Distrigas Corporation, Docket Nos. CP70-196 and CP74-227;

Distrigas of Massachusetts Corporation, Docket Nos. CP73-135 and CP74-137 Order Affirming Initial Decision Conditioning Certificate of Public Convenience and Necessity

(Issued January 2, 1979)

[Note: Initial Decision was issued June 28, 1977, and appears at 6 FERC ¶ 63,009. Rehearing denied by order issued March 5, 1979, 6 FERC ¶ 61,203. Petition for review filed May 3, 1979, Distrigas Corporation v. F.E.R.C., 1st Cir.,No. 79-1176]

Syllabus

Commission resolves environmental and safety issues attendant to the authorization of certificate of public convenience and necessity to construct and operate an LNG facility.

[1] GAS FACILITIES & SERVICES

Certification

New Service Factors

Environment

Commission affirms ALJ's finding that applicant's facilities are environmentally sound and safe and will have no significant adverse impact on the environment and believes that the public interest requires issuance of a certificate of public convenience and necessity subject to certain safety conditions.

[2] GAS FACILITIES & SERVICES

Certification

Exotic Supplies (LNG)

Sales

Commission finds that 68.0 cents MMBtu, plus 0.6 cent annual escalation constitutes the authorized LNG import price to be paid by the applicant, and orders the applicant to refund all amounts collected in excess of the authorized price for LNG imports received thru December 31, 1977.

Appearances*

Edwin S. Nail and Sherman S. Poland for Distrigas Corporation and Distrigas of Massachusetts Corporation

L William Law, Jr. for Boston Gas Company

John S. Schmid for Bay State Gas Company, The Connecticut Gas Company, Fall River Gas Company, Haverhill Gas Company, The Providence Gas Company and Valley Gas Company

F. Peter O'Hara and Joseph Stevens for Brooklyn Union Gas Company

Frederick Moring and James A. Wilderotter for South Jersey Gas Company and New Jersey Natural Gas Company

Charles E. McGee for Eascogas LNG, Inc.

John T. Ketcham for Algonquin Gas Transmission Company

Edward S. Kirby for Public Service Electric & Gas Company

Richard Berger for the Attorney General of the State of New York

Nancy Stassinopoulos for the City of New York

Peter A. Buchsbaum for Public Advocate of the State of New Jersey

Bruce J. Terris for Congressman John M. Murphy

Kevin White, Mayor, Boston, Massachusetts

Thomas B. Arnold for Union of Concerned Scientists Fund, Inc.

Allan W. Anderson, Jr. for the Staff of the Federal Energy Regulatory Commission

[Order Text]

Before Commissioners: Charles B. Curtis, Chairman; Don S. Smith, Georgiana Sheldon, Matthew Holden, Jr. and George R. Hall.

By order issued June 14, 1977, 58 FPC 2589, in Docket No. CP70-196, et al., the Commission' approved a settlement agreement resolving a number of outstanding issues in this case and issued a certificate of public convenience and necessity authorizing, inter alia, construction and operation by Distrigas of Massachusetts (DOMAC) of liquefied natural gas (LNG) facilities at its LNG terminal in Everett, Massachusetts, for receipt, terminalling storage, and redelivery of LNG. The authorization was conditioned, however, upon favorable resolution of environmental and safety issues then pending in this proceeding.' This order resolves those issues.

Extensive hearings were held on the environmental and safety issues before an Administrative Law Judge who issued an Initial Decision on June 28, 1977, 6 FERC ¶ 63,009. The Judge found that operation of the Everett LNG facilities and sale of natural gas as proposed therefrom "can be performed in an environmentally sound and safe manner" and without "significant adverse impact upon the environment.” The decision concluded that the public interest required issuance of a certificate of public convenience and necessity consistent with the Commission's order of June 14, 1977, and subject to the conditions hereinafter set forth.

For the reasons discussed below, we shall affirm the Initial Decision. Our action today satisfies the environmental and safety conditions imposed by the Commission order of June 14, 1977, and that order now becomes fully operative.

Congressman John Murphy, the Attorney General of the State of New York, and the Public Advocate of the State of New Jersey (hereinafter collectively referred to as Congressman Murphy, et al.) filed a joint brief on exceptions. The City of New York filed a separate brief on exceptions. No other party filed exceptions. Responses were filed by DOMAC, Distrigas, Brooklyn Union Gas Company, Public Service Electric and Gas Company, Eascogas LNG, Inc., and staff. The main thrust of the exceptions filed by Congressman Murphy, et al. and the City of New York was to attack the adequacy of staff's EIS, particularly its risk analysis as it might apply to the Eascogas Staten Island proceeding.' They also propose that importation of LNG be limited to Everett and that no LNG shipments be made from Everett to New York. After giving due consideration to each exception, we find them without merit. Our decision is reached on the basis of the record in this proceeding which relates to the Everett terminal. As noted by the Judge, applicants have no intention to import LNG at New York or to ship LNG from Everett to New York unless and until they receive such authority. This order does not provide that authority.

We believe the Judge's findings and conclusions are fully supported by substantial evidence of record. We note particularly that staff's Environmental Impact Statement (EIS) and the Judge found that the risks attendant to the Everett facility and related shipping activity are acceptable and that the evidence fully supports such finding." The same methodology used by staff in this EIS risk analysis has appeared in prior staff EIS's which have been accepted by the Commission in earlier proceedings.' Staff's EIS was entered into evidence without objection or cross-examination. Nor was any rebuttal evidence to the EIS subsequently presented. We note finally that these facilities have been in operation for over seven years, pursuant to appropriate authorization, without serious environmental or safety incidents. We concur with the Judge that the Everett Facilities are environmentally sound and safe to operate and will have no significant adverse impact upon the environment.

[1] One of the conditions which Staff recommended for imposition on the certificate is that traffic be suspended on adjacent roads during periods when LNG was being unloaded. This was rejected by the Judge based on representations by Distrigas that it was already being done. Without implying a lack of confidence in such representations, we believe that the public interest would best be served by subjecting the certificate to this condition as hereinafter ordered.

We also affirm the Judge's recommended conditions to be attached to the certificate as set forth below.

One other matter, unrelated to the environmental and safety issues, needs to be addressed. That is the LNG import price paid by Distrigas. By order issued November 12, 1976, 56 FPC 3115, in subject docket, the Commission allowed Distrigas to pay and flow through a so-called "winter import rate" of 73.0 cents per MMBtu, subject to refund based on a final determination of the import price established by Commission Opinion No. 613. The settlement order of June 14, 1977 noted that the exact rate at which Distrigas was authorized to import LNG from Algeria by Opinion No. 613 is an issue currently pending before the Judge in the present proceeding.' The Judge held that this issue has been decided by the Commission and "is not at bar here". Opinion No. 613 adopted the Initial Decision of June 14, 1971, "as modified herein and not inconsistent with this Opinion as the Commission's decision". In that Decision, the Judge conditioned the import authorization to an initial price of 68.0 cents per MMBtu, subject to 0.6 cents per MMBtu annual escalation.10

[2] We agree with the Judge and find that the 68.0 cents per MMBtu, plus the 0.6 cents annual escalation constitutes the authorized LNG import price to be paid by Distrigas. Accordingly, we shall order Distrigas to refund all amounts collected in excess of the Commission's Opinion No. 613 authorized price for LNG imports received through December 31, 1977."1

The Commission orders:

(A) The Initial Decision of June 28, 1977, in this proceeding, is affirmed and exceptions thereto denied.

(B) The certificate of public convenience and necessity issued by paragraph (B) of the order of June 14, 1977, in this proceeding, shall be subject to the following conditions:

(1) Distrigas shall submit operational reports semi-annually within 45 days after each period ending December 31 and June 30, describing facility operations for the period covered and particularly noting any abnormal operating experience or behavior. Abnormalities would include, but not be limited to, tank vibration, rollover, geysering, cold spots on the tank, fires, significant equipment malfunctions or failures, nonscheduled maintenance or repair (and reasons therefor), rapid vaporizations, vapor or liquid releases, negative pressures (partial vacuum) within the storage tank, and higher than predicted boil-off rates. The technical information supplied by the applicant should be submitted in a form acceptable to the Commission and must provide sufficient detail to allow a complete understanding of such events consistent with the existing state-of-the-art or knowledge. Such information can provide the FERC with useful technical data that may be applied to other LNG facilities. In the event that an abnormality is of sufficient magnitude to endanger the facility, the operating personnel, or nearby residences or industries, the Commission must be notified immediately.

(2) Distrigas shall cooperate with local emergency personnel such as the Coast Guard, Civil Defense, hospitals, police and fire departments, to develop and submit an emergency notification and evacuation plan. Procedures should contain measures for the evacuation of nearby areas, the suspension of local highway and shipping traffic in the event of a major accident, the immediate notification of nearby inhabitants of any potentially dangerous situation that might arise, as well as the notification of emergency personnel. The routes to be used by the emergency personnel should be planned and test driven. DOMAC shall submit the plan to the Commission for review within six months from the authorization granted herein. In the event that an appropriate plan is not completed within that period, a progress report will be submitted.

(3) The storage facilities shall be operated according to the procedures regarding rollover and mixing, outlined on pages 4-31 and 4-32 of Staff's EIS for this proceeding. Distrigas shall submit to the Commission annual reports describing any changes in technology with respect to the operation of storage facilities regarding rollover and mixing within 45 days after each period ending December 31. The Commission may, at its option, authorize the implementation of procedural modifications made possible by changes in said technology.

(4) Distrigas shall continue its practice of suspending all traffic on the road (Rovex Street) adjacent to the plant where the unloading line crosses from the dock to the diked tank area during those periods when there is any liquid in the unloading line

(C) Any and all outstanding conditions relating to operations of the Everett facilities as previously ordered by the Commission in related Docket No. CP77-216, et al., shall remain in full force and effect.

(D) The authorization granted herein shall be without prejudice to whatever future action may be ordered by the Commission with respect to matters pending in related Docket No. CP77-216, et al.

(E) Within 45 days, from the date of this order Distrigas shall make refunds of all amounts collected in excess of those which would have been payable under the rates approved in accordance with Commission Opinion No. 613, together with interest from the date of payment to the date of refund at the rate of 9 percent per annum. Within 15 days of making refunds, Distrigas shall submit a report of such refunds and interest to the Commission.

-Footnotes

* These proceedings, and those related proceedings, date back to 1970 and only principal parties and counsel have been identified here.

This proceeding commenced before the FPC. When that agency ceased to exist on October 1, 1977, the matter came here. The term "Commission" refers to the FPC when used with respect to events prior to October 1, 1977, and to this Commission when used otherwise.

2 In Commission Opinion No. 613, issued March 9, 1972 (47 FPC 752), Distrigas Corporation (Distrigas) was given authorization to import annually for a period of 20 years, up to 15.4 trillion Btu of LNG from Algeria to LNG ports contemplated at Everett, Massachusetts, and Staten Island, New York. As a result of a subsequent court decision and other Commission orders, Distrigas' and Distrigas of Massachusetts Corporation (DOMAC) filed with the Commission various applications to construct and operate an LNG terminal at Everett, Massachusetts, and to sell gas from Distrigas to DOMAC and from DOMAC to its customers. Distrigas Corporation v. F.P.C., 495 F. 2d 1057 (D.C. Cir. 1974), cert. denied, 419 U.S. 834 (1974); Commission orders issued May 25 and June 20, 1973, in Docket No. CP73–78, et al., Distrigas Corporation (49 FPC 1145 and 1400). By its June 14, 1977 order, the Commission pronounced that it had jurisdiction over the DOMAC terminal at Everett, Massachusetts, but made no determination at that time on the environmental aspects of the terminal site and project since the Presiding Judge had not yet issued a decision in this matter. The effectiveness of this order was subsequently stayed pending resolution of Distrigas motion for clarification (See Order Clarifying Previous Order, November 23, 1977, Docket No. CP70–196, et al., 1 FERC 61,163).

Congressman Murphy, et al. and the City of New York were permitted to intervene in the instant proceeding when it was consolidated with the Eascogas LNG case in CP73-47, et al., involving operation of an LNG facility at

Staten Island, New York. However, these proceedings have since been severed (Distrigas Corporation, et al., Docket No. CP73-132, et al., “Order Granting Severance of Proceedings", issued September 8, 1975). Although Congressman Murphy, et al., remain parties to the Everett proceeding, they admit they have no interest therein, insofar as it has no effect on New York City (Murphy Brief, p. 4). The instant proceeding and decision involves the Everett facilities only. We believe that the concern o Congressman Murphy, et al., and the City of New York that this decision will somehow prejudice or prejudge the Eascogas proceeding is misplaced. These parties have had and will have ample opportunity to protect their interests as appropriate in the Eascogas proceeding to which they also remain parties.

The staff's EIS concluded [Exh. E-1, pp. 9-1]:

The information elicited by the Staff from field investigations, reference and source data, and special studies indicates that approval of the proposed importations of LNG, construction and operation of the LNG terminal and pipeline facilities, and the sale of natural gas would have no significant adverse impact directly on the environment under normal operating conditions.

' Trunkline LNG Company, et al., Opinion Nos. 796 and 796-A, issued April 27, 1977, and June 30, 1977, 58 FPC 726, 2935, Docket No. CP74-138, et al., and Recommendation to the President, Alaska Gas Transportation System, issued May 1, 1977, Docket No. CP74–96, et al., 58 FPC 810.

* Distrigas Corporation, et al., Docket No. CP70-196, November 12, 1976 (3116).

' Order of June 14, 1977, supra (p. 2592, n. 7).

• Initial Decision, p. 7.

947 FPC 752 at 766 (1972).

10 47 FPC 797 at 839 and 844 (1971).

On that date the Department of Energy (ERA) issued an order, effective January 1, 1978, in Docket No. 77-011-LNG, approving a new Distrigas import rate.