal operations.[37] It will only release some methane when the system is turned on and off or when the backup generator is used.[38] The intermittent methane emissions will likely not come close to those of nearby Manchester Street Station, the city’s power plant, so FERC will probably conclude that the emissions are within an acceptable range.

 

Third, many protestors are concerned with the liquefaction plant because it is perpetuating reliance on fossil fuels. The fact is: the storage tank has been operating for 42 years. The plant would not change the amount of natural gas used, just its source. FERC’s only concerns will be the need for the plant locally and its local environmental impact. Any effects it has on a more general scale are irrelevant to FERC.[39]

 

If FERC issues the permit to build the liquefaction plant, litigation is certainly a possible course of action for the protestors. It is also likely a futile one. The D.C. Circuit’s review of FERC decisions is limited to whether they are arbitrary, capricious, an abuse of discretion, or contrary to law.[40] Likewise, FERC’s fact-findings are conclusive if supported by substantial evidence and the court will give “extreme” deference to FERC’s scientific analysis.[41] In FERC’s prior approval of a liquefaction plant on the site, FERC saw no real environmental concerns so long as the facility was built and operated in accordance with its application.[42] That trend is likely to continue, and with the convenience of the property being adjacent to the existing plant, the plant is not likely to be viewed as racially-motivated by FERC. The D.C. Circuit would be likely to agree.

 

-Matthew K. Stiles is an Associate Editor on MJEAL. He can be reached at mkstil@umich.edu.


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[1] Fields Point, a geographic landmark within the Port of Providence, is often used as a metonym for the port and is used interchangeably with it here.

[2] Demographic information was culled from a combination of U.S. Census data and provplan.org, which provides data as a pseudo-governmental non-profit.

[3] 112 F.E.R.C. ¶ 61,028, at *3 (2005).

[4] Id. at *4.

[5] ISO-New England, New England Power Grid 2014-2015 Profile (2015), http://www.iso-ne.com/static-assets/documents/2015/02/2015-powergridprofile-final.pdf.

[6] Another environmental debate in New England right now is the need to increase pipeline capacity, which could help solve the issue at hand here by reducing demand on LNG, but faces challenges from some of the same groups who oppose expanding the LNG facility.

[7] Press Release, National Grid, National Grid Plans Installation of New Equipment to Support Local Natural Gas Supply (July 16, 2015), http://www.nationalgridus.com/aboutus/a3-1_news2.asp?Document=9613 (hereinafter, National Grid Press Release).

[8] See id.; Alex Kuffner, National Grid Plans $100 Million LNG System at Fields Point in Providence, Providence J., July 15, 2015, http://www.providencejournal.com/article/20150715/NEWS/150719511.

[9] National Grid Press Release, n.8.

[10] Kuffner, supra n.9.

[11] 112 F.E.R.C. ¶ 61,028.

[12] Id. at *17. The storage tank has an impoundment area that would hold 100% of the tank’s contents should it be breached. Current standards require an impoundment area of 110%. Id. at *14.

[13] See Eileen Gauna, LNG Facility Siting and Environmental (In)justice: Is It Time for a National Siting Scheme?, 2 Envt’l & Energy L. & Pol’t J. 85, 102 (2007). Overall, LNG facilities have had two fires worldwide, one in Cleveland in 1944 and one in Algeria in 2004.

[14] Id. at *17.

[15] 79 F.E.R.C. ¶ 61,139 (1997).

[16] Id. at *6.

[17] Id. at *27.

[18] Id. at *6.

[19] 112 F.E.R.C. ¶ 61,028, at *18 n.24.

[20] National Grid LNG, LLC: Notice of Intent to Prepare an Environmental Document for the Planned Fields Point Liquefaction Project, Request for Comments on Environmental Issues, and Notice of Public Scoping Meeting, 80 Fed. Reg. 59,769 (Oct. 2, 2015).

[21] Id.

[22] Alex Kuffner, Groups Protest LNG Storage Tank Proposal at Fields Point in Providence, Providence J., Aug. 13, 2015, http://www.providencejournal.com/article/20150813/NEWS/150819647.

[23] Id.

[24] Id.

[25] Id.

[26] Steve Ahlquist, FERC Listens as No One Speaks in Favor of National Grid’s LNG Facility, RI Future (Oct. 9, 2015), http://www.rifuture.org/ferc-listens-as-no-one-speaks-in-favor-of-national-grids-lng-facility.html.

[27] Alex Kuffner, National Grid Plans $100 Million LNG System at Fields Point in Providence, Providence J., July 15, 2015, http://www.providencejournal.com/article/20150715/NEWS/150719511.

[28] 15 U.S.C. § 717b(e)(1).

[29] Kathryn E. Kransdorf, Note, Not on My Coastline: The Jurisdictional Battle Over the Siting of LNG Import Terminals, 17 Fordham Envtl. L. Rev. 37, 77 (2005).

[30] Id. at 77-78.

[31] See generally Joan M. Darby et al., The Role of FERC and the States in Approving and Siting Interstate Natural Gas Facilities and LNG Terminals After the Energy Policy Act of 2005 – Consultation, Preemption and Cooperative Federalism, 6 Tex. J. Oil Gas & Energy L. 335 (2010).

[32] Kuffner, supra note 24.

[33] U.S. Energy Information Administration, Rhode Island: State Profile and Energy Estimates (2013), http://www.eia.gov/state/?sid=RI.

[34] Alex Kuffner, $700-million ‘Clean’ Gas-fired Power Plant Proposed in Burrillville, Providence J., Aug. 4, 2015, http://www.providencejournal.com/article/20150804/NEWS/150809749.

[35] 147 F.E.R.C. ¶ 61,230 (2014); see also 148 F.E.R.C. ¶ 61,244, at *47 (2014).

[36] 147 F.E.R.C. ¶ 61,230, at *23. In the current Providence case, the liquefaction plant will take up less than 9 acres, which is significantly less than the 502 acres for the Louisiana project. See id. at *4.

[37] Tim Faulkner, National Grid Wants to Bring New Liquefied Natural Gas Project to Providence’s Industrial Waterfront, ecoRI News, Aug. 3, 2015, http://www.ecori.org/social-justice-archive/2015/8/3/national-grid-wants-to-bring-new-lng-project-to-providence-waterfront.

[38] Id.

[39] See 147 F.E.R.C. ¶ 61,230, at *10 (rejecting the Sierra Club’s concerns about a liquefaction plant’s effect on natural gas production nationally as outside the scope of the proposal).

[40] Id. at 1308.

[41] Id.

[42] 79 F.E.R.C. ¶ 61,139, at *24. Although FERC laid out many conditions for the liquefaction plant’s approval in an appendix, most of the conditions dealt with construction matters, not operational.

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