NVIC 01-11: Guidance on waterfront LNG facility applications

U.S. Department o~. Commandant 2100SecondSI., SWSTOP7126 Homeland Security .,,,,,,'iJ!' . United StatesCoastGuard Washington, DC20593-7126 s;1II. StaffSymbol: CG-522 United States ~ Phone: (202)372-1410 Fax: (202)372-1926 Coast Guard COMDTPUB P16700.4 NVIC 01-2011 J'A,1 t q l _'l fj ~. NAVIGATION AND VESSEL INSPECTION CIRCULAR (NVIC) NO. 01-2011 Subj: GUIDANCE RELATED TO WATERFRONT LIQUEFIED NATURAL GAS (LNG) FACILITIES Ref: (a) Title 33 Code ofFederal Regulations (CFR) Part 127 (b) Interagency Agreement among the Federal Energy Regulatory Commission, U.S. Coast Guard, and Research & Special Programs Administration for the Safety and Security Review ofWaterfront Import/ExportLiquefied Natural Gas Facilities, signed Feb 200··l (Interagency Agreement) (c) Title 18 Code ofFederal Regulations (CFR) Part 157 (d) Navigation and Vessel Inspection CircularNo.10-04, Guidelines for Handling ofSensitive Security Information (SSI), COMDTPUB P16700.4 (e) SandiaNational Laboratories Report SAND2004-6258, "Guidance onRisk Analysis ald Safety Implications ofaLarge Liquefied Natural Gas (LNG) Spill Over Water", dated December 2004 (f) SandiaNational Laboratories Report SAND2008-3153, "Breachand Safety Analysis f Spills over Water from Large Liquefied Natural Gas Carriers", dated May 2008 (g) Risk-Based Decision-Making, COMDTINST M16010.3 (series), and Risk-Based Decision-Making Guidelines, 3rd ed. (http://www.uscg.mil/hq/cg5/cg5211/risk.asp) (h) Section 813 ofthe Coast Guard AuthorizationAct of2010, (Public LawNo. 111-281)

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — PURPOSE.

a. The purpose ofthis NVIC is to provide guidance to: (1) An owner or operator seeking approval from the Federal Energy Regulatory Commissicofi (FERC) to build and operate aLNG facility, as defined in 33 CFRPart 127, and; DISTRIBUTION-SDLNo 156 a b c d e f g h i j k 1 m n 0 p q r s t u v w x y z A B 8 5 1 1 1 2 5 C D 1 2 1 1 1 E 2 F 1 1 G H Navigation and Vessel Inspection Circular No. 01-2011 (2) The Coast Guard as it assesses LNG marine operations under its regulations, noted in reference (a), and fulfills its commitment to FERC as outlined in reference (b). b. This NVIC replaces NVIC 05-08 (series) and reflects updated information and experience gained since NVIC 05-08 Change 1 was released on March 18, 2009. In particular, the Coast Guard has revised the format of the Letter of Recommendation (LOR) to conform to its intended effect of being a recommendation to FERC as to the suitability of the waterway. The Coast Guard has added guidance on release of the LOR and message management, and we have provided an updated template for the LOR Analysis. This NVIC may be updated further as more information comes to light regarding risks and risk management measures for the marine transportation of LNG. c. This NVIC clarifies the timing and scope of the process, pursuant to FERC regulations (reference (c)), that is necessary to ensure that full consideration is given to safety and security of the port, the facility, and the vessels transporting the LNG. It provides various guides and letter templates that can be used by Coast Guard and industry personnel as appropriate. d. This NVIC does not address LNG Deepwater Port (DWP) facilities licensed under the DWP Act of 1974 (33 U.S.C. § 1501, et seq.), as amended, nor does it apply to facilities that handle liquefied hazardous gases other than LNG.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — ACTION.

a. An owner or operator intending to build a new facility handling LNG, or an owner or operator planning new construction to expand or modify marine terminal operations in an existing facility handling LNG where the expansion or modification results in an increase in the size and/or frequency of LNG marine traffic on the waterway associated with a proposed facility or modification to an existing facility, or prospective applicants requesting authorization from FERC to site, construct, and operate an LNG terminal and required to comply with 18 CFR 157.21(a), (Hereinafter “Applicant”) should refer to this NVIC for process information and guidance (enclosures (1) and (2)) on how to complete a Waterway Suitability Assessment

(WSA). To allow for timely review, owners and operators should submit a Letter of Intent

(LOI) to the Coast Guard as early in the process as possible. FERC regulations at 18 CFR 157.21 and USCG regulations at 33 CFR 127.007 require the prospective applicant to submit the LOI and WSA to the Coast Guard no later than the prospective applicant’s pre-filing submission to FERC. b. The Coast Guard Captain of the Port (COTP) should refer to enclosures (3) and (4) for guidance on reviewing and validating WSAs and enclosures (5) and (6) for guidance on writing a LOR and a LOR Analysis. c. The COTP should notify Commandant (CG-522) and Commandant (CG-741), through his or her chain of command, as soon as a LOI is received. Additionally, due to the multifaceted considerations regarding a proposed LNG facility, COTPs should ensure Commandant (CG- 522) and Commandant (CG-741), as well as the respective Area and District commands, are provided with pre-release copies of official correspondence related to proposed LNG facilities in their area of responsibility. Navigation and Vessel Inspection Circular No. 01-2011 d. Enclosure (7) to this NVIC contains Sensitive Security Information (SSI); therefore, it is not subject to public disclosure. If disclosed, the SSI could be used to subvert or exploit the security programs of vessels, facilities, or ports. SSI material requires appropriate handling in accordance with 49 CFR Part 1520 and reference (d). Members of the maritime industry, members of federal, state, or local government agencies, and other parties who can demonstrate a need to know should contact the cognizant COTP or Commandant (CG- 522) for information on how to submit a request for enclosure (7). This NVIC will be distributed, without enclosure (7), by electronic means only. It is available on the World Wide Web at www.uscg.mil/hq/g-m/nvic/index00.htm.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — DIRECTIVES AFFECTED. Navigation and Vessel Inspection Circular (NVIC) 05-08,

GUIDANCE RELATED TO WATERFRONT LIQUEFIED NATURAL GAS (LNG) FACILITIES and NVIC 05-08 Change 1, are superseded by NVIC 01-2011.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — BACKGROUND.

a. LNG History. In the late 1800s it was discovered that natural gas could be converted to a liquid by cooling it to about –260°F. By the 1950's there was enough commercial demand for natural gas in the U. S. for the country to seek supply sources from overseas. Since LNG takes up 600 times less space than in its gaseous form, the most economical way to import natural gas from overseas is to liquefy it and transport it via LNG tankers. The first LNG tanker went into operation in 1959. Since that time, all LNG tankers have been built to rigorous international standards and have had an excellent safety record in 50 years of service. b. LNG Safety. A number of studies and reports have been published about the safety of LNG tankers, with varying conclusions about the likelihood and consequences of a large LNG marine spill. In order to provide the federal government and general public with a clearer picture of the risks associated with LNG tankers, the Department of Energy (DOE) tasked Sandia National Laboratories to perform an independent review of these studies and reports and then develop their own conclusions about the risks associated with LNG tankers. They were also tasked with developing guidance on a risk-based approach to assess and quantify potential threats to an LNG ship, to review the potential hazards and consequences of a large spill from an LNG ship, and review risk management strategies that could be implemented to reduce both the potential for, and the risks of, an LNG spill over water. The Sandia Labs Reports, references (e) and (f), provide the foundation for the Coast Guard’s current position on LNG safety and provide a basis for evaluating the risks associated with LNG marine traffic. c. FERC and Coast Guard Interagency Agreement. In February 2004, the Coast Guard, FERC, and the U.S. Department of Transportation (DOT) entered into an Interagency Agreement

(reference (b)). Under this agreement, the agencies agreed to work together to ensure that both land and marine safety and security issues are addressed in a coordinated and comprehensive manner. In particular, the Coast Guard is identified as a cooperating agency to FERC for the Environmental Impact Statement (EIS) process, serving as a subject matter expert on maritime safety and security issues. The agencies also agreed that maritime safety and security-related information would be addressed by FERC in its EIS process required under the National Environmental Policy Act (NEPA), and disclosed to the public to the extent permitted by law. Navigation and Vessel Inspection Circular No. 01-2011

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — DISCUSSION.

a. Roles and Responsibilities of Involved Parties.

(1) Role of FERC. FERC has the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal located onshore or in state waters. This includes LNG facilities that are built beyond the shoreline but are located within state waters and, therefore, do not fall under the jurisdiction of the Deepwater Port Act, as amended (33 U.S.C. § 1501, et seq.). FERC is the lead federal agency responsible for ensuring proposed LNG projects comply with the requirements of NEPA, and for preparing the required environmental documents.

(2) Role of Coast Guard.

The Coast Guard exercises regulatory authority over waterfront LNG facilities and the associated LNG vessel traffic, which affect the safety and security of port areas and navigable waterways, under Executive Order 10173; the Magnuson Act (50 U.S.C. § 191); the Ports and Waterways Safety Act of 1972, as amended (33 U.S.C. § 1221, et seq.); the Maritime Transportation Security Act of 2002 (46 U.S.C. § 701), and the Safety and Accountability For Every Port Act (46 U.S.C. § 70101).

The Coast Guard is also responsible for matters related to navigational safety, vessel engineering and construction safety standards, and matters pertaining to the safety of facilities or equipment located in or adjacent to navigable waters.

As a cooperating agency in FERC’s NEPA analysis, and in accordance with references (a) and (h), the Coast Guard provides FERC with a recommendation on the suitability of the waterway to support marine traffic associated with the proposed facility.

The Coast Guard also regulates the safety and security of LNG facilities in accordance with 33 CFR parts 101, 105, and 127.

Under the auspices of the Port State Control Program and international conventions, the Coast Guard assesses the safety and security of LNG carrier operations while at berth and during transit to and from the LNG facility while in U.S. territorial waters.

In addition to acting as a cooperating agency to FERC, the Coast Guard reviews the owner or operator's LOI and WSA, assesses the suitability of the waterway covered under the LOI and WSA, and issues an LOR under its regulations.

The LOR with LOR Analysis attached, enclosures 5 and 6, is provided to FERC (as the siting authority) and to the state and local authorities having jurisdiction, to help assist with their decisions concerning the approval of the LNG facility.

These documents are also provided to the facility owner and/or operator.

Nothing in this NVIC prohibits the COTP from using his or her authority under the Magnuson Act, as codified in 50 U.S.C. § 191 and implemented in 33 CFR Part 6, the Ports and Waterways Safety Act, as codified at 33 U.S.C. § 1221, et seq., and implemented in 33 CFR Parts 127 and 160, the Safety and Accountability For Every Port Act (46 U.S.C. § 70101 et seq, as amended), and the Maritime Transportation Security Act, as codified at 46 U.S.C. § 70101, et seq., and implemented in 33 CFR Parts 101 to 106, to prohibit LNG transfer operations or LNG vessel movements within his or her area of responsibility if he or she determines that such action is necessary to protect the waterway, port, or marine environment.

Navigation and Vessel Inspection Circular No. 01-2011

(3) Role of Waterfront LNG Facility Applicant. The owner who intends to build a new LNG facility, or owner or operator who plans new construction at an existing LNG facility, is responsible for researching, analyzing, and preparing various reports, forms, and applications either as called out by federal regulations or as requested by the regulating agencies during the course of their review of the applicants’ proposed project applications. This may include, but is not limited to: submitting a LOI; completing supplemental modeling studies if deemed necessary; conducting the WSA; and developing plans such as the Emergency Response Plan and Cost Sharing Plan, and the optional Transit Management Plan.

(4) Role of Local Committees. Area Maritime Security Committees (AMSCs), Harbor Safety Committees (HSCs), and other relevant committees, subcommittees, or workgroups can help provide local knowledge and experience about the local port community. Their assistance in helping the applicant develop the WSA, and helping the COTP with review and validation of the WSA, is highly encouraged.

(5) Role of other Port Stakeholders. Keeping in mind due regard for the protection of SSI and/or commercial proprietary information, COTPs are encouraged to include other port stakeholders in the WSA process who may not be represented by the AMSC, HSC or other established committees. This may include members of the general public, as appropriate.

(6) Role of State and Local Governments. State and local governments have an interest in the activities occurring in the port areas and waterways under their jurisdiction. They also have an important public safety role and are essential in helping plan and prepare for emergencies. Representatives of each should be invited and encouraged to participate in the review and validation of the WSA as port stakeholders. Enclosure (12) is a sample letter which should be used to inform, identify and invite state representatives to participate in the WSA process. A similar letter, addressed to the head of the local government (e.g. county, borough, municipality, city or town), may be used to inform and identify local government representatives in a similar manner. Reference (h) requires the Coast Guard to consider recommendations from the state prior to providing FERC a recommendation on the suitability of the waterway for handling LNG marine traffic.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — IMPLEMENTATION. The guidance provided in this NVIC applies to all LNG facilities, as

defined by 33 CFR Part 127, for which FERC has not completed its final environmental analysis as of the date of this NVIC.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — DISCLAIMER. Each COTP has discretionary authority on how best to address specific safety and

security concerns within his/her area of responsibility. Nothing in this NVIC is meant to override or subvert the discretion of the COTP when addressing the unique safety and security concerns for an LNG operation. This guidance is not a substitute for applicable legal requirements, nor is it itself a rule. It is not intended to nor does it impose legally-binding requirements on any party. It represents the Coast Guard’s current policy on this topic and may assist industry, mariners, the general public, and the Coast Guard, as well as other federal and state regulators, in applying statutory and regulatory Navigation and Vessel Inspection CircularNo. 01-2011 requirements. You may use an alternative approach for complying with these requirements ifthe approach satisfies the requirements ofthe applicable statutes and regulations. Ifyou want to discuss an alternative approach, you may contact the Office ofOperating and Environmental Standards, Commandant (CG-522) which is responsible for promulgatingthis guidance.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — PAPERWORK REDUCTION ACT. This NVIC describes a collection ofinformation. An agency

may not conduct or sponsor, and a person is not required to respond to, an information collection that does not display a currently valid Office ofManagement and Budget (OMB) control number. Submission ofa LOI and WSA is required by Coast Guard regulations at 33 CFR 127.007, for which the relevant OMB control number is 1625-0049. Submission ofa WSA is also required by FERC regulations at 18 CFR 157.21, for which the relevant OMB control numbers are 1902-0060, 1902-0062 and 1902-0128.

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — CHANGES. This NVIC will be posted onthe web at: www.uscg.mil/hg/g-m/nvic/indexOO.htm.

Changes to this NVIC will be issued as necessary. Questions or suggestions for improvements of this NVIC should be submitted in writing to: COMMANDANT (CG-5222) ATTN: VESSEL & FACILITY OPERATING STANDARDS DIVISION US COAST GUARD 2100 2ND ST SW STOP 7126 WASHINGTON DC 20593-7126

Guidance Related to Waterfront Liquefied Natural Gas (LNG) Facilities — FORMS REPORTS. None.

P.F. Z KUNFT Assistant Commandant for Marine Safety, Security, and Stewardship End: (1) Overview - Process and Procedures Associated with Waterfront LNG Facilities (2) Guidance on Conducting a WSA for LNG Marine Traffic (3) Guidance on Reviewing a WSA and Issuing a LOR and a LORAnalysis (4) Checklist for Reviewing a WSA for LNG Marine Traffic (5) Sample LOR (6) Sample Analysis Supportingthe Letter ofRecommendation (7) Risk Management Quick-Reference Tool (Sensitive Security Information, see paragraph 2.d for guidance on how this enclosure will be distributed) (8) Sample Table ofContents for the Optional Transit Management Plan (9) "Zones ofConcern" for Intentional LNG Spills from Vessels up to 265,000 m Cargo Capacity (10) LNG TankerNationality Letterto FERC (11) Sample Press Release (12) Sample Letterto Governor (13) Memo Template for Documenting Anticipated CG Resource Needs (14) List ofAcronyms