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Licensing Deepwater LNG Ports:
A Key Way to Help Solve America's Energy Problems
By Joan Bondareff
Joan M. Bondareff, Of Counsel for Blank Rome LLP, focuses her practice on marine transportation, environmental, and legislative issues. She represents clients in many industries in matters related to maritime regulations and public policy, environmental law, government relations, international law, federal grants, and port security. Ms. Bondareff is a member of Women in Government Relations and serves on the Homeland Security Task Force. Email: Bondareff@BlankRome.c om
In 1974, Congress enacted a little known law, the Deepwater Port Act (DWPA, 33 U.S.C. 1501-1524), to license ports located in federal waters for the importation of oil. The law was used to create the only offshore oil port known as LOOP. In 2003, Congress amended the DWPA to include liquefied natural gas (LNG) and establish improved procedures for licensing deepwater LNG ports. As the nation's energy demands increase, the DWPA has become an extremely attractive option for bringing LNG into the country. This article reviews the procedures, describes the approval process for successful projects, and makes suggestions on how to improve the process further.
The Federal Licensing Process
Under the DWPA, as amended, the Secretary of Transportation is responsible for the licensing decision. The U.S. Maritime Administration, MARAD, has been delegated the licensing decision, but MARAD and the U.S. Coast Guard have joint responsibility for processing applications for offshore LNG ports. To date, seventeen applications have been filed and seven have been approved. The DWPA creates a streamlined approval
process of 356 days from the date an application is filed with MARAD and the Coast Guard to the date a Record of Decision is issued. However, the agencies have the authority to stop the clock at any time they determine there is insufficient information or other problems with the processing of an application. The burden is on the applicant to address these issues and get the clock restarted. MARAD's role is to determine that an applicant's financial and U.S. citizenship requirements have been met before a final license is issued. For example, the applicant must demonstrate financial responsibility to own and operate the deepwater port, guarantee that the port will be removed at the end of the license term, and meet all financial obligations of the Oil Pollution Act of 1990. The role of the Coast Guard is to consider the marine navigation, safety and security aspects of the license, and to take the lead federal agency role with regard to the National Environmental Policy Act (NEPA). A full environmental impact statement (EIS) is prepared for each license. The applicant must pay an environmental consultant to assist the Government in preparing the EIS. The NEPA process provides the mechanism for applicants to consult, through the Coast Guard, with other interested federal agencies,
Footnotes 1 Section 106 of the Maritime Transportation Security Act of 2002, Pub. L. 107-295. 2 For more information on how LNG is used in the U.S. today, see the valuable website of the Center for LNG at www.LNGfacts.org. 3 From a list of current and planned Deepwater ports; see www.marad.dot.gov/dwp/lng/deepwater_ports/ index.asp. 4 "Deepwater Port Licensing Program, Meeting the Nation's Transportation, Security and Energy Needs" published by the Office of Deepwater Ports and Offshore Activities, Maritime Administration, p.2 (hereafter Program). 5 Program at 8. 6 33 U.S.C. 2701 et seq. 7 Program at 8. 8 For a good description of this process, see www.marad.dot.gov/DWP/LNG/. 9 www.epa.gov/opei/lng/regroadmp_508.pdf. 10 www.arb.ca.gov/html/brochure/history.htm. 11 Letter posted on MARAD's web site on June 1, 2007; www.marad.dot.gov/dwp/lng/port_news/news_ detail.asp?ID=44. 12 For a complete record of decisions by the Secretary of Commerce on CZMA consistency appeals, see www.ogc.doc.gov/czma.htm.
20 MTR
November/December 2008
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