PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following revised rule:
Proposed Action:
Addition of Part 570 to Title 6 NYCRR.
Statutory authority:
Environmental Conservation Law, art. 23, title 17 and section 3-0301(2)(a), (m)
Subject:
Liquefied Natural Gas (LNG).
Purpose:
To establish criteria for the siting of and to require DEC permits for LNG facilities per ECL article 23, title 17.
Substance of revised rule:
This rulemaking is proposed by the New York State Department of Environmental Conservation (DEC) to adopt 6 NYCRR Part 570, the statewide regulations that would implement safe siting, operating, and transportation requirements in New York State (the State) for Liquefied Natural Gas (LNG) facilities under Article 23, Title 17 of the Environmental Conservation Law (ECL). Adoption of Part 570 would allow DEC to permit the siting, construction, and operation of LNG facilities in response to the renewed interest in locating LNG facilities (particularly heavy-duty truck fueling facilities) in the State. Part 570 also addresses the transportation of LNG and the statutory requirement that intrastate transportation only occur along approved routes. The following summarizes proposed 6 NYCRR Part 570.
Section 570.1: INTRODUCTION
Section 570.1 sets out the general purpose, applicability, definitions, exemptions, severability, and enforcement provisions of Part 570. The purpose of this section is to ensure the orderly and efficient administration of ECL Article 23, Title 17 at LNG facilities throughout the State. Consistent with Title 17, this Part does not regulate compressed natural gas or liquefied petroleum gas. These regulations do not require permits for vehicles or vessels that are fueled by LNG but do regulate dispensing facilities (fueling stations) that store LNG.
Section 570.2: PERMIT REQUIREMENTS and APPLICATION PROCEDURES
Section 570.2 applies to the permit requirements and application procedures for LNG facilities, including an explanation of the permit application process; contents of an application; criteria for siting; permit issuance, duration and renewal; public participation guidelines; modification of permit and change of ownership; permit suspension or revocation; and permit application fees and costs. This section also outlines the required procedures to obtain a permit. This section includes an upper limit of 70,000 gallons on the total amount of LNG that will be allowed to be stored at a permitted facility.
Section 570.3: SITE INSPECTIONS, RECORDKEEPING, and TRAINING of LOCAL FIRE DEPARTMENT PERSONNEL
Section 570.3 applies to site inspections, recordkeeping, and training of local fire department personnel. Applicants for permits shall offer emergency training for local fire department staff, and such equipment and personnel as may be required. Compliance with training and inspection requirements can either be determined by DEC’s personnel or third parties who are qualified to monitor compliance. This section also specifies which records must be maintained at all LNG facilities, and which must be either maintained at the facility or provided to DEC within three business days of DEC’s request.
Section 570.4: TRANSPORTATION of LNG
Section 570.4 explains the intrastate and interstate transportation requirements of LNG within the State. The regulations prohibit the intrastate transportation of LNG unless the intrastate transportation route has been certified as set forth in subdivision 570.4(a). In reviewing the requirement within the ECL for certified routes (ECL section 23-1713), the State Department of Transportation has determined that since certified routes are not established for other hazardous materials, it would be impracticable to establish certified routes for LNG from sources within the State. For that reason, intrastate transportation of LNG would not be allowed under Part 570. Consistent with ECL Article 23 Title 17, the proposed regulations do not require certification of routes from out-of-state sources of LNG.
Section 570.5: PRE-EXISTING FACILITIES
Section 570.5 sets forth the requirement for pre-existing facilities to comply with the rules and regulations of this Part and the procedures outlined in the LNG Statute. There are three facilities which fit this situation: National Grid’s Holtsville and Greenpoint facilities, and Con-Edison’s Astoria plant. These facilities operate pursuant to DEC Orders issued in 1979.
Section 570.6: PERMANENT CLOSURE of OUT-OF-SERVICE LNG STORAGE TANKS
Section 570.6 establishes the requirements for the permanent closure of out-of-service LNG storage tanks, referring to engineering guidelines and procedures that must be complied with to ensure proper closure.
Section 570.7: FINANCIAL ASSURANCE
Section 570.7 states that financial assurance, the form and amount of which will be established by DEC, may be required to ensure proper closure of LNG facilities.
Section 570.8: REPORTING OF LNG SPILLS
Section 570.8 explains the requirements for reporting a spill of LNG at a permitted facility. Spills of one gallon or more, or lesser amounts that result in a fire or explosion, must be reported.
Section 570.9: EFFECT ON MORATORIUM
Section 570.9 pertains to the existence of a moratorium on the siting of LNG facilities in cities with populations of one million or more. It emphasizes that the LNG regulations will not affect any statutory moratorium. In May 2013, the moratorium was extended to April 1, 2015.
Section 570.10: REFERENCES
Section 570.10 provides a listing of reference materials that are cited in 6 NYCRR Part 570, including those that are incorporated by reference, and explains how they can be obtained for inspection and/or purchasing.
Revised rule compared with proposed rule:
Substantial revisions were made in section 570.2(a), (b)(5), (k)(4). Non-substantive revisions were made in sections 570.1(a)-(d), 570.2(a)-(e), (i)-(k), 570.3(a)-(e), 570.4(a)-(b), 570.5, 570.6, 570.8-570.10.
Text of revised proposed rule and any required statements and analyses may be obtained from
Andrew English, NYS Department of Environmental Conservation, 625 Broadway, Albany, NY 12233-7020, (518) 402-9553, email: derweb@dec.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
30 days after publication of this notice.
Additional matter required by statute:
Negative Declaration, Coastal Assessment Form, and Short Environmental Assessment Form have been completed for the proposed rule making.
Summary of Revised Regulatory Impact Statement
This revised rulemaking is proposed by the New York State Department of Environmental Conservation (DEC) to adopt 6 NYCRR Part 570, to implement requirements for the safe siting and operation of Liquefied Natural Gas (LNG) facilities and transportation of LNG under Environmental Conservation Law (ECL) Article 23, Title 17 (the LNG statute). Adoption of Part 570 would allow DEC to permit the siting, construction, and operation of LNG facilities in response to the renewed interest in locating LNG facilities (particularly heavy-duty truck fueling facilities) in New York State (the State). Part 570 also addresses the transportation of LNG and the statutory requirement that intrastate transportation only occur along approved routes.
Use of LNG in heavy-duty trucks has environmental advantages over the use of diesel fuel because of reduced greenhouse gas and other emissions. Other states allow LNG storage, conversion and transportation. As a result, LNG refueling stations may be operated in such other states. New York has not permitted the construction of any LNG facilities since the LNG statute was adopted. There are three “grandfathered” peak shaving facilities in New York City and on Long Island operating under DEC Orders in accordance with ECL section 23-1719. Adoption of Part 570 would allow DEC to consider applications for environmental safety permits for new facilities and address renewed interest in siting LNG facilities.
1. Statutory Authority
The statutory authority for Part 570, and guidance as to its contents, is found in ECL sections 1-0101, 3-0301, and the LNG statute. The full Regulatory Impact Statement (RIS) discusses each of these statutory sections. Key provisions are summarized below.
ECL section 1-0101 declares a policy of the State to conserve, improve and protect its natural resources and environment and to prevent, abate and control water, land and air pollution in order to enhance the health, safety and welfare of the people and their overall economic and social wellbeing. ECL section 3-0301 empowers DEC to adopt regulations as may be necessary to effectuate that environmental policy. ECL section 23-1709 requires DEC to adopt regulations for the safe siting and operation of LNG facilities. Various sections of the LNG statute specify the requirements for implementation of an LNG program in the State.
2. Legislative Objectives
ECL section 23-1703 sets forth the legislative findings and purpose of the LNG statute to control and regulate the siting of LNG facilities for the protection of public health, the environment, and economic welfare of the people of the State. ECL section 23-1703 emphasizes the need to minimize the siting of LNG storage, transportation and conversion facilities in residential areas or in proximity to contiguous populations and to protect such areas from potential hazards associated with transportation of LNG.
A regulatory program for LNG facilities would further the objectives of the LNG statute and ECL section 23-1709 specifically by establishing a permitting program to appropriately site LNG facilities in locations that encourage the best usage of land and minimize the risk of potential environmental and safety impacts. As required by the LNG statute, the proposed rules prohibit intrastate transportation of LNG until routes are approved. Part 570 dovetails with federal standards applicable to LNG storage and transportation, as detailed in the full RIS. Like the underlying LNG statute, the proposed rules would not impede interstate commerce.
Section 570.1 contains general provisions, including purpose, applicability, definitions, and exemptions. These regulations, consistent with the LNG statute, would not regulate compressed natural gas or liquefied petroleum gas, or require permits for vehicles or vessels fueled by LNG.
Section 570.2 implements objectives of ECL 23-1707, 23-1709 and 23-1711. It sets forth permit application procedures; public participation guidelines; permit modification and change of facility ownership; permit suspension or revocation; permit application fees; and costs. In a substantial change from the proposed regulations, this section has been revised to limit the capacity of permitted LNG facilities to 70,000 gallons. This change addresses concerns embodied in public comments regarding safety of larger facilities.
Section 570.3 implements provisions of ECL 23-1715 that authorize DEC, or qualified third parties, to inspect permitted facilities, and requires that LNG facilities offer, at the applicant’s cost, emergency training for local fire department staff. The revised rule also clarifies that permitted facilities must maintain certain records.
Section 570.4 implements objectives of ECL 23-1713. It prohibits the intrastate transportation of LNG unless the intrastate transportation route has been certified. Because no routes are currently approved, intrastate transportation of LNG is prohibited. Consistent with the LNG statute, the proposed regulations do not affect interstate LNG transport.
Section 570.5 implements ECL 23-1719 and addresses “grandfathered” LNG facilities. No permits are required for these facilities, three of which currently operate in New York, unless capacity is increased. In the proposed rule noticed on September 11, 2013, these facilities were called “non-conforming” consistent with language used in ECL 23-1719. In response to public comments, in the revised proposed rule these facilities are referred to as “pre-existing” facilities.
Section 570.6 requires out-of-service LNG tanks to be permanently closed pursuant to certain engineering guidelines and procedures. This section includes procedures similar to those required for out-of-service petroleum bulk storage tanks to ensure protection of public safety and the environment.
Section 570.7 states that financial assurance, the form and amount of which will be established by DEC, may be required to ensure proper closure of LNG facilities.
Section 570.8 requires LNG spills to be reported to ensure protection of public safety and the environment.
Section 570.9 states that Part 570 will not affect any statutory moratoria.
Section 570.10 provides a listing of reference materials that are cited in 6 NYCRR Part 570.
3. Needs and Benefits
Without Part 570, new LNG facilities cannot be constructed or operated in the State. In recent years, several companies have proposed LNG operations in the State. Commercial vehicle manufacturers and operators have expressed interest in replacing diesel engines with those that run on LNG.
A 1998 New York State Energy Research and Development Authority (NYSERDA) report found that New York was the only state in the nation with a moratorium on LNG facilities, even though LNG facilities have been operated safely elsewhere. The report recommended the moratorium be lifted, which occurred on April 1, 1999, except for New York City. The report also recommended the repeal of the LNG statute.
A second NYSERDA LNG report (2011) analyzed the “state-of-the-art” of LNG activities in the U.S., and provided facility, job and cost projections in the event LNG regulations were promulgated. The report confirmed that the recent lower price of LNG compared with other fuels has increased its demand in the transportation sector, and that most states use NFPA Standards 52 and 59A, which are comprehensive standards for the construction and operation of LNG facilities. The report also documented the environmental benefits of LNG.
The 2011 study also estimated the type and number of LNG permits expected to be issued in the State if the regulations were promulgated. These included: (1) LNG import/export terminals, which would require federal approval; (2) peak shaving plants that produce/store/vaporize LNG; (3) regional LNG production facilities (relatively large quantities); (4) LNG production at natural gas wells; (5) LNG production at facilities with access to a natural gas pipeline; and (6) LNG fueling facilities without on-site production of LNG. Using various methods, the report estimates that between 10 and 25 facilities (best estimate 21) would be permitted in the first five years after adoption of regulations. The most common LNG facilities in this first five years are expected to be fueling facilities. This report also indicates that the great majority of, if not all, facilities that would be permitted in the first five years of the program would have storage capacities less than 70,000 gallons. The 70,000 gallon limit on facility capacity for a permitted LNG facility, which is proposed in this revised rulemaking, would greatly curtail, if not eliminate, the possibility of new peak shaving facilities and regional LNG production facilities. As noted above, LNG import or export facilities would be primarily under federal jurisdiction.
4. Costs
a. Costs to regulated community
Applicants for LNG permits will have to submit application fees for each new permit, renewal, or transfer, based on the facility’s LNG storage capacity. If the capacity is less than 1,100 gallons, the fee for a five-year permit is $100; 1,100 gallons to 10,000 gallons: $500; 10,001 to 70,000 gallons: $1,000. In addition, DEC is authorized to recover costs incurred in implementing the program.
Applicants must provide any additional training, equipment, or personnel determined by DEC to be necessary. Costs for training would range from $1,000 to $5,000 per firefighter, depending on their numbers and experience levels. Subsequent annual refreshers would range from $200 to $500.
b. Costs to DEC, State, and Local Government
Promulgation of these regulations is required by the LNG statute. DEC expects the State to recoup its costs for implementing the program through permit application fees and recovery of SEQRA and administrative costs from the facility.
Costs to other state agencies are to: 1) Office of Fire Prevention and Control (OFPC) for the Fire Administrator’s review of applications to determine capabilities of local fire departments; and 2) New York State Department of Public Service (NYSDPS) for inspection of facilities covered by the Public Service Law. These responsibilities can be fulfilled with those agencies’ current staff.
Costs to local governments will be paid for by applicants. Thus, there will be no, or de minimis, costs to local governments.
c. Basis of Cost Estimates
The cost estimates contained herein are from the 2011 NYSERDA LNG report and DEC staff’s best professional judgments based on years of experience with many environmental regulatory programs. Both the 1998 and 2011 NYSERDA reports are incorporated herein by reference and available on DEC’s website.
5. Local Government Mandates
No recordkeeping, reporting, or other requirements beyond what is required by the LNG statute would be imposed on local governments by this rulemaking.
6. Paperwork
Applicants must submit completed applications to DEC for a permit. In addition, there are record-keeping requirements and reporting obligations for spills of LNG of one gallon or more, or lesser amounts that result in a fire or explosion. These obligations are consistent with the legislative intent and would not cause any undue costs or burdens.
7. Duplication
Three federal agencies, the Federal Energy Regulatory Commission (FERC), Department of Transportation (USDOT), and Coast Guard (USCG), have jurisdiction over LNG safety issues. Under the Natural Gas Act, FERC issues certificates authorizing the siting and construction of onshore and near-shore LNG import or export facilities, and has jurisdiction over LNG peak shaving facilities used in interstate commerce. FERC also issues certificates of public convenience and necessity for LNG facilities engaged in interstate natural gas transportation by pipeline. In addition, NFPA standards have been adopted by numerous state and federal agencies.
Finally, USCG has authority over the design, construction, manning, and operation of ships and barges that transport LNG, and marine transfer areas of import/export facilities. Currently, no import and/or export terminal facilities are operating in the State.
At the State level, NYSDOT, NYSDPS, NYSERDA and OFPC have regulatory jurisdiction over, and/or input into, certain aspects of the production, storage, transportation, and use of LNG. In drafting Part 570, DEC worked with all affected state agencies to minimize the impact of any duplication, overlap or conflict on the regulated community.
8. Alternatives
If Part 570 is not promulgated, DEC cannot issue permits for LNG facilities. DEC has rejected this alternative because the LNG statute requires that DEC promulgate regulations to permit LNG facilities, and under a “no action” alternative, the economic, environmental, and energy benefits of these projects would be lost.
9. Federal Standards
No federal standards will be exceeded by promulgating the proposed rule.
10. Compliance Schedule
The regulated community would be required to comply upon adoption of the proposed regulations.
Revised Regulatory Flexibility Analysis
1. Effect of Rule
The LNG regulations will apply statewide except where new facilities are prohibited by law (currently in New York City). They provide opportunities for small businesses and local governments to construct and operate LNG facilities. The result will be to allow LNG to be stored and used across New York State (the State) at a time when economic conditions are creating significant demand for this alternative fuel. The primary anticipated uses of LNG are in the transportation sector (long-haul trucks) and as a source of heating fuel (space heating, steam production, and industrial uses). Construction and operation of new LNG facilities, without a permit provided by the revised proposed regulations, is prohibited under Environmental Conservation Law, Article 23, Title 17 (the LNG statute).
2. Compliance Requirements
The implementation of these regulations will not adversely affect small businesses or local governments since there are no substantive reporting or record keeping requirements for small businesses or local governments as a result of the proposed rule making. The reporting obligations contained in the regulations are derived from the LNG statute.
3. Professional Services
Professional services will be required by applicants to prepare applications for facility permits, design facility structures, ensure that all aspects of the facility are in compliance with applicable building, fire, and safety requirements, maintain the facility, and eventually close the facility. Through outreach efforts, the New York State Department of Environmental Conservation (DEC) will make information available on DEC’s web site, including answers to questions about the new regulations. Future public workshops (meetings) are anticipated to be scheduled as needed.
4. Compliance Costs
Small businesses and local governments should not incur any additional costs, either initial capital costs or annual compliance costs to comply with the proposed rulemaking beyond what are required for obtaining a permit to construct/operate and normal business costs. It is estimated that the cost to obtain a permit under these regulations would be approximately $10,000 in addition to the cost to provide specialized training to local fire departments, if needed. Permit application fees would range between $100 and $1,000. In addition DEC is authorized to recover costs from the facility to implement the program. Facilities with more than 70,000 gallons capacity would not be allowed under the revised proposed regulations.
5. Economic and Technological Feasibility
The proposed rulemaking enacts into regulation State statutory requirements. It is expected to increase economic growth throughout the State. The proposed rulemaking causes no added economic burdens and requires no additional sophisticated environmental control technology, other than that which may be required by statute and for the facility to be in compliance with existing building and fire safety standards. Accordingly, implementation of these rules will be economically and technologically feasible for small businesses and local governments.
6. Minimizing Adverse Impact
It is DEC's belief that the proposed regulations will not cause a significant economic burden to the small business community or local governments. Promulgating regulations that will establish criteria for the siting and storage of LNG facilities will enhance the State’s ability to attract the LNG industry and corporations to provide the public and business communities with an alternative (clean) fueling source. This will provide an economic growth opportunity for the State. In addition, LNG is a cleaner burning fuel, providing significant environmental benefits, and is less expensive than other fuels for uses such as space heating and steam production.
The revised proposed rulemaking does not place any additional burdens on the small business community or local governments or increase the universe of regulatory requirements applicable to the small business community or local governments beyond that which is required by the LNG statute.
Safe production, storage, utilization and transportation of LNG throughout the State will very likely produce substantial economic, environmental, and energy benefits for the entire State with the implementation of statutory requirements of the LNG statute via the promulgation of 6 NYCRR Part 570.
7. Small Business and Local Government Participation
DEC will continue to provide a statewide outreach program to regulated communities and interested parties, including small businesses and local governments. An invitation only Stakeholders Meeting was held on Wednesday, February 27, 2013 at the DEC office in Albany, New York. Persons invited to this meeting represented a broad cross section of industry representatives, public/environmental advocacy groups, utilities, and government personnel. Comments received were considered as the rulemaking documents were revised. DEC also made a presentation regarding the draft regulations at the May 22, 2013 “LNG-CNG-NGV Technical Conference,” sponsored by the New York State Department of Public Service. The conference was attended by a variety of business representatives from large and small companies.
During the proposed rule making, outreach efforts included electronic mailings to environmental groups, statewide organizations, regulated community, and other interested parties, including small businesses and local governments. In October 2013, DEC held public meetings at two locations in the State and a public hearing in Albany. DEC also posted and will continue to post relevant information about the proposed rulemaking on its website. Future DEC outreach will include contacting fire emergency response personnel regarding their time associated with training for LNG facilities, and DEC will receive public comments on the revisions to the rule for a minimum of 30 days after publication of the Notice of Revised Rule Making.
Subdivision 570.2(h), Public Participation, states: “Any hearings, comments, or participation by federal, State or local government bodies or members of the public, relative to any permit proceedings, will be conducted in accordance with procedures established in Parts 621 and 624 of this Title.” This subdivision ensures that any hearings in connection with LNG permit applications will be conducted close to locations where proposed LNG facilities will be sited in the State.
Revised Rural Area Flexibility Analysis
1. Types and Estimated Number of Rural Areas:
This rule will apply statewide to all 44 rural counties and 71 additional rural towns.
2. Reporting, Recordkeeping, Other Compliance Requirements, and Need for Professional Services:
Professional services will be required by applicants to prepare applications for facility permits, design facility structures, ensure that all aspects of the facility are in compliance with applicable building, fire, and safety requirements, maintain the facility, and eventually close the facility. Reporting and recordkeeping requirements of the regulations are minimal, and include reporting spills at the facility and maintaining documents produced in the normal course of business.
3. Costs:
The applicant for a permit is required to offer an emergency response training program for appropriate municipal response personnel. As needed, this training will be held annually and the program must be approved by the New York State Fire Administrator within the Office of Fire Prevention and Control of the New York State Division of Homeland Security and Emergency Services. Costs of the initial training of firefighters will range from $1,000 to $5,000 per firefighter, depending on the number and the level of experience of the firefighters. Subsequent yearly refresher classes or training costs will range from $200 to $500, depending on the number of participants. These costs include a trainer, room, supplies, etc. Releases (i.e., vapor clouds) are addressed with fire fighting techniques. Shorter training courses use simulations to illustrate the behaviors of LNG and explain how to respond to such releases.
The 2011 New York State Energy Research and Development Authority LNG report (available on New York State Department of Environmental Conservation’s (DEC) web site) estimates that the applicant’s cost to complete the application process to apply for and receive a facility permit would be approximately $10,000. Permit application fees would range between $100 and $1,000. In addition DEC is authorized to recover costs from the facility to implement the program. Facilities with more than 70,000 gallons capacity would not be allowed under the revised proposed regulations.
4. Minimizing Adverse Impact:
It is DEC’s belief that the revised proposed regulations will not cause a significant economic burden, place any additional burdens on rural areas, or increase the universe of regulatory requirements applicable to such rural areas beyond those required by the LNG statute, Environmental Conservation Law Article 23 Title 17. In fact, safe transportation, storage and utilization of LNG throughout the State will most likely result in substantial economic, environmental, and energy benefits for the entire New York State.
5. Rural Area Participation:
DEC will continue to provide a statewide outreach program to regulated communities and interested parties, including public and private interests in rural areas. An invitation only Stakeholders Meeting was held on Wednesday, February 27, 2013 at the DEC office in Albany, New York. Persons invited to this meeting represented a broad cross section of industry representatives, public/environmental advocacy groups, utilities, and government personnel. Comments received were considered as the rulemaking documents were revised. DEC also made a presentation regarding the draft regulations at the May 22, 2013 “LNG-CNG-NGV Technical Conference,” which was sponsored by the New York State Department of Public Service. The conference was attended by a variety of business representatives from large and small companies.
During the proposed rule making, outreach efforts included electronic mailings to environmental groups, statewide organizations, regulated community, and other interested parties, including those located in rural areas. In October 2013, DEC held public meetings at two locations in the State and a public hearing in Albany. DEC also posted and will continue to post relevant information about the proposed rule making on its website, and DEC will receive public comments on the revisions to the rule for a minimum of 30 days after publication of the Notice of Revised Rule Making.
Subdivision 570.2(h), Public Participation, states: “Any hearings, comments, or participation by federal, State or local government bodies or members of the public, relative to any permit proceedings, will be conducted in accordance with procedures established in Parts 621 and 624 of this Title.” This subdivision ensures that any hearings in connection with LNG permit applications will be conducted close to locations where proposed LNG facilities will be sited in the State, including any sited in rural areas.
Revised Job Impact Statement
In accordance with Section 201-a(2)(a) of the State Administrative Procedure Act, a Job Impact Statement has not been prepared for this rule making, as it is not expected to create a substantial adverse impact on jobs and employment opportunities in New York State (the State). To the contrary, 6 NYCRR Part 570 is expected to create, as set forth below, a positive impact on employment opportunities.
The New York State Department of Environmental Conservation (DEC) has determined that the proposed Liquefied Natural Gas (LNG) regulations will have a positive impact on jobs and employment opportunities throughout the State. There would be a creation of an essentially new industry with this rulemaking and it will not replace any existing petroleum or chemical facilities in the State. There are several types of LNG facilities that could be developed in connection with this new industry. Under the regulations proposed in September, 2013, these included: LNG import/export terminals (which would require federal approvals); peak-shaving plants that produce/store/vaporize LNG; regional LNG production facilities (relatively large quantities). But under the revised proposal, these three types of LNG facilities will not be permitted, as the capacity limit of 70,000 in effect excludes them from the Part 570 permitting program. However, LNG production at natural gas wells; LNG production at facilities with access to a natural gas pipeline; and, most immediately, LNG fueling facilities without on-site production of LNG are still likely. Types of employees needed for the LNG industry include, but are not limited to, truckers (employed by either the LNG facility or an independent transportation company); fire and safety, and security personnel; and operators for various locations in the process at LNG facilities. In many cases, facilities can be expected to be operating 24 hours per day, 7 days per week.
An LNG study was conducted in 2011 by the New York State Energy Research and Development Authority, with DEC staff providing input on the scope of work and review of the resulting report. This study indicated that there would be several permanent jobs at each new LNG facility, as well as temporary jobs during the initial construction, installation and start-up of these facilities. It also estimated that between 10 and 25 facilities (best estimate 21) will be permitted in the first 5 years after Part 570 is promulgated. For additional information, please refer to the report, “NYS Liquefied Natural Gas, 6 NYCRR Part 570, Promulgation Support Study,” dated September 20, 2011, which is available on DEC’s web site. After this report was issued, DEC received several inquiries from industry and utilities indicating their interest in LNG facilities.
The following outline provides information about each section of the proposed regulations and the impact on potential employment opportunities in this new LNG industry.
Section 570.1 contains a description of the general purpose, applicability, definitions, exemptions, severability, and enforcement provisions of Part 570. The purpose of this section is to ensure the orderly and efficient administration of Article 23, Title 17 of the Environmental Conservation Law (ECL) at LNG facilities throughout the State. There is no negative effect on the generation of employment opportunities under this section.
Section 570.2 applies to the permit requirements and application procedures for LNG facilities, including explanation of the permit application process; criteria for siting; permit issuance, duration and renewal; public participation guidelines; modification of permit and change of ownership; permit suspension or revocation; an upper limit of 70,000 gallons on the total amount of LNG that will be allowed to be stored at a permitted facility; and program fees and costs. This new limit on facility capacity at a permitted LNG facility will eliminate or greatly curtail the possibility of new peak shaving facilities and regional LNG production facilities. As noted above, LNG import or export facilities would be primarily under federal jurisdiction. This section also outlines the required procedures to obtain a permit for constructing and operating LNG facilities, which will result in increased economic growth and job creation in the State.
Section 570.3 applies to site inspections, recordkeeping, and training of local fire department personnel. Applicants for permits shall offer emergency training for local fire department staff required for local code enforcement. Compliance with training and inspection requirements can either be determined by DEC’s personnel, or by third parties who are qualified to monitor compliance, thereby creating additional potential for employment. New York State Department of Public Service (NYSDPS) has inspection responsibilities for those LNG facilities under the jurisdiction of the Public Service Commission. It is expected that existing NYSDPS staff will handle the limited number of additional inspections that the LNG regulations will require for facilities under their jurisdiction.
Section 570.4 delineates the intrastate and interstate transportation requirements of LNG within the State, and thus does not result in job creation, reduction, or elimination.
Section 570.5 applies to the requirement that pre-existing facilities comply with the rules and regulations of this Part and the procedures outlined in the LNG statute, ECL Article 23 Title 17. This section does not affect job creation, reduction, or elimination; these facilities are expected to continue to operate substantially as before promulgation of Part 570. The term referring to these facilities has been changed from that used in the proposed documents noticed on September 11, 2013, from “non-conforming” to pre-existing” facilities.
Section 570.6 applies to the permanent closure of out-of-service LNG storage tanks, referring to engineering guidelines and procedures that must be complied with to ensure proper closure. Closure activities performed at these LNG facilities will most likely result in increased temporary employment.
Section 570.7 pertains to financial assurance that may be required by DEC to ensure proper closure of LNG facilities, the form and amount of which will be established by DEC. This section does not affect job creation, reduction, or elimination.
Section 570.8 states the requirements for reporting a spill of LNG at a permitted facility. This section does not result in job creation, reduction, or elimination.
Section 570.9 recognizes the existence of a moratorium on the siting of LNG facilities in New York City and specifies that the LNG regulations will not affect any moratorium. This section does not result in job creation, reduction, or elimination.
Section 570.10 provides a listing of reference materials that are cited in 6 NYCRR Part 570, including those that are incorporated by reference, and explains how they can be obtained for inspection or purchasing, which does not impact job creation, reduction, or elimination.
In consideration of the foregoing, DEC concludes that adoption of this regulatory proposal for new LNG facilities will not have substantial adverse impacts on jobs within the State. Rather, with the construction and operation of new LNG facilities, a relatively small number of various employment opportunities will be created at different types of LNG facilities based on growth of this new alternative fuel and its availability throughout the State.
Summary of Assessment of Public Comment
6 NYCRR Part 570 - Liquefied Natural Gas - On September 11, 2013, the New York State Department of Environmental Conservation (DEC) proposed the adoption of 6 NYCRR Part 570 to implement requirements for siting and operation of Liquefied Natural Gas (LNG) facilities and transportation of LNG under Environmental Conservation Law (ECL) Article 23, Title 17 (“LNG statute”). A public hearing was held on October 30, 2013 in Albany, NY. In response to public requests, the comment period was extended 30 days to December 4, 2013. DEC received approximately 57,000 submittals, representing approximately 131,000 individual comments. All comments were reviewed, categorized, and counted (195 unique comments were identified). Below is a summary of the comments and DEC’s responses. All 195 comments, and DEC’s complete responses, are in the “Assessment of Public Comment” found on DEC’s website.
1. General Comments in Support
These comments encouraged DEC to promulgate Part 570, noting it provides environmental benefits such as reduced emissions from substituting natural gas for petroleum. They also noted that LNG fire hazards are similar to those associated with other flammable fuels, and found Part 570 is otherwise protective of public health and the environment. These commenters pointed out that LNG is already transported safely across the country and State, and has been stored safely in three grandfathered facilities in the State. Others suggested other benefits from adoption of the regulation (e.g., greater consistency among states, reduction in transportation costs).
DEC generally concurs with these comments, and notes the similar fire hazards between LNG and other volatile fuels. The State of California and Argonne National Laboratory have found that the life-cycle carbon footprint of producing and using LNG is less than that of petroleum or coal. Specific reductions in emissions were noted for hydrocarbons, carbon monoxide, oxides of nitrogen, and greenhouse gases.
2. General Comments in Opposition
A large number of these comments raised general concerns about safety issues. Many claimed that adoption of Part 570 would create an “infrastructure” of LNG facilities, increasing the likelihood that the State would approve high-volume hydraulic fracturing (HVHF) as a drilling technique. Some commenters opined that Part 570 falls short of the statutory requirement to provide “maximum safeguards” for permitting LNG facilities.
The production of natural gas is outside the scope of this rulemaking. Part 570 contains no provisions regarding the production of natural gas and focuses on the mandate in the LNG statute to promulgate an LNG regulation. Part 570 would result in less than a one percent increase in natural gas usage in the State. In addition, the safety record for LNG is similar to, or better than, that of other fuels. The consensus among other states is that it is appropriate to rely upon the established standards of the National Fire Protection Association (NFPA) for handling LNG. These requirements have been part of the State Building and Fire Code for many years. DEC noted the environmental benefits of using LNG over petroleum and coal, as discussed above. Further, natural gas is already the largest single source of energy in the State and is used in millions of residences, and commercial and industrial applications, demonstrating that natural gas (liquid and gaseous) is already managed safely in the State. Examples include three multi-million gallon “grandfathered” LNG production and storage facilities that have been operating in New York City and Suffolk County for over 40 years without incident. The explosion at an LNG storage tank in 1973 was a maintenance accident at a tank that had been emptied of LNG for a year.
3. General Comments on Part 570
Many commenters expressed concern that Part 570 is not adequately protective because it does not limit emissions of methane, a potent greenhouse gas and a contributor to climate change. Others suggested that Part 570 should include requirements to prevent impacts to a wide variety of public and environmental concerns (e.g., water quality, noise, wetlands, bird migration, etc.). Many felt that the NFPA standards are inadequate to protect the public. Some expressed the opinion that Part 570 is not clear about the types of LNG facilities to be permitted. Some of these commenters felt that DEC documents hid the fact that facilities other than truck refueling facilities could be permitted under the regulation.
DEC’s responses explain that most LNG facilities, including the grandfathered facilities, do not normally emit large volumes of methane. Other emissions are controlled under other regulations. If an LNG facility emitted significant quantities of pollutants, it would be subject to those regulations. DEC concludes that other impacts (e.g., water quality, wetlands, etc.) would be positive, insignificant, and/or covered by other state regulations. DEC points out that there would be environmental benefits from switching to LNG from petroleum, such as a lower threat of surface water and groundwater contamination compared to storing petroleum, because any LNG spilled would quickly vaporize, and not impact water. As noted, the NFPA standards have been included in fire codes in New York and other states for years. DEC will coordinate with the State Office of Fire Prevention and Control (OFPC), the state agency with fire safety expertise, on fire safety issues.
As indicated in the 2011 New York State Energy Research and Development Authority (NYSERDA) report, there is consensus among regulatory agencies that the NFPA standards establish appropriate requirements for the safe management of LNG. DEC notes that Part 570 would provide the most comprehensive LNG management system in the nation, because beyond the NFPA standards, DEC will require permits, tailored for each facility. Proposed Part 570 and the revised rule making documents clearly indicate that other types of LNG facilities may be permitted, although truck fueling facilities are likely to predominate among early applications. Large LNG import or export facilities are expected to be outside DEC’s jurisdiction and would require permits from federal agencies, potentially including the Federal Energy Regulatory Commission, Coast Guard, United States Department of Transportation, and/or others. The inclusion of a maximum facility capacity of 70,000 gallons in the revised proposal addresses the concern that Part 570 would make the construction of large LNG facilities more likely.
4. Specific Comments on Part 570
The most frequent of these comments is that there should be an upper limit on the volume of LNG that may be stored at facilities.
Many factors influence the fire safety risks presented by a specific LNG facility such as individual tank capacities and layout, location, overall capacity, surrounding land uses, capabilities of local fire departments, availability of firefighting water for cooling, etc. Although DEC could not find any study or data that shows that higher capacity facilities have greater risk for fire or explosion than lower capacity facilities, an accident involving a facility with large capacities would have the potential for greater damage than a smaller facility. After careful consideration of the issue, DEC has revised the proposed regulation to include an upper limit of 70,000 gallons of facility capacity based upon reasons provided in the full assessment of comments.
Some commenters would prefer more specific siting requirements. But the regulation requires applicants to provide all information DEC will need to determine whether or not to issue a permit for a facility. The revised proposed Part 570 includes additional detail on the information that must be included in a complete application; however, it would be impracticable, to attempt to list all factors and criteria that may be for every potential scenario. DEC needs flexibility to evaluate each case separately.
Several commenters asked for clarifications of the text of Part 570. Clarifying changes proposed in the revised rulemaking include:
• changed “non-conforming” LNG facility to “pre-existing” LNG facility
• clarified that LNG fuel tanks exempt from Part 570 are those used to power a vehicle, not tank trailers used to transport LNG to be used later as fuel
• clarified the criteria for evaluating alternative locations for siting an LNG facility
• clarified recordkeeping and production requirements
• expressly stated that transportation of LNG must comply with all applicable State and federal requirements
• clarified when out-of-service storage tanks must be permanently closed
• clarified spill reporting requirements
• clarified DEC’s cost recovery authority.
For some comments, DEC does not propose rule revisions because they are not authorized under the law. For example, the LNG statute specifically makes applicants responsible for training local fire fighters. In some cases, suggested changes are impracticable or unnecessary. For example, it was suggested that DEC announce all inspections beforehand but unannounced inspections are an important compliance tool.
Many commenters wanted assurances that local emergency responders will be prepared and equipped for LNG incidents.
The law and proposed Part 570 require evaluations of every fire company that would respond to an LNG incident before a permit is issued. Any deficiencies in staffing, training or equipment must be rectified (and paid for) by the applicant. DEC will provide guidance on the training and numbers of firefighters, and equipment that should be available for responding to an LNG incident, including how these capabilities would increase as facility/tank capacities increase. Some comments contended that the LNG routing requirements were inadequate, while others suggested they were unnecessary.
The LNG statute requires that the New York State Department of Transportation (NYSDOT) certify any intrastate route for supplying a facility with LNG. The Regulatory Impact Statement explains that NYSDOT has determined that it is impracticable to certify LNG intrastate routes, since it does not certify routes for any other hazardous materials. The LNG statute requires certification of transportation routes; therefore, intrastate routing of LNG is effectively prohibited at this time. Therefore, facilities that do not generate their own supply of LNG must import it from out of State.
Some commenters suggested that financial assurance be required in every case, or be expanded to require insurance to reimburse any third parties that suffer LNG-related losses.
Due to the physical properties of LNG, and the nature of storage facilities, financial assurance would not often be necessary. It is unlikely there would be any LNG left when a facility closes permanently (due to the value of natural gas as a product). Tanks and equipment would be empty and be easily disposed due to their salvage value. The statute itself specifies that strict liability applies to damages resulting from LNG facility operations. DEC will also require proof of liability insurance for facility operations. DEC has authority to recover all state costs.
Some commenters believe that the requirements for reporting spills are inadequate or vague.
The revised rulemaking clarifies that the threshold for reporting spills is one gallon or more, or lesser amounts that result in a fire or explosion. In addition, it is proposed to allow more time in most situations, i.e., ten days rather than two, to submit written evaluations of spills, so the reports would be more complete and well-considered. DEC reserved the right to shorten or lengthen this period as needed.
5. General Comments on Rulemaking Documents and Process
Many commenters felt that DEC should have issued a positive declaration under the State Environmental Quality Review Act (SEQRA) regarding the promulgation of Part 570. They claimed this would have entailed the evaluation of many factors they felt should be considered more closely (e.g., climate change, energy policies, wildlife impacts, noise, light, bird migration, water quality, terrorism, health care).
DEC took the requisite “hard look” at environmental impacts, and carefully considered whether promulgation of Part 570 may have significant adverse environmental impacts. DEC convened a working group of six state agencies and, with NYSERDA, completed a study of how LNG is regulated in other states. The study also developed projections of facilities, jobs, and costs required under the State Administrative Procedure Act. DEC concluded that promulgation of Part 570 would not have significant adverse environmental impacts, making the negative declaration under SEQRA proper. This rule making would result in environmental benefits, in terms of lower air emissions and avoidance of greater impacts associated with the storage and handling of petroleum. All individual permit applications will undergo full SEQRA review, which would include, if appropriate, positive declarations.
