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85–447 2014

U.S. ENERGY ABUNDANCE: REGULATORY, 

MARKET, AND LEGAL BARRIERS TO EXPORT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JUNE 18, 2013 

Serial No. 113–57 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

STEVE SCALISE, Louisiana 

Vice Chairman 

RALPH M. HALL, Texas 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

EDWARD J. MARKEY, Massachusetts 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 4 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 5 

Prepared statement .......................................................................................... 6 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

WITNESSES

Jennifer C. Moyer, Acting Chief, Regulatory Program, U.S. Army Corps of 

Engineers .............................................................................................................. 9 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 181 

Jeff C. Wright, Director, Office of Energy Projects, Federal Energy Regulatory 

Commission ........................................................................................................... 21 

Prepared statement .......................................................................................... 23 

Answers to submitted questions ...................................................................... 184 

Christopher A. Smith, Principal Deputy Assistant Secretary and Acting Assistant Secretary for Fossil Energy, U.S. Department of Energy .................... 30 

Prepared statement .......................................................................................... 32 

Answers to submitted questions ...................................................................... 186 

Mike McGinn, Mayor, City of Seattle .................................................................... 62 

Prepared statement .......................................................................................... 65 

Answers to submitted questions ...................................................................... 192 

Harold P. Quinn, President and CEO, National Mining Association .................. 92 

Prepared statement .......................................................................................... 94 

Ross E. Eisenberg, Vice President, Energy and Resources Policy, National 

Association of Manufacturers .............................................................................. 100 

Prepared statement .......................................................................................... 102 

KC Golden, Policy Director, Climate Solutions ..................................................... 117 

Prepared statement .......................................................................................... 119 

Lucian Pugliaresi, President, Energy Policy Research Foundation, Inc. ............ 134 

Prepared statement .......................................................................................... 136 

Bill Cooper, President, The Center for Liquefied Natural Gas ............................ 154 

Prepared statement .......................................................................................... 156 

SUBMITTED MATERIAL

Coal dust analysis, Missoula, Montana, McCrone Associates, Inc. ..................... 177 

(1) 

U.S. ENERGY ABUNDANCE: REGULATORY, 

MARKET, AND LEGAL BARRIERS TO EXPORT 

TUESDAY, JUNE 18, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:18 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Ed Whitfield 

(chairman of the subcommittee) presiding. 

Members present: Representatives Whitfield, Scalise, Shimkus, 

Pitts, Latta, McKinley, Griffith, Barton, Upton (ex officio), Rush, 

McNerney, Tonko, Green, Castor, and Waxman (ex officio). 

Staff present: Nick Abraham, Legislative Clerk; Charlotte Baker, 

Press Secretary; Sean Bonyun, Communications Director; Matt 

Bravo, Professional Staff Member; Allison Busbee, Policy Coordinator, Energy and Power; Patrick Currier, Counsel, Energy and 

Power; Andy Duberstein, Deputy Press Secretary; Tom 

Hassenboehler, Chief Counsel, Energy and Power; Jason Knox, 

Counsel, Energy and Power; Ben Lieberman, Counsel, Energy and 

Power; Nick Magallanes, Policy Coordinator, Commerce, Manufacturing, and Trade; Brandon Mooney, Professional Staff Member; 

Mary Neumayr, Senior Energy Counsel; Chris Sarley, Policy Coordinator, Environment and the Economy; Jeff Baran, Democratic 

Senior Counsel; Phil Barnett, Democratic Staff Director; Alison 

Cassady, Democratic Senior Professional Staff Member; Caitlin 

Haberman, Democratic Policy Analyst; and Elizabeth Letter, Democratic Assistant Press Secretary. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. I would like to call this hearing to order, and today’s hearing is entitled ‘‘U.S. Energy Abundance and the Regulatory, Market, and Legal Barriers to Export.’’ I am going to recognize myself for 5 minutes for an opening statement. I would like 

to say in the beginning that we do appreciate the witnesses that 

are here with us today. We have two panels of witnesses, and I will 

be introducing you all right before you have an opportunity to give 

your opening statement, but I would—do want to thank you very 

much for joining with us this morning to discuss this very important issue. And with that, I will recognize myself for 5 minutes for 

an opening statement. 

2 

I was reading an article a couple of days ago, and it was talking 

about worldwide there are two or three million people—between 

two and three million people who do not have electricity today. Our 

trade deficit last year in the United States was $539 billion. Our 

unemployment rate is still pretty high, 7.5 percent range. Coal consumption is increasing every year worldwide, primarily because of 

increased use in China, India, and Asia. In fact, last year we exported 126 million tons, which was above 107, and the projections 

are that by 2030, it is going to just continue to go up because of 

the use of coal worldwide. We all know that having basic electricity 

is vital to a society functioning, and as I said, our coal is going into 

some areas that certainly need help. All of you are very much 

aware of the abundance of coal we have in America today, recoverable coal. We also are the number one natural gas producer in the 

world in 2010 because of recent discovery in shale fields. So we 

have a tremendous opportunity in the U.S. to have a significant 

amount of export of both coal and natural gas, and it will help decrease our trade deficit. It will help increase the number of jobs 

available in America, and I think about the railroad industry that 

is moving a lot of coal and oil today, and just one railroad, the Burlington Northern in Santa Fe, I was talking to some of their people 

recently, are spending about $4.3 billion a year just maintaining 

their railroads and multiply that by the number of railroads 

around the country, and there is no government money involved in 

it. So we have private enterprise putting in money to create jobs 

in America to export a product and products, or at leas the potential of doing it that the world wants and the world needs. 

And so at today’s hearing, we are going to focus on what are the 

obstacles to this, because we all know that there are significant obstacles. There are regulatory obstacles, market obstacles, permit 

obstacles, and then a lot of lawsuits are being filed. Mayor 

Bloomberg alone gave $50 million to the Sierra Club basically to 

file lawsuits against the coal industry. And I am a fan of the Sierra 

Club, and I will be the first to say that they have done a lot of good 

in America, but at the same time, when you are deliberately filing 

lawsuits to stop jobs from being produced in America, I think that 

is not something that we need very much of. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

Today’s hearing is entitled ‘‘U.S. Energy Abundance: Regulatory, Market, and 

Legal Barriers to Export.’’ It builds upon our previous hearings that have assessed 

the tremendous potential for increased American energy production, including the 

opportunities to expand energy exports. Today, we will look at the barriers to realizing this export potential with an eye towards lessening regulatory hurdles and expeditiously approving our export opportunities. 

We all want to reduce our trade deficit and perhaps one day have a trade surplus. 

And America’s growing energy abundance is already beginning to make this goal a 

reality, both by reducing the need for energy imports and by expanding exports. 

However, we should remain mindful that if our trading partners don’t get their coal 

or natural gas from us, they will very likely get it from another energy-exporting 

nation with weaker environmental safeguards. 

And we can continue to increase energy exports. We have long had an abundance 

of coal in this country and have exported it for many years. But growing world demand for affordable and reliable energy has led to record-setting coal exports in recent years. In 2012, the U.S. exported 125.7 million short tons of coal and EIA estimates that amount to rise to 144 million short tons by 2030. In 2011 in Kentucky 

3 

alone, coal mining operations employed over 25,000 workers, and 1,760 of those jobs 

stemmed directly from the production of coal for export. We could continue breaking 

these records in the years ahead, bringing billions of dollars in revenues into the 

country and supporting jobs all along the supply chain from coal miners to railroad 

workers to dock workers. 

And over the past few years we have seen a remarkable expansion of domestic 

natural gas production to the point that we are now the number one producer in 

the world. As with coal exports, natural gas exports would create jobs and economic 

development while strengthening our ties with energy-importing allies like Japan 

and India who would much rather buy from us than from Russia or Iran. 

Unfortunately, those who are trying to shut down the production and use of coal 

and natural gas in the U.S. are attempting to do the same thing to exports. And 

much of their focus is on infrastructure. Not only do we need to mine the coal and 

drill for natural gas, but we need the transportation and pipeline systems to deliver 

it to the nation’s port facilities. And we need to expand those port facilities to handle the growing volumes. But many of these job-creating infrastructure projects are 

being held up by an array of burdensome regulations, permit requirements, and 

legal challenges brought by litigious environmental groups. There are currently two 

licenses that have been approved to export LNG and 18 applications that have been 

filed and are pending with DOE. 

For example, the growth of coal exports will necessitate the construction of new 

port facilities and the expansion of existing ones, which comes under the purview 

of the Army Corps of Engineers. The last thing we need is the kind of years-long 

bureaucratic delays comparable to what we have seen with Keystone XL, but the 

threat of such delays is very real. 

LNG facilities also face a host of barriers, originating with the Natural Gas Act 

of 1938 and extending to more recent measures. Even beyond federal licensing 

issues, these projects also face the threat of litigation from activist organizations. 

The reality is that market forces will determine the amount and to what extent 

we export our energy from the U.S. Policies that delay or prevent energy exports 

are detrimental to energy producing states like Kentucky, and they hurt the nation 

as a whole. And I might add that the environmental arguments against energy exports don’t stand up to scrutiny. Instead of arbitrary and irrational barriers proposed on U.S. exports, the U.S. can be a global energy leader by exporting affordable 

and reliable energy to povertystricken countries that would otherwise have no electricity. 

I have concerns that the approval process for these export projects is not a balanced one as it clearly should be, especially in light of the opportunities before us. 

We need to restore that balance. I look forward to hearing the insightful testimony 

from our government and industry witnesses today. 

# # # 

Mr. WHITFIELD. I still have a minute and 30 seconds left, so I 

would like to yield the balance of my time to the gentleman from 

Louisiana, Mr. Scalise. 

Mr. SCALISE. Well thank you, Mr. Chairman. 

If you look at the barriers to export, I know in South Louisiana, 

the first LNG facility that has been permitted, Cheniere, is spending billions of dollars—this is all private money—to be able to export natural gas. This is something that I think if you look across 

America, there are going to be more opportunities as we explore 

this revolution in shale with hydraulic fracturing and horizontal 

drilling, the things that it has opened up, the opportunities not just 

to create jobs for America, for Americans to create billions of dollars in economic activity in the States that have chosen to be a part 

of this revolution, but also it has allowed America not only to be 

energy independent in terms of natural gas, which has been great, 

not just for natural gas but for manufacturing in our country. It 

is going to reindustrialize a lot of the chemical facilities, a lot of 

other facilities that were looking at moving out of the country because it has provided a stable source of energy. It has also provided 

4 

us an opportunity to export energy, which is something that we 

should be looking at doing more of, because again, this allows us 

to be competitive. It allows us to bring that trade balance down. 

And so if you look at the threats to the ability to export more, 

a lot of these are coming from federal agencies right now. You 

know, we had the Secretary of Energy last week talking about energy independence and all-of-the-above, and this is part of it. 

So I appreciate the focus, Mr. Chairman. I yield back the balance 

of my time. 

Mr. WHITFIELD. Gentleman yields back. At this time, I would like 

to recognize the gentleman from Illinois, Mr. Rush, for a 5-minute 

opening statement. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman, and I want to 

thank the witnesses for appearing before the subcommittee today. 

Mr. Chairman, I commend you for holding today’s timely hearing 

on the potential impacts of exporting both coal and LNG to overseas markets. 

There is no doubt in my mind that the energy sector will play 

a huge role in helping to get the American economy back on track, 

while also creating the jobs and the economic opportunity that can 

benefit all sectors of the American population. Just as I believe 

that energy will play a substantial role in helping to bolster the 

U.S. economy, I also believe that the increased production of natural gas will play a crucial role within the energy sector of helping 

us become more competitive and energy independent. 

With the new technologies of hydraulic fracturing and horizontal 

drilling, we are already seeing natural gas production defy expectations of only a few years ago, when most experts believed that the 

U.S. would need to become a net importer of natural gas in order 

to meet its domestic demands. However, today, Mr. Chairman, 

through the increased use of fracking and horizontal drilling, we 

have seen natural gas production in the U.S. rise by 34 percent between 1990 and 2012, and the EIA projects that under existing 

policies, natural gas production will increase by an additional 39 

percent by 2040. Even with the EIA predicting that domestic consumption of natural gas will increase modestly in the electric, industrial, and to a lesser extent, the transportation industries, the 

agency still expects for the U.S. production of natural gas to outpace demand, resulting in the U.S. becoming a net exporter of natural gas by 2020. 

Which brings us to today’s hearing, Mr. Chairman, where we will 

have the opportunity to hear from relevant stakeholders from within federal agencies and from within industry on the regulatory, 

market, and legal barriers to exporting natural gas, as well as the 

potential impacts and unintended consequences of making these 

exports. It is my hope that today’s hearing will shed more light on 

important issues associated with exporting LNG and coal, including the impact on domestic prices, the potential for jobs, the effect 

on our manufacturing base, as well as the effect on the U.S. trade 

balance. 

5 

Additionally, Mr. Chairman, as a record-setting 2012 where we 

witnessed an historical number of heat waves, wildfires, flooding 

and drought, and with 2013 already showing signs of record-breaking tornadoes, wildfires, and hurricanes sweeping across our Nation and destroying lives and property, it is imperative that we also 

hear about climate change as we debate whether to export coal and 

LNG overseas. As policymakers, it is our duty to understand the 

totality of the consequences for the decisions we make in regards 

to exporting coal and LNG. 

Mr. Chairman, with that, I yield back the balance of my time. 

Mr. WHITFIELD. Thank you, Mr. Rush. At this time, I recognize 

the chairman of the full committee, Mr. Upton, for 5 minutes. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well thank you, Mr. Chairman. 

America’s energy landscape is indeed changing for the better, 

creating opportunities for jobs, economic growth, energy security, 

and an enhanced standing around the world. But this bright energy future is far from guaranteed. Federal laws and regs that are 

stuck in the past could devastate newfound opportunity, in addition 

to an Administration that sometimes seems more intent on rewarding a handful of environmental activist allies rather than capitalizing on our new energy abundance that certainly would create jobs 

and stimulate the economy for the benefit of all. 

According to CRS, America has the largest fossil fuel reserves of 

any nation on earth, and estimates keep growing because of technological advances. At the same time, the global demand for energy 

is on the rise. According to the World Bank, more than 1.2 billion 

people—that is b as in big—17 percent of the world’s population, 

are still without access to electricity. So when you put two and two 

together, the U.S. has the potential to become the world’s preeminent supplier of affordable and reliable energy, and with commonsense planning and continued safe and responsible development, our country can indeed help to take the power back from 

OPEC and geopolitically unstable regions of the world and be a 

force of change to help bring nations out of poverty with our energy 

resources. 

We are already seeing increased exports of coal. Rapidly rising 

domestic natural gas production is likely to become the next American-made energy source to reach the global market. As a recent 

report conducted for the DOE concluded, America can export a portion of its natural gas abundance while, in fact, still maintaining 

affordable domestic supplies to continue to power our manufacturing renaissance. 

All that is missing is the additional infrastructure to make expanded exports possible, and achieving our export potential would 

have the added benefit of creating thousands, tens of thousands, of 

new jobs. 

Unfortunately, the build-up of red tape over the last couple of 

decades has become a real obstacle, especially for the kinds of 

major projects that will be needed such as pipelines, ports, and 

LNG facilities. 

6 

The cumbersome federal approval process is out of step with 

where we are as an energy-producing Nation today, and that is 

partly due to the ingrained mindset of energy scarcity that has 

proven slow to change despite the dramatic and unexpected rise in 

domestic energy supplies. But it is also due to overlapping laws 

and regs that create multiple opportunities for delays and for litigation. The Keystone XL pipeline is a perfect example of the kind 

of project delays we are talking about. We have been waiting for 

nearly 5 years for federal approval, and when it comes to the 

projects necessary to expand exports, thereby increasing jobs and 

improving our trade balance, we should not have to wait that long. 

Just as we are putting jobs at risk by failing to approve Keystone, 

we may forego jobs and economic growth by not pursuing energy 

export projects in a timely fashion. 

The private sector has made rapid progress in unlocking our energy abundance. What the American people now need is a regulatory process that can keep up with the evolving energy landscape. 

Are there other members wishing—I will yield the balance of my 

time to Mr. Barton. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

America’s energy landscape is changing for the better, creating opportunities for 

jobs, economic growth, energy security, and an enhanced standing around the world. 

But this bright energy future is far from guaranteed. Federal laws and regulations 

that are stuck in the past could devastate newfound opportunity, in addition to an 

administration that seems more intent on rewarding a handful of environmental activist allies rather than capitalizing on our new energy abundance that would create 

jobs and stimulate the economy for the betterment of all. 

According to the Congressional Research Service, America has the largest fossil 

fuel reserves of any nation on earth, and estimates keep growing because of technological advances. 

At the same time, the global demand for energy is on the rise. According to the 

World Bank, more than 1.2 billion people—17 percent of the world’s population— 

are still without access to electricity. Put two and two together, and the U.S. has 

the potential to become the world’s preeminent supplier of affordable and reliable 

energy. With commonsense planning and continued safe and responsible development, our country can help to take the power back from OPEC and geopolitically 

unstable regions of the world and be a force of change to help bring nations out of 

poverty with our energy resources. 

We are already seeing increased exports of coal, and rapidly rising domestic natural gas production is likely to become the next American-made energy source to 

reach the global market. As a recent report conducted for the Department of Energy 

concluded, America can export a portion of its natural gas abundance while still 

maintaining affordable domestic supplies to continue powering our manufacturing 

renaissance. 

All that is missing is the additional infrastructure to make expanded exports possible—and achieving our export potential would have the added benefit of creating 

thousands of new jobs. 

Unfortunately, the build-up of red tape over the last several decades has become 

a real obstacle, especially for the kinds of major projects that will be needed such 

as pipelines, ports, and LNG facilities. The cumbersome federal approval process is 

out of step with where we are as an energy-producing nation today. 

This is partly due to the ingrained mindset of energy scarcity that has proven 

slow to change despite the dramatic and unexpected rise in domestic energy supplies. But it is also due to overlapping laws and regulations that create multiple opportunities for delays and for litigation. 

The Keystone XL pipeline is a perfect example of the kind of project delays we 

are talking about. We have been waiting for nearly five years for federal approval 

of Keystone XL. When it comes to the projects necessary to expand exports, thereby 

increasing jobs and improving our trade balance, we should not have to wait that 

long. Just as we are putting jobs at risk by failing to approve Keystone XL, we may 

7 

forego jobs and economic growth by not pursuing energy export projects in a timely 

fashion. 

The private sector has made rapid progress in unlocking our energy abundance. 

What the American people now need is a regulatory process that can keep up with 

this evolving energy landscape. 

# # # 

Mr. BARTON. Thank you, Mr. Chairman. 

There are three things that we need to know with regards to natural gas exports. Number one, we are the world’s largest producer 

of natural gas. Number two, we have the world’s largest amount 

of reserves of natural gas, and number three, we have the world’s 

cheapest price. Prices in the United States are 1⁄3 of the—less than 1⁄2 the price over in Europe, less than 1⁄3 of the price in Asia, and 

less than 1⁄4 of the price in South America. It would seem it is a 

win/win if we could license some export facilities, get these natural 

gas products overseas, bring the wealth back from overseas that 

pays for it and use that to create more jobs in America. 

The same thing can be said on coal. The good news on coal is it 

doesn’t have some of the regulatory requirements for export that 

natural gas does. 

So Mr. Chairman, I think this is a good hearing, and I look forward to hearing from the witnesses. I will yield to whoever. 

Mr. WHITFIELD. Gentleman yields back. At this time, I recognize 

the gentleman from California, Mr. Waxman, for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman. 

At today’s hearing, we will focus on the export of liquefied natural gas and coal. These are complex issues and it is important for 

the subcommittee to understand how they relate to our energy policy. There are multiple factors to consider when evaluating exports. 

Proponents of increasing our exports of natural gas and coal stress 

that exports can help our balance of trade and create new economic 

opportunities. Opponents raise a number of concerns ranging from 

potential environmental harm to price impacts for U.S. consumers 

and manufacturers. 

In my view, a key factor on this issue, as on so many other energy issues, is climate change. Climate change is the biggest energy 

challenge we face. We can’t have a conversation about America’s 

energy policy without also having a conversation about climate 

change. The energy policy decisions we make today will have an 

impact on whether we can prevent the worst impacts of climate 

change in the future. We need to understand and weigh those 

risks, otherwise we are in danger of locking in infrastructure that 

will produce carbon pollution for decades to come, or creating 

stranded investments that must be shut down before they serve 

their useful life. 

Last week, the International Energy Agency released a report 

concluding that the world is not on track to meet the goal of limiting global average temperature to rise below 3.6 degrees Fahrenheit above the preindustrial levels. Climate scientists tell us that 

8 

if global average temperatures increase beyond this threshold, society will face devastating impacts. 

It is not too late to keep temperatures below the most dangerous 

levels if we act now to cut carbon pollution. The International Energy Agency found that taking key actions now to reduce emissions 

could be done at no net economic cost, while delay would impose 

trillions of dollars in costs on society. 

It is through that lens we need to examine whether to construct 

new export terminals to ship America’s natural gas and coal overseas. Liquefied natural gas and coal export terminals are huge, 

multi-billion dollar investments that will last for decades. It would 

make no sense to build these facilities only to find out that they 

are unsustainable because of the climate implications. 

I have an open mind about natural gas exports. Natural gas combustion for electricity emits less carbon pollution than coal. If natural gas exports displace coal consumption, that can produce a significant net climate benefit, especially if we tackle the problem of 

fugitive methane emissions. On the other hand, if natural gas exports raise gas prices in the United States, that could cause some 

utilities to switch back to coal, erasing some of the carbon pollution 

reductions that our country has recently achieved. We should fully 

understand these climate impacts before these facilities are built, 

not after. 

With respect to coal exports, the United States and the rest of 

the world need to reduce our dependence on carbon-intensive fuels 

like coal, and move towards a cleaner, low-carbon energy future. 

Building billions of dollars in new infrastructure that guarantees 

China a steady supply of cheap coal for decades to come is the opposite of what we should be doing. Governor Inslee of Washington 

State, Governor Kitzhaber of Oregon, the two States that would be 

most directly affected by new coal export terminals, wrote a letter 

to the White House on this very point. They argued that ‘‘before 

the United States and our trading partners make substantial new 

investments in coal generation and the infrastructure to transport 

coal, extending the world’s reliance on this fuel for decades, we 

need a full public airing of the consequences of such a path’’ and 

they call on the White House to thoroughly examine this matter. 

I agree with these Governors. If we do not, at the very least, understand the consequences of our energy policies before we implement 

them, I think we would be making a mistake. 

I thank our witnesses for appearing today and I look forward to 

your testimony. 

Mr. WHITFIELD. Thank you, Mr. Waxman. 

At this time I would like to introduce the first panel, and as I 

said in the beginning, we appreciate your being with us. Thank you 

for coming and we look forward to your comments. 

First we have Mrs. Jennifer Moyer, who is the Acting Chief, Regulatory Program at the U.S. Army Corps of Engineers. We have 

Mr. Jeff Wright, who is the Director of Office of Energy Projects at 

the Federal Energy Regulator Commission, and we have Mr. Christopher Smith, who is the Principal Deputy Assistant Secretary and 

Acting Assistant Secretary of Energy—I mean, for Fossil Energy at 

the Department of Energy. 

9 

So thank you for joining us, and each one of you will be recognized for 5 minutes for an opening statement. If you would remember to pull the microphone close to you and just be sure to turn it 

on, and when your time is expired, there are two little boxes and 

the red light will go on. 

So Ms. Moyer, we will recognize you for your 5-minute opening 

statement. Thank you. 

STATEMENTS OF JENNIFER C. MOYER, ACTING CHIEF, REGULATORY PROGRAM, U.S. ARMY CORPS OF ENGINEERS; JEFF 

C. WRIGHT, DIRECTOR, OFFICE OF ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION; AND CHRISTOPHER A. SMITH, PRINCIPAL DEPUTY ASSISTANT SECRETARY AND ACTING ASSISTANT SECRETARY FOR FOSSIL 

ENERGY, U.S. DEPARTMENT OF ENERGY 

STATEMENT OF JENNIFER C. MOYER 

Ms. MOYER. Thank you. Chairman Whitfield, Ranking Member 

Rush, and members of the subcommittee, I am Jennifer Moyer, 

Acting Chief of the Regulatory Program for the U.S. Army Corps 

of Engineers. Thank you for the opportunity to discuss the Corps’ 

regulatory authorities under Section 10 of the Rivers and Harbors 

Act of 1899, and Section 404 of the Clean Water Act. I will specifically discuss the Corps’ role in permitting of shipping facilities with 

a focus on coal and the issues currently being discussed in the Pacific Northwest. 

The responsibility for making final permit decisions has been delegated to our 38 district commanders. They are the closest to the 

proposed activities, have staff and expertise to evaluate applications, and know the aquatic resources and navigation issues involved. 

Section 10 permits are required for work in navigable waters of 

the U.S., while Section 404 permits are required for the discharge 

of dredged or fill material into waters of the United States. First, 

a little background on the existing shipping terminals along the 

Gulf Coast and East Coast, which have accounted for most U.S. 

coal exports over the past 10 years. 

Depending on originating and export facilities locations, coal is 

shipped over existing rail networks or by barge on our Nation’s inland waterway system. In 2012, total U.S. coal exports increased 

about 126 million tons due to a substantial increase in the amount 

of steam coal exported, which is used for generating electricity. The 

National Environmental Policy Act, or NEPA, mandates that agency conclusions be supported by critical thinking and reasoned analysis of the potential environmental consequences of a proposed 

agency action, such as a decision on a pending permit application. 

The Corps first identifies the federal action under consideration 

and then decides whether we have sufficient control and responsibility for activities outside of our regulatory jurisdiction; that is, 

waters of the United States, such that the issuance of a Corps permit would amount to approval of those activities. The Corps limits 

its review to only the specific activity requiring a Corps permit and 

those portions of the activity over which the Corps then has sufficient control and responsibility. The Corps is evaluating shipping 

10 

facility proposals at three separate and independent locations in 

the Pacific Northwest. These three facilities have generated considerable public interest, in part because these facilities’ primary purpose would be to receive coal via rail from the Powder River Basin 

in Wyoming and Montana for shipment via barges and oceangoing 

vessels to other locations, including Asia. 

When considered in accordance with the laws and regulations I 

have discussed above, many of the activities of concern to the public, such as rail traffic, coal mining, shipping of coal outside of U.S. 

waters, and the burning of coal overseas are outside of the Corps’ 

control and responsibility. These activities are too far attenuated 

and distant from the proposed activities being evaluated by the 

Corps to be considered effects of the Corps’ permit actions. The 

Corps expects to receive many comments from the public and from 

sister federal, state, and local agencies, and especially from tribes 

on these issues, and we will carefully consider all the comments we 

receive. 

Based on anticipated direct, indirect, and cumulative impacts, 

the Seattle District is currently preparing a draft environmental 

impact statement for the Gateway Project, and a separate draft environmental impact statement for the Millennium Project. For the 

Coyote Island Project, the Portland District is currently preparing 

an environmental assessment. The three proposed projects are not 

a Corps plan or a program, therefore preparation of a programmatic EIS in this case is not appropriate. Because they are 

independent projects at different locations whose impacts are not 

related and they are unconnected single actions under NEPA, preparation of an area-wide or regional EIS is not appropriate, based 

on our review of pertinent regulations. Based on these facts, we 

have determined that preparation of neither a programmatic EIS 

nor an area-wide or regional EIS is appropriate. 

The scope of analysis established by the Corps in the review of 

each proposal will include the specific activity required by a Corps 

permit, the environmental effects or impacts of that specific activity, and those portions of the entire project over which there is sufficient federal control and responsibility to warrant a Corps NEPA 

review. The preparation of the NEPA documents for these projects, 

all three of them, is at an early stage. 

In summary, our Seattle and Portland Districts are reviewing 

these proposals and carrying out the NEPA scoping process to determine which potential environmental effects to analyze in detail. 

The Corps Districts will carefully consider each of these proposals 

while appropriately bounding the scope of analysis and consideration of the impacts in accordance with existing regulations, policies, and guidance. 

I appreciate the opportunity to be here today and will be happy 

to answer any questions that you may have. 

[The prepared statement of Ms. Moyer follows:] 

11 


85447.001

DEPARTMENT OF THE ARMY 

COMPLETE STATEMENT 

OF 

JENNIFER A. MOYER 

ACTING CHIEF, REGULATORY PROGRAM 

U.S. ARMY CORPS OF ENGINEERS 

BEFORE 

THE COMMITTEE ON ENERGY AND COMMERCE 

SUBCOMMITTEE ON ENERGY AND POWER 

UNITED STATES HOUSE OF REPRESENTATIVES 

ON 

"U.S. Energy Abundance: Regulatory, Market and Legal Barriers to 

Export" 

June 18, 2013 
12 


85447.002

Chairman Whitfield, Ranking Member Rush, and Members of the Subcommittee, 

I am Jennifer Moyer, Acting Chief of the Regulatory Program for the U.S. Army Corps of 

Engineers. Thank you for the opportunity to discuss the Army Corps of Engineers 

(Corps) regulatory authorities under Section 10 of the Rivers and Harbors Act of 1899 

and Section 404 of the Clean Water Act (CWA). I will specifically discuss the Corps' 

role in the permitting of shipping facilities, with a focus on coal and the issues currently 

being discussed in the Pacific Northwest. 

Background on Section 10 of the Rivers and Harbors Act and Section 404 of the 

Clean Water Act 

Section 10 of the Rivers and Harbors Act of 1899 gives the Corps authority to 

ensure that there are no obstructions to the navigable waters of the United States. 

Under this authority, the Corps regulates work and/or structures within navigable waters 

related to activities such as: construction of piers, jetties, and weirs; dredging projects; 

and other such projects. Section 404 of the Clean Water Act (CWA) established a 

program to regulate the discharge of dredged or fill material into "waters of the United 

States: Under the Section 404 authority, the Corps regulates discharges of dredged or 

fill material into jurisdictional waters of the United States including wetlands. Such 

discharges often are associated with activities such as highway construction; 

residential, commerCial, and industrial developments; energy projects; and a variety of 

other projects. In addition to these two authorities, the Corps regulates the transport of 

dredged material for dumping in ocean waters under Section 103 of Marine Protection 

Research and Sanctuaries Act (MPRSA). In reviewing project proposals, the Corps 

must comply with other applicable statutes and regulations. 
13 


85447.003

The Secretary of the Army, acting through the Chief of Engineers, has delegated 

responsibility for making final decisions on permit applications to the commanders in the 

38 Corps districts. The regulatory program is implemented day-by-day at the district 

level by staff that knows their regions and resources, and the public they serve. 

Nationwide, the Corps makes tens of thousands of final permit decisions annually. In all 

but the very rarest of circumstances, these decisions are made at the district level. 

When implementing the Corps regulatory program, the Corps is neither an opponent nor 

a proponent for any specific project - the Corps' responsibility is to process permit 

applications in accordance with all applicable laws and regulations, in order to make fair 

and objective and timely permit decisions. This responsibility of the Corps district 

includes preparing the appropriate environmental analysis and other appropriate work 

under the applicable laws and regulations. 

EXisting Export Facilities for Coal 

Information produced by the U.S. Energy Information Administration indicates 

that seaports on the Gulf Coast and East Coast have accounted for most U.S. coal 

exports over the past ten years. These facilities are located in the Baltimore, Norfolk, 

Mobile, and New Orleans areas. About 65 percent of the total U.S. exports of 107 

million tons in 2011 was coking coal, which is used in making iron and steel. In 2012, 

U.S. exports increased to about 126 million tons due to a substantial increase in the 

amount of steam coal (used for generating electricity) exported at the Norfolk and New 

Orleans ports. Depending on the originating and port locations, this coal is shipped to 

the port facilities over existing rail networks or by barge on the inland waterways 

2 
14 


85447.004

navigation system. The New Orleans and Norfolk Districts of the Corps have received 

some objections while processing applications for Section 10 and/or Section 404 

permits for the construction and operation of expanded coal export facilities in the New 

Orleans and Norfolk areas. 

National Environmental Policy Act (NEPA) 

NEPA's mandate is to ensure a fully informed and well-considered decision and 

that agency conclusions be supported by critical thinking and reasoned analysis of the 

potential environmental consequences of a proposed agency action, such as a decision 

on a pending permit based on project-specific facts. NEPA does not mandate any 

particular result but ensures agencies fully explain the choices made. Corps NEPA 

documents should be fully transparent with the public, inform the decision-maker, and 

provide a sound basis for the decision on the Department of the Army permit 

application. They should also address, concurrently whenever practicable, the other 

relevant environmental requirements including any necessary consultation or 

coordination. 

The Corps must identify the federal action under consideration and must decide, 

for purposes of NEPA, whether the Corps has sufficient "control and responsibility" for 

activities outside of its regulatory jurisdiction such that the issuance of a Corps permit 

would amount to approval of those activities. For purposes of the Corps regulatory 

program, the definition of "federal action" is straightforward. The Corps focuses its 

NEPA analysis on the federal actions defined either by the discharge of dredged and/or 

fill materials into waters of the United States, and/or by any work in navigable waters. 

3 
15 


85447.005

The specific activity requiring authorization by a Corps permit may, at times, be 

merely one component of a larger project involving upland activities. Identifying aspects 

of a broader project over which the Corps may have "control and responsibility" by 

virtue of its permitting authorities requires careful consideration. Pursuant to the 

provisions of its Appendix B NEPA regulations, the Corps includes in its reviews the 

specific activity requiring a Corps permit and those portions of the activity over which 

the Corps has sufficient control and responsibility to warrant review by the Corps under 

NEPA. 

Proposed Shipping Facilities in the Pacific Northwest Under Review 

The Corps is evaluating proposals at three separate and independent shipping 

facilities in the Pacific Northwest that would require Department of the Army (DA) permit 

authorizations, as issued by the Corps. Because those three new facilities would 

involve placing structures in or over navigable waters and/or the discharge of dredged 

or fill material in other waters of the United States subject to Clean Water Act (CWA) 

jurisdiction, all three proposed projects require DA permits under Section 10 of the 

Rivers and Harbors Act of 1899 (RHA) and/or Section 404 of the CWA. The three 

proposed export terminals in Washington and Oregon have created considerable public 

interest, in part because the facilities' primary purpose would be to receive coal via rail 

from the Powder River Basin in Wyoming and Montana, and to ship that coal via barges 

and Panamax vessels for use in other locations, including Asia. Two of these proposed 

terminals would be located on the Columbia River - Coyote Island at Port of Morrow, 

OR (-mile point 270), being evaluated by the Portland District; and Millennium Bulk 

Terminal at Longview, WA (-mile point 63), being evaluated by the Seattle District. The 

4 
16 


85447.006

third of the proposed terminals, called the Gateway Pacific Terminal, located near 

Bellingham, WA on the Puget Sound, is also being evaluated by the Seattle District. 

Although the proposed shipping facilities share a similar purpose, the facts and 

circumstances related to each differ substantially. Each of the three proposed facilities 

would cause very different types of impacts that are subject to regulation under the 

Corps Section 10 and/or Section 404 regulatory authorities. Section 103 ofthe MPRSA 

is not triggered by any of the proposed facilities. 

Other potential shipping facilities (e.g. Coos Bay, Grays Harbor, etc.) have also 

been discussed during in the past several months: however, the Corps is not currently 

engaged in discussions with or processing permit applications for any facilities beyond 

the three identified above. 

When considered in accordance with the laws and regulations discussed above, 

many of the activities of concern to the public, such as rail traffic, coal mining, shipping 

coal outside of U.S. territory, and the ultimate burning of coal overseas, are outside the 

Corps' control and responsibility for the permit applications related to the proposed 

projects. We note that coal mining in the Powder River Basin has been occurring for 

many years, with that coal being shipped by rail to many different destinations. The 

potential change in rail traffic patterns is beyond the control and expertise of the Corps, 

and requires no involvement from the Corps. Coal produced from the Powder River 

Basin currently transits the rail system to various destinations. Similarly, the possible 

future shipment of coal by oceangoing vessels across the Pacific Ocean beyond the 

limits of U.S. navigable waters, and the possible future off-loading, distribution, and 

burning of coal in Asia are attenuated and far removed from the activities regulated by 

5 
17 


85447.007

the Corps at any of the three shipping facilities. Commercial markets drive the need for 

and destination of coal which could change regardless of the Corps decision regarding 

the proposed activities in waters within our jurisdiction. 

The draft NEPA EIS documents that will be available for public review will explain 

the Corps' approach to these issues. Indeed, the Corps expects to receive many 

comments on these issues from the public and from sister federal, state, and local 

agencies given the sUbstantial interest in the production, transport, and use of coal that 

may transfer through a port facility that requires a Corps permit for some aspect of its 

construction. At that pOint, the public will be able to provide detailed feedback for the 

Corps to consider as it develops its final NEPA documents. 

Preparation of NEPA Documents for the Three Pacific Northwest Shipping 

Facilities 

The Corps Seattle and Portland Districts are currently reviewing three separate 

proposals (one for each of the three proposed terminals) and preparing a projectspecifiC NEPA document for each. Based on anticipated direct, indirect and cumulative 

impacts, the Corps is preparing a separate draft EIS for the Gateway project and 

another draft EIS for the Millennium project. For the Coyote Island project, the Portland 

District is currently preparing an environmental assessment. When that document is 

completed, the district will determine whether a site-specific EIS is required, or instead 

to prepare a Finding of No Significant Impact (FONSI). The scope of analysis that the 

Corps will establish in the review of each proposal will include the specific activity 

requiring a DA permit (issued by the Corps), the environmental impacts of that speCific 

activity, and those portions of the entire project (that is, the portions that are beyond the 

6 
18 


85447.008

regulatory jurisdiction of the Corps) over which there is sufficient federal control and 

responsibility to warrant Corps NEPA review. The preparation of the NEPA documents 

for these projects is at an early stage. 

The Corps has received feedback from members of the public suggesting that it 

should prepare a single EIS to assess the potential impacts of all three shipping 

facilities in the Pacific Northwest. Two concepts established by the Council on 

Environmental Quality NEPA regulations provide the framework for determining how to 

respond to these suggestions. First, the regulations require a programmatic EIS. One 

type of programmatic NEPA review is for a "federal action" that consists of "adoption of 

programs, such as a group of concerted actions to implement a specific policy or plan; 

systematic and connected agency decisions allocating agency resources to implement 

a specific statutory program or directive." 40 C.F.R. 150S.1S(b)(3). The second type of 

programmatic NEPA review is often referred to as "area-wide" or "regional", where the 

NEPA review focuses on a range of federal actions that share certain commonalities. 

These would include broad actions occurring in the same general location or having 

relevant similarities such as timing or impacts. 40 C.F.R. §§ 1502.4(b)-(c) and 150S.25. 

There is no compelling justification for the preparation of a "programmatic EIS" with 

respect to the three proposed facilities under review. The Corps does not build or 

finance the construction of these or other land-side port facilities, nor is it allocating its 

resources to implement any plan for development. Rather, the Corps is dealing with 

them in its regulatory program responsibilities. They are independent projects in 

different locations, whose impacts are not related. (See 40 C.F.R. 1502.4(b) and 

150S.1S(b)(3». 

7 
19 


85447.009

Regulations at 40 C.F.R. 1508.25 address how a federal agency that has 

decided to produce an EIS should determine the "scope" of that EIS in terms of the 

"range of actions" to be considered. This "range of actions" does not include 

"unconnected single actions." 40 C.F.R.1508.25. Federal actions that should be 

considered together include "connected actions," "cumulative actions" (actions with 

cumulatively significant impacts), and "similar actions" (those that have similarities that 

logically could be considered together, such as actions with common timing or 

geography) 40 C.F.R.1508.25. "Connected actions" are separate actions that may 

automatically trigger another, actions that cannot or will not proceed absent related 

actions, or actions that are "interdependent parts of a larger action and depend upon the 

larger action for their justification." (The labels "area-wide" or "regional" are sometimes 

used to describe one EIS that assesses multiple proposed federal actions in a 

geographic area, because those actions are connected or similar, or would have 

cumulative environmental effects). The Corps has determined that neither a 

Programmatic nor an area-wide/regional EIS are appropriate when considering the 

proposed permits in light of based on these NEPA regulations. 

In addition to the shipping facilities, there is also a separate permit application for 

a new BNSF rail spur at the Gateway Terminal. In this context, the Gateway Pacific 

and BNSF proposals are being considered in a single NEPA document because they 

fall within the regulatory definitions of "cumulative actions," "connected actions," and 

"similar actions." The applicants for both of these projects propose fill of wetlands on a 

defined site, with implications for cumulative impacts to that resource; both projects are 

"connected" in that they are parts of a larger development of a port facility and "similar" 

8 
20 


85447.010

in that they have common timing and are proposed for the same site. 

However, the other permit applications, for the Millennium Bulk Terminal and the 

Port of Morrow proposal, are being considered in separate project specific NEPA 

documents - separate both from each other and from the analysis of the Gateway 

Pacific/BNSF project. The three proposed facilities are in different watersheds and are 

not sufficiently close to one another from a cumulative impacts perspective to justify 

one EIS for all three permit applications. 

Summary 

We are certainly aware of and appreciate the concerns that members of the 

public have expressed in association with the proposed shipping facilities in the Pacific 

Northwest. Our Seattle and Portland Districts are reviewing these proposals, and are 

carrying out the NEPA "scoping" process to determine which potential environmental 

effects to analyze in detail. As I clarified above, the scope of our analysis with respect 

to these proposals is defined by law and regulation. The Corps districts will therefore 

carefully consider each of these proposals on its merits, while appropriately bounding 

the scope of their analysis and their consideration of the impacts. 

I appreciate the opportunity to be here today and I will be happy to answer any 

questions you may have. 

9 
21 

Mr. WHITFIELD. Thank you, Ms. Moyer. 

Mr. Wright, you are recognized for 5 minutes. 

STATEMENT OF JEFF C. WRIGHT 

Mr. WRIGHT. Chairman Whitfield, Ranking Member Rush, and 

members of the subcommittee, my name is Jeff Wright and I am 

the Director of the Office of Energy Projects at the Federal Energy 

Regulatory Commission. The Office of Energy Projects is responsible for, among other things, the authorization and oversight of 

the construction and operation of onshore and near-shore liquefied 

natural gas terminals. Today I will discuss the process which the 

Commission uses to review applications for facilities for the export 

of LNG. 

With respect to LNG, the Commission does not authorize the import or the export of LNG. That authority rests with the Department of Energy. Accordingly, applications for authority to import or 

export LNG must be submitted to DOE, while applications for the 

construction and operation of import or export related facilities 

must be submitted to the Commission. 

The Commission’s review process is comprised of three distinct 

phases: pre-filing review, application review, and post-authorization review. Each stage of the review process requires its submission of detailed information that involves a review and consultation 

with key stakeholders and other federal agencies, such as the 

Coast Guard and the Department of Transportation. 

Section 311 of the Energy Policy Act of 2005 requires perspective 

applicants seeking Commission authority to construct and operate 

an LNG terminal to participate in a pre-filing process for a period 

of at least 6 months. This is the beginning of the Commission’s 

staff review, and it involves not only an early analysis of the 

project proposal, but also provides a transparent forum for consultation and discussion. The pre-filing process is designed to engage all stakeholders in order to identify and resolve potential 

issues related to the construction and operation of a facility before 

the filing of a formal application. During this process, project-specific issues are raised throughout the environmental scoping process and/or by other means, such as open houses, public meetings, 

site visits, and/or filed comments. At this stage, information needs 

are identified and studies are conducted as necessary to fill data 

gaps. 

The end of the pre-filing process occurs when the applicant files 

its formal application. Once the formal application has been filed, 

any person can move to intervene in the Commission’s proceedings. 

Interveners become parties to a proceeding and have the right to 

request rehearing of Commission orders and seek relief of final 

agency actions in U.S. Circuit Courts of Appeal. In addition, all interested parties have the opportunity to place their concerns regarding the project into the record and file any evidence they feel 

is important for the Commission to consider. 

During the application review phase, the Commission staff analyzes the formal application and once sufficient information to address environmental and safety issues exists in the record, it establishes a schedule for the production of the environmental review 

documents. The environmental document is then issued for public 

22 

comment, and comments received on that document are addressed. 

The final environmental document contains staff’s conclusions regarding the feasibility, safety, and environmental impacts associated with the proposed facilities. The document also includes any 

recommended measures for ensuring safety and mitigating any environmental impacts identified through analysis of the proposal 

and consideration of concerns raised during the pre-filing and application review. 

After issuance of the final environmental document, the Commission considers the entire record of the proceeding. If the Commission finds that the environmental and safety impacts from the construction and operation of the LNG facility are acceptable and authorizes the proposal, the project specific mitigation measures recommended in the environmental document are included as conditions to this authorization. 

During the post-authorization review phase, detailed plans for 

the Commission-required mitigation are developed. Approval of 

these detailed plans must be received before construction can commence. During the construction period, mitigation measures are 

implemented and monitored. As part of its ongoing detailed postauthorization project review, staff inspects the construction and 

progress to ensure that all required measures are implemented. Inspections during construction entail the review of quality assurance 

and quality control plans, nonconformance reports, and cool down 

and commissioning plans to ensure that the installed design is consistent with the safety and operability characteristics of the proposal approved by the Commission. 

Finally, at the end of construction, the project sponsor will file 

a request for authorization to commence operation of the facility. 

The information contained in this request must demonstrate how 

the project sponsor has complied with all of the Commission’s requirements and must be consistent with the results of the Commission’s inspections. This final authorization from the Commission 

will not be granted unless all measures to ensure safe and secure 

operations and the necessary environmental protections are in 

place and serving their intended purpose. Once a facility is placed 

in service, it is subject to continuing inspections by the FERC staff 

for the life of the facility. This ensures that the facility continues 

to be operated and maintained in accordance with the Commission’s original authorization. 

This concludes my testimony. I will be happy to answer any 

questions you may have. 

[The prepared statement of Mr. Wright follows:] 

23 


85447.011

Testimony of 

Jeff C. Wright 

Director, Office of Energy Projects 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, DC, 20426 

202-502-8700 

Before the Committee on Energy and Commerce 

Subcommittee on Energy and Power 

United States House of Representatives 

Hearing on 

"u.s. Energy Abundance: Regulatory, Market, and Legal Barriers to Export" 

June 18, 2013 
24 


85447.012

Mr. Chairman and Members of the Subcommittee: 

My name is Jeff Wright and I am the Director ofthe Office of Energy 

Projects (OEP) at the Federal Energy Commission (FERC or Commission). I 

appear today as a Commission staff witness speaking with the approval of the 

Chairman of the Commission. The views I express are my own and not 

necessarily those of the Commission or of any individual Commissioner. 

The Office of Energy Projects is responsible for the licensing, 

administration, and safety of non-federal hydropower projects; the certification of 

interstate natural gas pipelines and storage facilities; and the authorization and 

oversight over the construction and operation of on-shore and near-shore liquefied 

natural gas (LNG) terminals. Thank you for the opportunity to appear before you 

today to discuss the process which the Federal Energy Regulatory Commission 

uses to review applications for facilities for the export of LNG. 

With the creation of the Department of Energy (DOE) in 1?77, Congress 

directed all applications for authorization for the exportation or importation of 

natural gas to or from a foreign country to be submitted to the Secretary of Energy. 

In accordance with the Natural Gas Act and 15 U.S.c. Part 717, no entity may 

import or export natural gas without first having secured an order from the DOE 

authorizing it to do so. The Secretary of Energy subsequently delegated to the 

Commission the authority to approve or deny applications for the construction and 

-2-
25 


85447.013

operation of those facilities used for the import or export of natUral gas. 1 This 

delegation was most recently re-affirmed in 2006 by DOE Delegation Order No. 

00-004.00A. 

With respect to LNG, the Commission is an environmental and safety 

regulatory agency. The Commission does not authorize the import or the export of 

LNG as a commodity; that authority was retained by the DOE. Accordingly, 

applications for authority to import or export the commodity of natural gas must 

be submitted to the DOE, while applications for the construction and operation of 

the facilities necessary to perform such imports or exports must be submitted to 

theFERC. 

The FERC requirements for filing an application for the authorization of 

LNG import or export facilities are located in Title 18, C.F.R., Part 153. Section 

153.6 requires an applicant to state whether DOE authorization for the import or 

export of natural gas is required and whether DOE has granted the required 

authorizations. Section 3 of the Natural Gas Act (NGA) states that the importation 

of LNG is consistent with the public interest. Section 3 also provides that LNG 

exports to countries with which the United States has executed a free trade 

agreement are in the public interest. In those situations where applicants are 

seeking to export (or import) LNG to non-free trade agreement countries, Section 

3(a) of the NGA requires the DOE to make a determination on whether such 

exports (or imports) will not be consistent with the public interest. 

1 DOE Delegation Order No. 0201-112. Federal Register, 49 Fed. Reg. 6684 (1984). 

- 3 -
26 


85447.014

The Commission's review process is identical for either LNG import or 

export terminals. This process is comprised of three distinct phases: pre-filing 

review, application review, and post-authorization review. Each stage of the 

review process requires the submission of progressively more detailed information 

and involves an exhaustive review and consultation with key stakeholders and 

other federal agencies such as the U.S. Coast Guard and the u.s. Department of 

Transportation. How these phases build upon each other is described below. 

Section 311 of the Energy Policy Act of 2005 requires prospective 

applicants seeking Commission authority to construct and operate an LNG 

terminal to participate in the Commission's Pre-Filing Process for a period of at 

least six months. This is the beginning of the Commission staff review and it 

involves not only an early analysis of the project proposal, but also provides a 

transparent forum for consultation and discussion among participants in the 

process (namely, the prospective applicant, FERC staff, affected landowners, other 

federal agencies, state and local entities, and the public). The Commission's PreFiling Process is designed to engage all stakeholders at the earliest point to 

identify and resolve potential issues related to the construction and operation of a 

facility before the filing of a formal application. During this process, projectspecific issues are raised through the environmental scoping process and/or other 

means, such as open-houses, public meetings, site visits, or filed comments. 

Information needs are identified and studies are conducted as necessary to fill data 

-4-
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85447.015

gaps. The end of the Pre-Filing Process occurs when the applicant files its formal 

application. 

Once the formal application has been filed, any individual or organization 

can move to intervene in the Commission proceeding. Intervenors become parties 

to a proceeding and have the right to request rehearing of Commission orders and 

seek relief of final agency actions in the U.S. Circuit Courts of Appeal. In 

addition to intervention, all interested entities have the opportunity to place their 

concerns regarding the project into the record and file any evidence they feel is 

important for the Commission to consider, 

During the application review phase, the Commission staff reviews the 

formal application and, once sufficient information to address environmental and 

safety issues exists in the record, establishes a schedule for the production of the 

environmental review documents. The environmental document is then issued for 

pubic comment, and comments received on that document are addressed. 

The final environmental document contains staff's conclusions regarding 

the feasibility, safety, and environmental impacts associated with the proposed 

facilities. The document also includes any recommended measures for ensuring 

safety and mitigating any environmental impacts identified through analysis of the 

proposal and consideration of concerns raised during the pre-filing and application 

review. 

After issuance of the final environmental document, the Commission 

considers the entire record of the proceeding. If the Commission ultimately fmds 

- 5 -
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85447.016

that the environmental and safety impacts from the construction and operation of 

the LNG facility are acceptable and authorizes the proposal, the project-specific 

mitigation measures recommended in the environmental documents, and any 

others identified by the Commission as necessary, are included as conditions to the 

authorization. 

Development of the information and the consultation required by these 

mitigative measures are the subject of the third phase of the Commission's 

process: post-authorization review. It is during the post-authorization review 

phase that detailed plans for the Commission-required mitigation are developed. 

Approval of these detailed plans, and the specified conditions of an order, must be 

received before the Commission's second authorization, the authorization to 

commence construction, will be issued. Authorization to commence construction 

will not be issued until the conditions requiring pre-construction approval have 

been satisfied, with input as appropriate from all named agencies and other parties. 

During what is typically a multi-year construction period, mitigation 

measures are implemented and monitored. Frequently during this period, on-theground conditions are identified that require modifications of the mitigation plans 

that were developed prior to the start of construction. As part of its ongoing, 

detailed post-authorization project review, staff inspects the construction in 

progress, as do third-party inspectors, ensuring that all required measures are 

implemented. 

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85447.017

FERC staffs inspections during construction entail the review of quality 

assurance and quality control plans, non-conformance reports, and cool down and 

commissioning plans to ensure that the installed design is consistent with the 

safety and operability characteristics of the proposal approved by the Commission. 

Finally, at the end of construction, the project sponsor files a request for 

authorization to commence operation of the facility. 

The information contained in this request must demonstrate how the project 

sponsor has complied with all of the Commission requirements and must be 

consistent with the results of the Commission's inspections. This fmal 

authorization from the Commission will not be granted unless all measures to 

ensure safe and secure operations, and the necessary environmental protections, 

are in place and serving their intended purpose. 

Once a facility is placed in service, it is subject to continuing inspections by 

FERC staff for the entire life of the facility. This ensures that the facility 

continues to be operated and maintained in accordance with the Commission's 

original authorization. 

This concludes my testimony. I will be happy to answer any questions you 

may have. 

-7-
30 

Mr. WHITFIELD. Thank you, Mr. Wright. 

Mr. Smith, you are recognized for 5 minutes. 

STATEMENT OF CHRISTOPHER A. SMITH 

Mr. SMITH. Thank you, Chairman Whitfield, Ranking Member 

Rush, and members of the subcommittee. I appreciate the opportunity to discuss the Department of Energy’s program regulating 

the export of natural gas, including liquefied natural gas. 

The Department’s authority to regulate the export of natural gas 

arises from the Natural Gas Act, which provides two statutory 

standards for processing applications to export LNG from the 

United States: one for export to free trade agreement nations, and 

one for export to nations with which the United States does not 

have a free trade agreement. 

By law, applications to export natural gas to free trade agreement nations are deemed consistent with the public interest and 

the Secretary of Energy must grant authorization without modification or delay. As of today, the Department of Energy has approved 

24 long-term applications to export a lower 48 LNG to free trade 

agreement countries, and there are three other currently pending. 

For applications to export natural gas to non-FTA nations, the 

Secretary of Energy must grant the authorization unless, after opportunity for hearing, the proposed export is found to not be consistent with the public interest. 

The Department’s review of applications to export LNG to nonFTA countries is conducted through a publically transparent process which includes full public interest review. To date, the Department has granted two long-term applications to export domestically 

produced lower 48 LNG to non-FTA countries. In the Sabine Pass 

order, the Department of Energy stated that it would evaluate the 

cumulative impact of that authorization and any future authorizations for export authority when considering subsequent applications. Following the issuance of that order, the Department of Energy undertook a two-part study of the cumulative economic impact 

of LNG exports, to which were received over 190,000 comments. 

On May 17, the Department of Energy granted the second longterm application to export LNG, which was granted to Freeport 

LNG in a conditional order, pending successful environmental review. The order was granted after an extensive, careful review of 

the application, the LNG export study, public comments for and 

against the application, and public comments of the cumulative impact of LNG exports filed in the LNG export study. 

Currently, the Department of Energy has 20 non-FTA export applications pending. Going forward, the Department will continue 

processing the pending applications on a case-by-case basis, following the order of precedence previously established and set forward on the Department of Energy’s Web site. Finally, the Department will assess the impact of any market developments on subsequent public interest determinations as further information becomes available. 

Due to the adjudicatory nature of this process, Mr. Chairman, I 

will be unable to comment today on issues that are presently being 

addressed in our pending proceedings. However, I can speak to the 

Department of Energy’s statutory authority, our process to review 

31 

applications, our two-party LNG export study, the comments we received on those studies, and other recent developments in LNG export. With respect to these topics, the Department and I are committed to being as responsive as possible to any questions that the 

committee may have. 

In conclusion, Mr. Chairman, I would like to emphasize that Department of Energy is committed to moving this process forward as 

expeditiously as possible. We understand the significance of this 

issue, as well as the importance of getting it right. Thank you. 

[The prepared statement of Mr. Smith follows:] 

32 


85447.018

Statement of 

Christopher Smith 

Assistant Secretary for Fossil Energy (Acting) 

Office of Fossil Energy 

U.S. Department of Energy 

Before the 

Subcommittee on Energy and Power 

Committee on Energy and Commerce 

United States House of Representatives 

The Department of Energy's Progmm Regulating Liquefied Natuml Gas Export 

Applications 

June 18,2013 

Thank you Chainnan Whitfield, Ranking Member Rush, and members of the Subcommittee; I 

appreciate the opportunity to be here today to discuss the Department of Energy's (DOE) 

program regulating the export of natural gas, including liquefied natural gas (LNG). 

Recent Developments in LNG Exports 

The boom in domestic shale gas provides unprecedented opportunities for the United States. 

Over the last several years, domestic natural gas production has increased significantly, 

outpacing consumption growth, resulting in declining natural gas and LNG imports. Production 

growth is primarily due to the development of improved drilling technologies, including the 

ability to produce natural gas trapped in shale gas geologic fonnations. 

Historically, the DOE has played a critical role in the development of technologies that have 

enabled the United States to expand development of our energy resources. Between 1978 and 

1992, public research investments managed by the Department contributed to the development 

of hydraulic fracturing and extended horizontal lateral drilling technologies that spurred private 

sector investments and industry innovation, unlocking billions of dollars in economic activity 

associated with shale gas. 

Today, domestic natural gas prices are lower than international prices of delivered LNG to 

overseas markets. As in the United States, demand for natural gas is growing rapidly in foreign 

markets. Due primarily to these developments, DOE has received a growing number of 

applications to export domestically produced natural gas to overseas markets in the fonn of 

LNG. 

DOE's Statutory Authority 

DOE's authority to regulate the export of natural gas arises under section 3 of the Natural Gas 

Act (NGA), 15 U.S.C. § 717b, and section 301(b) of the DOE Organization Act, 42 U.S.C. § 
33 


85447.019

7151. This authority is vested in the Secretary of Energy and has been delegated to the Assistant 

Secretary for Fossil Energy. 

Section 3(a) of the NGA sets forth the standard for review of most LNG export applications: 

[N]o person shall export any natural gas from the United States to a foreign country or 

import any natural gas from a foreign country without first having secured an order of the 

[Secretary of Energy] authorizing it to do so. The [Secretary] shall issue such order upon 

application, unless after opportunity for hearing, [he] fmds that the proposed exportation 

or importation will not be consistent with the public interest. The [Secretary] may by [the 

Secretary's] order grant such application, in whole or part, with such modification and 

upon such terms and conditions as the [Secretary] may find necessary or appropriate. 

Section 3(a) thus creates a rebuttable presumption that a proposed export of natural gas is in the 

public interest. Section 3(a) also authorizes DOE to attach terms or conditions to the order that 

the Secretary finds are necessary or appropriate to protect the public interest. Under this 

provision, DOE performs a thorough public interest analysis before acting. 

In the Energy Policy Act of 1992, Congress introduced a new section 3(c) to the NGA. Section 

3( c) created a different standard of review for applications to export natural gas, including LNG, 

to those countries with which the United States has in effect a free trade agreement requiring the 

national treatment for trade in natural gas. Section 3(c) requires such applications to be deemed 

consistent with the public interest, and requires such applications to be granted without 

modification or delay. 

Free Trade Agreement (FTA) Conntries 

There are currently 18 countries with which the United States has in place free trade agreements 

that require national treatment for trade in natural gas for purposes ofthe Natural Gas Act. 

These 18 countries include: Australia, Bahrain, Canada, Chile, Colombia, the Dominican 

Republic, EI Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, 

Panama, Peru, Republic of Korea, and Singapore. 

There also are two countries - Israel and Costa Rica - that have free trade agreements with the 

United States that do not require national treatment for trade in natural gas for purposes of the 

Natural Gas Act. 

Because complete applications under section 3(c) must be granted without modification or delay 

and are deemed to be in the public interest, DOE does not conduct a public interest analysis of 

those applications. 

DOE Process to Review Applications to Export LNG to non-FT A Conntries 

DOE's review of applications to export LNG to non-FTA countries is conducted through a 

public and transparent process. Upon receipt of an application, DOE issues a notice of the 

2 
34 


85447.020

application in the Federal Register, posts the application and all subsequent pleadings and orders 

in the proceeding on its website, and invites interested persons to participate in the proceeding by 

intervening and/or filing comments or protests. Section 3(a) applicants are typically given an 

opportunity to respond to any such comments or protests and, after consideration of the evidence 

that has been introduced into the record, DOE issues an order either granting the application as 

requested, granting with additional terms or conditions, or denying the application. 

Under the Natural Gas Act, DOE's orders are subject to a rehearing process that can be initiated 

by any party to a proceeding seeking to challenge DOE's determinations. Court review is 

available as well after the rehearing process is exhausted. 

Public Interest Criteria for NGA Section 3(a) Applications 

For applications requesting authority to export LNG to countries that do not have free trade 

agreements requiring national treatment for trade in natural gas, DOE conducts a full public 

interest review. A wide range of criteria are considered as part of DOE's public interest review 

process, including but not limited to: 

Domestic need for the natural gas proposed for export 

Adequacy of domestic natural gas supply 

- U.S. energy security 

- Impact on the U.S. economy (GDP), including impact on domestic natural gas 

prices 

International considerations 

Environmental considerations 

These criteria are not statutory but rather have been developed over several decades and 

supplemented and refined by subsequent agency adjudication. It is important to emphasize, 

however, that these criteria are not exclusive. Other issues raised by commenters and/or 

interveners or DOE that are relevant to a proceeding may be considered as well. 

Jurisdiction over the LNG Commodity Export Versus the LNG Export Facility 

The DOE exercises export jurisdiction over the commodity (natural gas), whereas other Federal, 

state, and local organizations have jurisdiction over the facilities used in the import or export of 

the commodity, depending on the facility location. 

The Federal Energy Regulatory Commission (FERC) is responsible for authorizing the siting, 

construction, expansion, and operation of LNG import and export terminals pursuant to section 

3(e) of the Natural Gas Act. FERC may approve those applications in whole or in part with such 

modifications and upon such terms and conditions as it finds necessary or appropriate. 

The U.S. Department of Transportation's Maritime Administration (MARAD) is responsible 

under the Deepwater Port Act of 1974, as amended, (33 U.S.C. § 1501 et seq.) for the licensing 

3 
35 


85447.021

system for ownership, construction, operation and decommissioning of deepwater port structures 

located beyond the U.s. territorial sea, including deepwater LNG export facilities. 

Sabine Pass Authorization - First Long-Term LNG Export Authorization 

DOE granted the first long-term application to export domestically-produced lower-48 LNG to 

non-FTA countries to Sabine Pass Liquefaction, LLC, (Sabine Pass) in DOEIFE Order Nos. 

2961 (May 20,2011), 2961-A (August 7, 2012), and 2961-B (January 25,2013). The LNG 

export volume authorized is equivalent to 2. 2 billion cubic feet per day (Bcf/d) of natural gas for 

a period of20 years. In the first of the Sabine Pass orders, DOE stated that it would evaluate the 

cumulative impact of the Sabine Pass authorization and any future authorizations for export 

authority when considering subsequent applications. 

LNG Export Study 

Following issuance of the Sabine Pass order, DOE undertook a two-part study of the cumulative 

economic impact of LNG exports. The first part of the study was conducted by the Energy 

Information Administration (E1A) and looked at the potential impact of additional natural gas 

exports on domestic energy consumption, production, and prices under several prescribed export 

scenarios. The second part of the study, performed by NERA Economic Consulting under 

contract to DOE, evaluated the macroeconomic impact of LNG exports on the U.S. economy 

with an emphasis on the energy sector and natural gas in particular. The NERA study was made 

available on December 5, 2012. 

On December 11, 2012, DOE published in the Federal Register a Notice of Availability of the 

EIA and NERA studies, and inserted both parts of the study into 15 then-pending LNG export 

application dockets for public comment. An initial round of comments on the study ended on 

January 24,2013, and reply comments were due February 25, 2013. 

Comments to the LNG Study 

In response to the Notice of Availability, DOE received over 188,000 initial comments and 

approximnately 2,700 reply comments. Proponents of LNG exports generally endorsed the 

results of the two-part study, particularly the conclusion of the NERA study that increasing 

levels of exports will generate net economic benefits for the United States. On the other hand, 

comments filed by opponents of LNG exports raised a number of issues, including challenges to 

the assumptions and economic modeling underlying the two-part study and assertions that the 

two-part macroeconomic study should have further examined regional, sectoral, or 

environmental issues. 

Second Long-Term LNG Export Authorization 

On May 17,2013, DOE granted the second long-term application to export LNG, which was 

granted to Freeport LNG Expansion, L.P. and FLNG Liquefaction, LLC in DOEIFE Order No. 

3290 (a conditional order pending a satisfactory environmental review). The order was granted 

4 
36 


85447.022

after an extensive review ofthe application to export LNG from the Freeport LNG Terminal, the 

LNG Export Study, public comments for and against the application, and public comments on 

the cumulative impact of LNG exports submitted in response to the LNG Export Study. DOE 

determined that exports from the terminal at a rate of up to 104 billion cubic feet per day for a 

period of20 years was not inconsistent with the public interest. 

LNG Export Applications Status 

Consistent with the NGA, as of June 7, 2013, DOE has approved 24 long-term applications to 

export lower-48 LNG to free trade agreement countries equivalent to 29041 billion cubic feet per 

day of natural gas from 21 new liquefaction facilities. In addition, DOE has three long-term 

applications pending to export lower-48 LNG to free trade agreement countries. 

Most of the applicants seeking authorization to export LNG from proposed facilities to free trade 

agreement countries have also filed to export LNG to non-free trade agreement countries in the 

same volume from the same facility to provide optionality on the final destination country. The 

volumes of the applications to export to free trade agreement countries and non-free trade 

agreement countries are therefore not additive. 

As of June 7, 2013, DOE has approved two long-term applications to export lower-48 LNG to 

non-free trade agreement countries equivalent to 3.6 billion cubic feet per day of natural gas 

from two proposed liquefaction facilities. DOE also currently has 20 applications pending to 

export LNG equivalent to an additional 25.61 billion cubic feet per day of natural gas to non-free 

trade agreement countries. 

DOE Path Forward 

The Department will continue processing the pending non-FTA LNG export applications on a 

case-by-case basis, following the order of precedence previously established and set forth on 

DOE's website. As further information becomes available at the end of2013, including the 

EtA's Annual Energy Outlook Report, the Department will assess the impact of any market 

developments on subsequent public interest determinations. 

Conclusion 

Due to the adjudicatory nature of this process, I am unable to comment today on issues that are 

presently being addressed in our pending proceedings. Those issues include but are not limited 

to the merits of pending applications, the validity of the two-part LNG export study, the study's 

adequacy as a basis for decision, and the appropriate scope of environmental review. However, I 

can speak to DOE's statutory authority, our process to review applications to export LNG to nonFTA countries, our two-part LNG export study, the comments we received on those studies, and 

other recent developments. I am committed to being as responsive as possible to any questions 

you or the Committee may have. 

5 
37 


85447.023

In conclusion Mr. Chairman, I would like to emphasize that DOE is committed to moving this 

process forward as expeditiously as possible. DOE understands the significance of this issueas wen as the importance of getting these decisions right. 

6 
38 

Mr. WHITFIELD. Thank you all very much for your testimony. We 

appreciate your being with us, as I said. 

Ms. Moyer, let me ask you a couple questions here. You said 

the—what was the word you used, deputy commander or division 

commander? You had 38 division commanders, is that right? 

Ms. MOYER. District commanders. 

Mr. WHITFIELD. District commanders. And they have the authority to make the final decision on, for example, Port Morrow’s application? 

Ms. MOYER. Yes, sir. 

Mr. WHITFIELD. OK. Now the President recently had made comments that he was considering requiring all federal agencies to consider the climate change effect, including global impacts of their actions. This is an unprecedented step with far reaching geopolitical 

implications that it effectively puts the U.S. in the position of evaluating the energy consumption—and environmental policies of our 

trading partners. Now in your testimony, you stated that the ultimate burning of coal overseas is outside the Corps’ control and responsibility. So does this mean for the purposes of NEPA that the 

Corps of Engineers does not intend to consider the climate change 

impacts related to any of the three, for example, proposed facilities 

in the West that have applied for license for export? 

Ms. MOYER. With respect to climate change or greenhouse gas 

emissions, the Corps will limit its focus on emissions to those emissions that will be associated with the construction of the facilities 

for those impacts that will occur within our scope of analysis, our 

limited scope of analysis, but the appropriate application of our 

regulations have led us to the conclusion that the effects of the 

burning of the coal in Asia or wherever it may be is too far removed from our action to be considered as an indirect effect or cumulative effect of our action itself. 

Mr. WHITFIELD. Right, which I think is a right decision. You also 

indicated in your testimony that the Corps is not planning to complete an area-wide environmental impact statement for the three 

export terminals currently pending before the Corps as one entity. 

Is that correct? 

Ms. MOYER. Yes, sir. 

Mr. WHITFIELD. So you do intend to proceed each one of those individually? 

Ms. MOYER. Yes, sir. 

Mr. WHITFIELD. OK, which I think also is the right decision. I 

know that there are groups out there that want an area-wide environmental impact statement, which certainly makes it a lot easier 

to create obstacles and lawsuits and so forth, so I appreciate that 

very much. 

Mr. Wright and Mr. Smith, would one of you just clarify for us 

the different responsibilities that you have for the liquefied natural 

gas export facility? Mr. Wright, Department of Energy, I guess, authorizes, is that correct? 

Mr. WRIGHT. The Department of Energy—and I will let Mr. 

Smith speak to that, but in my knowledge, the Department of Energy authorizes the import or the export of the physical commodity. 

FERC, or the Commission, authorizes the facilities to facilitate the 

import or the export of the commodity. 

39 

Mr. WHITFIELD. Mr. Smith? 

Mr. SMITH. Mr. Chairman, that is exactly correct. 

Mr. WHITFIELD. OK. And so far, you have issued—you have authorized two facilities to non-free trade areas, is that correct? 

Mr. WRIGHT. I believe the Department of Energy has authorized 

two exports to non-free trade agreement projects. The Commission 

has authorized the construction of one facility, and that is Cheniere 

Sabine Pass facility for export. 

Mr. WHITFIELD. Right. Yes, thanks for reminding me. Mr. Smith 

is at the Department of Energy, you are at FERC, so thank you. 

OK, that is all the questions I have for now, so Mr. Rush, I 

would recognize you for 5 minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman. Your questions 

have been quite interesting, and the testimony has been informative, and it has touched on the issue of LNG exports from a myriad of perspectives. 

My concern is I would like to also hear more about exporting 

LNG and how it would impact U.S. consumers. Unlike oil prices, 

which are set on the global market, natural gas prices are set on 

a regional scale in North America and Europe and Asia. Today, 

Americans are paying very low prices for natural gas, less than $4 

per gallon as opposed to $10 in Europe and $12 or $15 in east Asia. 

Most experts, however, expect this price to increase over the coming years with the EIA estimating that Henry Hub spot prices for 

natural gas will increase by 2.4 percent as producers begin drilling 

in more difficult terrain. 

The question I have is how will exporting LNG impact the cost 

of natural gas for American families and consumers, and American 

businesses and manufacturers? Will this impact be significant, and 

will it be widespread across many different sectors of our economy? 

Mr. Smith, do you want to take a stab at that? 

Mr. SMITH. Yes, thank you, Congressman, for that question. So 

as the Department of Energy goes through its process of evaluating 

these applications to export LNG, we are keenly aware and concerned about the potential impacts on American businesses, on 

American families, issues that might be related to changes in the 

price for natural gas. We certainly see that there is a tremendous 

opportunity that our country has in terms of our large natural gas 

resources. We do want to make sure they are being developed prudently and that we are making good public interest determinations 

in terms of export decisions. 

As part of that, as I mentioned in my oral testimony, when we 

put out the Sabine Pass order, the Department of Energy declared 

that it would consider the cumulative impacts of LNG exports, 

which was the reason why we commissioned a comprehensive study 

that looked at not only impacts here in the United States, but also 

the global market’s capability of absorbing LNG into other markets 

internationally. 

The conclusion of that study was overall that the impacts of LNG 

exports would be positive for the consumers. There would potentially be some price impacts, as you have additional demand that 

is placed on our supply based on exporting LNG. But the conclusion of the study that was done for DOE concluded that overall for 

our economy and then for American consumers it would be positive. 

40 

Mr. RUSH. I have an additional question, and I think this question centers around the issue of jobs. Would there be an overall 

gain or loss in manufacturing jobs and other types of employment 

when we start exporting LNG and how would exporting LNG impact jobs overall in the U.S.? And you and any of the other witnesses can chime in on this, the answer to this. 

Mr. SMITH. Well, thank you for the question, Congressman. So 

we did look very closely at economic impact and jobs. You certainly 

have a potential positive impact from the construction activity of 

building the terminal of actually producing the gas to be exported. 

The concern that was raised by some opponents of the LNG exports was that potential price rises might have a negative impact 

on energy intensive users of natural gas like chemical plants or 

some manufacturers. The evidence that we looked at said that in 

balance that LNG exports at various levels would be positive for 

the economy—— 

Mr. RUSH. Mr. Wright, would you want to chime in on that? 

Mr. WRIGHT. Well, we don’t get into the economic analysis, but 

in terms of approving construction, obviously when you build something there will be jobs there, and—— 

Mr. RUSH. Ms. Moyer, would you? 

Ms. MOYER. Certainly when we are evaluating applications from 

a private entity for a facility, we look at cost implications. We 

aren’t looking at economic benefits and detriments. 

Mr. RUSH. We don’t have any infrastructure for any of this, right, 

and the question is where is the infrastructure going to come from, 

and how much would it cost? 

Mr. SMITH. Well, if you look at the Sabine Pass terminal, the 

Sabine Pass terminal is actually an LNG import terminal that is 

being converted into an export terminal, so there is already a footprint that is going to be expanded in order to make that conversion 

to export LNG, but for all of these investments, there is going to 

be significant multi-billion dollar capital investments that are required in order to create the capacity to export LNG. 

Mr. WHITFIELD. Gentleman’s time is expired. At this time, I recognize the gentleman from Texas, Mr. Barton, for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. Before I ask my questions, I want to say welcome to Mr. Bill Cooper who is on the second panel. He is a former staffer for the Republican staff of the Energy and Commerce Committee, and we are glad to have him here 

in the audience. I welcome him. 

I want to ask a question of Mr. Smith. I have never seen a longer 

title. The Principal Deputy Assistant Secretary and the Acting Assistant Secretary for Fossil Energy. That is quite a mouthful. How 

many Deputy Assistant Secretaries for Fossil Energy are there, 

since you are the principal one? 

Mr. SMITH. Well, I have a long title because I am wearing a lot 

of hats right now. I will say that the chairman nailed the title 

when he introduced me, so thank you for that. 

Mr. BARTON. I do want to also make sure that I understand this. 

I am told that in a past life, you actually worked for Chevron, is 

that correct? 

Mr. SMITH. I worked for Chevron and actually grew up in Ft. 

Worth, Texas, not exactly in your district, but—— 

41 

Mr. BARTON. And yet you still got appointed to your position. 

Congratulations. 

Mr. SMITH. I was actually appointed to my position because of 

my specific industry background, so—— 

Mr. BARTON. That is good. That is very good. 

Well, my first question I will just—I will ask you, Mr. Smith. 

Does the law stipulate which entity has to be applied to first for 

an export permit? Do you have to get approved at DOE to export 

LNG, or could you go directly to FERC and ask to have the facility 

approved before DOE has approved that it could be exported, or 

does it matter? 

Mr. SMITH. The law actually gives us some flexibility, and it 

gives applicants some flexibility. So the way that we have handled 

that question is we have to come up with some order in which we 

are going to consider applicants, so applicants are free to apply to 

FERC, they are free to apply to the Department of Energy, but we 

have given priority to those applicants who have already started 

that FERC pre-filing process, which is the process in which you are 

starting to spend real money. And we are also considering—so we 

are considering applicants on a first come, first serve basis, with 

priority given to those who have started the FERC pre-filing process. 

Mr. BARTON. So the law doesn’t stipulate it, and the practice is 

that an entity can apply either place, but the DOE gives preference 

to those applicants that have already started the facility permitting 

process at FERC, is that correct? 

Mr. SMITH. We are considering first those applicants who have 

started the FERC pre-filing process. 

Mr. BARTON. OK, and is this go either place first policy going to 

be maintained, or is there a possibility that you might clarify it and 

set some specific criteria as to what you have to do first? 

Mr. SMITH. Well, the Department looked at a lot of factors when 

we were considering the order in which we were going to rule on 

applications. There is a lot of ways that we could have done that. 

We could have looked at business models, we could have done other 

evaluations, but the standard that we had was we wanted something that was open, that was transparent, that was simple, that 

was fair, and that helped us push projects that might be more valuable to the front of the queue. So we wanted a very subjective 

standard that didn’t have some—sorry, a very objective standard 

that didn’t have some subjectivity where we had to evaluate business models. So that is the order that we are moving forward. 

There is a PDF on the fossil energy Web site that lists those applications in order, and the process that we are using going forward. 

Mr. BARTON. And Mr. Wright, does FERC have a time table for 

its review of its process that you try to get the permit to build and 

construct done in so many months, so many years? Do you have a 

guideline for that? 

Mr. WRIGHT. Well we do, and we are in relatively new territory 

with export applications for construction. The import applications 

of the regasification facilities were much simpler, and given that 

we get all the information we would need, including the pre-filing 

period, we would authorize LNG import facilities somewhere between 18 to 24 months. With export facilities, the engineering is 

42 

much more critical, it is much more safety conscious, environmental conscious because of the use of refrigerants and natural gas 

liquids. What we are seeing is we are very dependent upon the applicant being able to finish its engineering studies to supply us 

with the information for our evaluation. 

Mr. BARTON. My time is expired, but could you give us—you try 

to get your review done by X months, X—is there an X that you 

use, or is that not possible? 

Mr. WRIGHT. We would love to get our review—formal application review done in 18 to 24 months. 

Mr. BARTON. Eighteen to 24 months. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. Gentleman’s time is expired. At this time, I recognize the gentleman from California, Mr. Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Ms. Moyer, the Corps has been asked by Governor Inslee of 

Washington State and Governor Kitzhaber of Oregon and others to 

prepare an environmental impact statement that looks at the cumulative impacts of the proposed West Coast coal export terminals. 

They have asked that this analysis include an impact exporting 

U.S. coal to China on climate change. In your testimony, you appear to reject this request. You state ‘‘shipping coal outside of U.S. 

territory and the ultimate burning of coal overseas are outside the 

Corps’ control and responsibility.’’ Ms. Moyer, is this accurate? Has 

the Corps of Engineers decided not to examine the climate impacts 

of these coal export terminals as part of its environmental impact 

statements? 

Ms. MOYER. What we have determined is that the effects of shipping of the coal outside of U.S. waters and the burning of the coal 

wherever its ultimate destination would be is outside of our scope 

of analysis. However, the climate change effects or the emissions 

associated with the activities within our scope of analysis, such as 

the construction activities associated with building the facilities, 

the emissions that may be associated with the increase in vessel 

traffic, those types of effects that may have an impact on climate 

change will be associated with our analysis for each of the facilities. 

Mr. WAXMAN. Ms. Moyer, I think the Corps is making a big mistake. As I understand it, some of the most important responsibilities of the Corps of Engineers are to protect navigable waters, to 

protect cities like New Orleans from flooding, to protect beaches 

and coastlines, and to ensure that major waterways remain open 

to commerce. Is that correct? 

Ms. MOYER. Yes. 

Mr. WAXMAN. All of these values which the Corps is charged 

with protecting are threatened by climate change. Sea level rise 

can dislocate millions of families and cause hundreds of billions of 

dollars in damages. Extreme weather like Superstorm Sandy can 

destroy coastlines. Droughts can make even the Mighty Mississippi 

impassable. And according to the world’s best climate scientists, all 

of these impacts are caused or exacerbated by climate change. Do 

you agree with this? 

Ms. MOYER. Yes, I do. 

43 

Mr. WAXMAN. There are many causes of climate change, but experts tell us that the single biggest source of the emissions causing 

climate change is China, specifically burning coal in China. The 

governors of Oregon and Washington and many others have said 

that exporting coal to China could continue China’s dependence of 

coal and worsen climate change. They have asked you to examine 

this issue, yet you are telling us you won’t do this. My question to 

you is, how can you conclude that exporting coal to China does not 

contribute to climate change if you even refuse to look at this 

issue? 

Ms. MOYER. I would say that the Corps’ responsibilities and authorities with respect to our Civil Works Program are dramatically 

different from the regulatory framework that governs our work 

within the framework that we are looking at these proposals, and 

primarily the proposals that we look at within our regulatory program are for nonfederal activities. And within that context, these 

issues are not part of the Corps’ scope of analysis. The burning of 

the coal in Asia, although very important aspects, they are not part 

of our framework. They are not within our scope of analysis, and 

they are too far attenuated to be considered indirect effects of the 

actions that we are—— 

Mr. WAXMAN. Well, I think you should reconsider your position. 

There is no bigger threat to navigable waters than climate change. 

Scientists tell us that those impacts will include sea level rise, 

more intense storms, increased flooding. Those impacts will all adversely affect navigable waters. It is the responsibility of the Corps 

of Engineers to protect the Nation’s navigable waters. The Corps 

cannot meet its responsibility by ignoring these climate impacts. 

Before billions of dollars are spent building new coal export facilities, we need to understand the impacts of those exports, including the climate impacts of burning all of that coal. I just think that 

makes common sense, so I would urge you to reconsider the position in light of the impact that I think is so important to the core 

goal of the Corps of Engineers. 

Thank you, Mr. Chairman. I will yield back my time. 

Mr. WHITFIELD. Gentleman’s time—gentleman yields back. At 

this time, I recognize the gentleman from Louisiana, Mr. Scalise, 

for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman, and I thank the panel 

for their testimony. 

When I gave my opening, I talked a little bit about the export facility at Cheniere, their investment alone represents about $10 

billion, again, private money being used to build this export facility 

so that we can create more jobs, and not only become energy independent at home, but also reduce our trade balance by exporting 

to other countries as well. In addition to Cheniere, there are I 

think 18 pending applications to build additional export facilities 

that are moving slowly through the process. 

I want to ask you, Mr. Smith, because in your testimony you 

talked about the economic impact on LNG exports. If you can expand on that, you know, in general, what are your thoughts on 

what LNG exports and expanding this would mean to our Nation’s 

economy first, if I could ask you that? 

Mr. SMITH. Well thank you, Congressman, for the question. 

44 

So when we look at our job in terms of evaluating public interest, 

again, the standard that is set in the statute is that we—there is 

a rebuttable presumption that exports are in the public interest, 

and it requires us to do a public interest determination for all of 

the applications that we are considering. So as part of that, we consider a very wide range of factors when we are evaluating exports. 

We look at economic growth, we look at jobs, we look at balance 

of trade, we look at prices, we look at impact on American businesses and families, we look at impact on manufacturing sector, on 

users of natural gas, we look at environmental impacts. So there 

is a very wide range of standards that we use. 

Part of that study or part of that evaluation we went out and requested a detailed economic study that was done in two parts, the 

first by our own IEA within the Department of Energy, and the 

second by a third party consultant. The overall result of that study 

which was done for the Department and entered into the public 

docket for public review was that at various levels, we found that 

LNG exports would be beneficial for the U.S. economy. The 

study—— 

Mr. SCALISE. Did you quantify jobs, economic impact? 

Mr. SMITH. Yes, the study looked at jobs, it looked at economic—— 

Mr. SCALISE. How many jobs did it conclude? 

Mr. SMITH. I don’t have a number of jobs, and certainly there 

was—if you look at different sectors, LNG exports would have a 

different impact of certain sectors than other sectors. But overall 

net, we saw that there would be a positive economic impact for the 

U.S. economy, and a fairly flat impact on jobs overall. 

Mr. SCALISE. So when you work in the Department of Energy 

and you have a study you commission that shows that LNG exports 

would have no real positive impact on our economy, and then you 

see that there are other agencies within the Federal Government 

that in various ways are trying to come and impede the production 

of natural gas in America, which of course, if you don’t produce it 

in America then you can’t export it. What do you all do, if anything, to work with these other agencies that are trying to get in 

the way of what States are doing very successfully to regulate hydraulic fracturing to give them—to make it clear to them that, if 

you are spending your time and resources that these agencies complain with sequestration and spending limitations, they complain 

that they don’t have enough money, yet they are spending some of 

those vital resources to try to do things that would be counter to 

our own Nation’s economy that would hurt these jobs that you are 

talking about that you tell. Do you all share this with these other 

agencies as they are going off on these kind of separate tangents? 

Mr. SMITH. We work very closely with all the agencies here within the Federal Government, because we have one mission, one 

shared mission which is to ensure that we prudently develop what 

is a very important resource, our natural resources here in the 

United States, particularly natural gas, and also ensuring that we 

do so with a minimal impact on the environment. 

The most important thing that Department of Energy is doing 

right now in terms of prudent development is to take concerns seriously, bring good objective science to quantify concerns that people 

45 

who live close to where these wells are being drilled have, to help 

demonstrate that we take the concerns seriously and that the regulations that are in place are effectively mitigating those risks which 

we have scientifically quantified. 

Mr. SCALISE. And so you know, our States do that already so that 

you don’t have a need to duplicate things that are already being 

done successfully. Our States actually do—each State regulates hydraulic fracturing and horizontal drilling and they do it very well, 

and so as you have these concerns—as each State has their concerns, I think somebody in Shreveport, Louisiana, where they have 

got the Haynesville shale plate, they feel much more comfortable 

that if there is any kind of concern, they can pick up the phone and 

call their State representative or call their State Department of 

Natural Resources and get those problems addressed, rather than 

calling some kind of—some bureaucrat that they can’t identify, 

maybe can’t even get in touch with at Washington, DC. So I would 

appreciate if you would share this information so other agencies 

know that some of the things they are doing run counter to the 

very things you showed in your report about jobs. 

I appreciate that. Yield back the balance of my time. 

Mr. WHITFIELD. Gentleman yields back. At this time, I recognize 

the gentleman from California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Ms. Moyer, I believe this is the first public acknowledgment that 

the Corps is not going to do regional EIRs. Is that correct, that this 

is the first time that that has been publically acknowledged by the 

Corps? 

Ms. MOYER. That we are not doing a regional or an area-wide? 

Mr. MCNERNEY. Right. 

Ms. MOYER. Yes. Well, I thank you for making that statement; 

however, it seems to me that the combined effect on traffic and 

noise pollution, road coal dust, and all these other things would 

have a regional impact. How did the Corps come to that decision 

that a regional or area-wide impact was not appropriate? 

Ms. MOYER. By doing a very careful review of our existing regulations and pertinent case law, it is very clear that these facilities 

are widely separated. They are not in the same watershed. They 

have very different proposed impacts when you look at each individual facility. And they are not connected actions. Each facility is 

not dependent on another facility to go forward, and when you look 

at that in the context of the existing framework of regulations, 

those are the factors that lead you to do an area-wide, and none 

of those factors—— 

Mr. MCNERNEY. So you think that doing the specific EIRs for 

each individual facility will be sufficient to capture those issues 

and protect the local population? 

Ms. MOYER. I do. I do, and each district is in the process of doing 

a specific NEPA evaluation. The two in Seattle District are undergoing environmental impact statements. The project in the Portland District, the Coyote Island terminal is currently doing—undergoing the process of an environmental assessment to determine if 

they need to do an EIS or not. 

Mr. MCNERNEY. Do the governors of the two states involved 

agree that that is the appropriate approach? 

46 

Ms. MOYER. They are involved in the process in the normal way 

that we engage in those coordination attempts. Now, the State is 

a cooperating agency and is actually a co-lead agency on the two 

projects in Washington State, so that is a federal, state, and actually the counties where the projects are located in Washington 

State are also participating as co-lead agencies on the Washington 

State projects. 

Mr. MCNERNEY. Thank you. Mr. Wright, would you reiterate how 

the FERC and the DOE jurisdictions on LNG break down? 

Mr. WRIGHT. Basically, the Department of Energy is in charge of 

approving the importer, the export of the commodity, the natural 

gas, the movement itself. FERC is in charge of approving the facilities necessary to effect that movement of the import or the export 

of the natural gas. 

Mr. MCNERNEY. And the operations of the facilities? 

Mr. WRIGHT. Yes. 

Mr. MCNERNEY. Is there much collaboration between the two 

agencies? 

Mr. WRIGHT. Well we do talk, yes. I mean, we do have different 

procedures and we don’t necessarily participate in each other’s procedures, but we are aware of what is going on at each other’s agencies. 

Mr. MCNERNEY. Do you all feel this is a controversial issue, LNG 

exports? 

Mr. WRIGHT. From my perspective as an environmental and safety regulator, it is controversial issue in that people—some people 

do not like infrastructure. They do not like the impact on the environment. Others go further and worry about the effects on the 

economy, but we are not charged with looking at the effects associated—economic impact. 

Mr. MCNERNEY. So how much gas do you expect will escape from 

these LNG terminals? 

Mr. WRIGHT. I don’t have a number for that, sir. 

Mr. MCNERNEY. That would be—I mean, I heard zero but I don’t 

hardly believe that. I would like to see that. I mean, natural gas 

is a strong greenhouse gas, much stronger than carbon dioxide, although it doesn’t persist in the environment as long, but in the 

short term do we need to worry about that? Are you in charge of 

regulations to determine the technical quality of the materials that 

go into building an LNG terminal? 

Mr. WRIGHT. We do an engineering review of what is proposed 

and what will be constructed there and look for the most efficient 

and safest way to build the LNG terminal. 

Mr. MCNERNEY. So what can you do, then, to prevent rogue gas 

from escaping from LNG terminals, or what will you do? 

Mr. WRIGHT. Well not being an engineer myself, my engineers 

would meet with the project proponent. They would talk it over— 

and they do this in technical conferences—talk over what valving, 

what piping they are going to use, and whether it is the current 

state-of-the-art, if you will, and that would be the one way to protect against fugitive emissions is using the most relevant, the most 

current facilities and construction materials possible. 

Mr. MCNERNEY. So, coming from an engineering background, 

thank you for indulging me, Mr. Chairman, a little bit. Field testVerDate Nov 24 2008 12:20 Jan 27, 2014 Jkt 037690 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-57 CHRIS
47 

ing, test data, some way of assuring rather than just saying it is 

the newest equipment would be in order. 

I will yield back. 

Mr. WHITFIELD. Gentleman’s time is expired. At this time, I recognize the gentleman from Illinois, Mr. Shimkus, 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. For my friend from 

California, we do have LNG facilities today and they have been operating for decades, some of them, and I just find it hard to believe 

that we—they would create a facility that would leak gas, a commodity they want to sell, on the market. 

We had talked before about—I usually bring a poster. I haven’t 

done it this Congress—of coal miners who lost their jobs in the ’92 

Clean Air Act. And so sometimes I get questions or where is it? 

Well, this is a great debate about bringing a new poster about coal 

mining jobs that are available in southern Illinois because of the 

exporting of coal. So I have an Illinois basis supply site story—that 

is not the first one I wanted to use. I want to use the Ernst and 

Young analysis, and it says that 15 percent, which is 5.5 million 

short tons, were exported abroad—this is just in Illinois—and accounted for 860, 15 percent of the total 5,868 coal mining jobs in 

just my state alone. The total estimate direct, indirect, and reduced 

contribution related to exports from 2011 is 4,190 jobs, $281 million of labor income, and $524 million of gross value added. 

So we are poised as a country to really be in a great position to 

turn—over my past decade of being here, it is always we are sending our money to the Middle East because they have the energy. 

Now we can say people are going to be buying our energy. They 

are going to be sending their money to us, which will help across 

the board in our balance of payment, our trade, on our revenues 

to our country providing the services, especially in a sequestration. 

This is just a tremendous win/win if we get it right. If we get 

through the regulatory hurdles and we get the export facilities, 

whether it is for LNG terminals or whether it is for coal, and we 

start exporting this stuff to folks who want to purchase it. 

The other—so here is another one. This is one I held up before. 

Illinois Basis supply site story. Illinois Basin producers are positioning themselves to nearly double production over the next 10 

years. Now for the climate change folks, that is scary. I mean, for 

people in southern Illinois who want jobs, that is very, very exciting. But the caution is that these expansions are market dependent. 

So you know, the fight about LNG terminals or whether the fight 

is on coal terminals, it is a climate debate to try to destroy the 

market so that we don’t have the market to expand our selling of 

the fossil fuel bounty that we have in our great land. That is what 

this debate is about, and everyone knows it, and so that is why we 

need to move forward for jobs and lower costs of energy and the 

like. 

Illinois just moved yesterday and the governor signed the 

fracking bill. We think it will be exploited greatly in southern Illinois and crude oil will be flowing again like it did during World 

War II, and we will need, again, market. So Mr. Chairman, I would 

suggest that we have one more, and this is on exports of LNG and 

coal. I think that there may be a time, based upon the demand of 

48 

liquid transportation fuels right now, and our supply and our renewables that we might be able to export refined product across 

the world to those in need. The world market is going to go up 

about 1 percent at a minimum, so we may want to follow this up 

with another opportunity for jobs. 

So in my last minute, let me turn to Ms. Moyer, because we are 

talking about kind of the hurdles that we are facing. What is the 

average time frame for the Corps to complete an environmental impact statement for the purpose of a marine terminal? 

Ms. MOYER. I don’t have the timeframe. 

Mr. SHIMKUS. We don’t have an average timeframe? 

Ms. MOYER. I don’t. I can get that information. We can get you 

some information on that. 

Mr. SHIMKUS. When can the draft environmental impact statement for the Gateway Pacific terminal project be expected? 

Ms. MOYER. They just finished scoping and at the end of this 

month, they are going to release the scoping report so that that 

will outline what issues and effects they are going to be considering 

in that draft document. So from there, then they will draft the EIS. 

So I don’t have the final timeline for that, but they are moving forward with that process. 

Mr. SHIMKUS. And when do you expect the draft EIS for the Millennium Bulk terminal project? 

Ms. MOYER. They are initiating scoping this summer, and as I 

mentioned previously, they are doing a joint process with the State 

and the county, so it is the Corps, the State, and the county, and 

I think that although it makes things go a little bit more slowly 

than if the Corps was doing it by itself, moving together—forward 

together will ultimately get us all to the same—— 

Mr. SHIMKUS. You are hoping that a partnership will help you 

get to the finish line faster than a supposed fight that may occur 

if you are not? 

Ms. MOYER. Right, right. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Gentleman’s time is expired. At this time, I recognize the gentleman from Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. Just an aside, I am glad 

to hear my colleague from Illinois is going to be producing oil, because we are good friends but we do have differences coming from 

Texas and Illinois on ethanol. But I am hoping you are going to 

produce a lot more oil than you do ethanol. 

But again, thank you, Mr. Chairman, for holding the hearing. I 

thank our witnesses. Mr. Smith, I want to thank you because I enjoyed meeting with you last week, and I hope you don’t mind, I will 

repeat some of my questions for the record, and based on your remarks recently at the Senate energy hearing, it has been suggested 

the remaining applications maybe considered at a one project every 

month pace—every 2 months pace. Is that true? 

Mr. SMITH. What we are able to say is two things. First, we are 

looking at these on a case-by-case basis so it is going to vary between projects, but if you look at our performance for the Freeport 

application between closing of the public comment and the release 

of the application was just over 2 months. 

49 

Mr. GREEN. OK. You mentioned also that further information becomes available at the end of 2013, including the EIA’s annual energy outlook report. The Department will assess the impact of any 

market developments on subsequent public interest determinations. Are you suggesting that you plan to take another pause at 

the end of the year? If so, aren’t you concerned that it will give certain companies a competitive advantage? 

Mr. SMITH. Thanks for the question, Congressman. What we are 

going to do is ensure that we are all using the most appropriate 

information that is available, so as market conditions change or as 

new information becomes available, we are going to be constantly 

reassessing these applications on a case-by-case basis. 

Mr. GREEN. OK. This question is for both you and Mr. Wright. 

When it comes to your statutory responsibility in regards to LNG 

exports and imports, are there any issues or limitations within the 

Natural Gas Act that you would like to see changed in order to do 

your job more expeditiously and effectively? Either FERC—and I 

know it is a two—well, three-step process, that is why the Corps 

is here, but maybe FERC and DOE. 

Mr. SMITH. Thank you for the question. I would state that our 

job as a member of the Executive Branch is to ensure that we are 

executing the law as written, both the letter and the spirit of the 

law, so if Congress should change the law we will certainly be executing the spirit of that law as changed. 

Mr. GREEN. But you don’t have any suggestions on improvements 

in the law? 

Mr. SMITH. I would not take it upon myself to make suggestions 

to this body about what they should change. 

Mr. GREEN. Mr. Smith—or Mr. Wright? 

Mr. WRIGHT. As per the Energy Policy Act of 2005, FERC was 

named—explicitly named the lead agency for processing LNG cases 

as well as pipelines, and within that context we set the schedule 

and we set the schedule not only for ourselves, but for other agencies. So I would agree with Mr. Smith. We have a good deal of authority that we need. If this body believes we need more, we will 

welcome it. 

Mr. GREEN. OK. Mr. Wright, in conducting the environmental reviews, do you find that other agencies are responding in a timely 

manner? 

Mr. WRIGHT. In most cases, yes, agencies do. Some agencies do 

have statutory considerations that prevent them from adhering to 

our usual—our schedule that we put out. That was acknowledged 

in the Energy Policy Act of 2005, but in general, the agencies do 

a very good job. 

Mr. GREEN. Mr. Smith, you mentioned that Section 3A of the 

Natural Gas Act creates a rebuttable presumption that a proposed 

export of natural gas is in the public interest. Why do you choose 

then to conduct a full public interest review? 

Mr. SMITH. Well I mean, our interpretation of that law simply 

states that it is incumbent on those who would expose exports to 

demonstrate that approving a particular export application would 

not be consistent with the public interest, which means that we 

have to take those things into consideration. The law states that 

50 

we have to consider the public interest, and that is what we do 

through our processes. 

Mr. GREEN. Mr. Booth and Mr. Cooper on the second panel argues that the case-by-case order of applicants that you plan to review violates the Administrative Procedures Act, because that approach was never offered up for a notice and comment period, and 

how do you respond to that. 

Mr. SMITH. Well, you know, we have an obligation to make sure 

that we do consider each of these applications. We have to have 

some sort of sequence for doing that, so we don’t have—we have 

not put in place anything that would state that there is a rule or 

something unique that applicants have to do before they will be 

considered, but in doing our work with the finite resources that we 

have, we have to have some sort of process for getting through the 

queue of applicants, and we wanted that to be open and transparent and fair. 

Mr. GREEN. Thank you, Mr. Chairman. I know I am almost out 

of time, but coming from Texas, it seems like every port from literally the Sabine River to the Rio Grande is going to get in line, 

so hopefully we can keep that production going in south Texas, 

make sure we can do that. Use it and export what we can’t use. 

Thank you. 

Mr. WHITFIELD. Chair at this time recognizes the gentleman 

from Nebraska, Mr. Terry, for 5 minutes. 

Mr. TERRY. Thank you, Mr. Chairman, and it is only appropriate 

that I ask questions after Mr. Green from Texas, because it was 

2005 that he and I teamed up to expedite the process to import liquid natural gas, as we felt there was a shortage of natural gas to 

meet our then current needs. That no longer exists today, and now 

we are talking about, perhaps, those same facilities that were being 

permitted to import liquid natural gas can now turn around and 

be exporters ourselves of natural gas. 

So I was interested—and I think it was Mr. Wright that there 

was a conversation regarding taking into account any price impacts 

on consumers. Was that you that answered that question? 

Mr. WRIGHT. No, it was not. 

Mr. TERRY. That was you, Mr. Smith? Sorry, Mr. Smith. 

Mr. SMITH. That was me. 

Mr. TERRY. And so in regard, what was your finding on any impact on prices? 

Mr. SMITH. So we commissioned a study that was delivered to 

the Department of Energy, and that study found that in some cases 

that there could be some price impacts in terms of creating additional demand. 

Mr. TERRY. Can you be more specific? 

Mr. SMITH. Well there are lots of cases, so we looked at a number 

of cases, so we found in the base case it is actually very difficult 

for LNG to compete in global markets, and so there would be zero 

or no impact on prices. We ran other cases that looked at limited 

supply of LNG globally. We looked at other cases that looked at increased demand for LNG globally, and we looked at some cases to 

combine some of those. But in different scenarios, we know that 

LNG is, at least historically, has been a fairly volatile commodity 

51 

in terms of price, but we found that overall, the overall impact on 

the economy, the results of the study said would be positive. 

Mr. TERRY. Is our current supply of natural gas that is readily 

available recoverable? Is it meeting our current needs of natural 

gas in the United States? 

Mr. SMITH. I would say yes. 

Mr. TERRY. In fact, there is an argument that we have an oversupply of liquid—I am sorry, of natural gas currently. So there is 

actually opportunities to increase demand, is that correct? 

Mr. SMITH. I think the—right now certainly you see some surplus of natural gas in lots of basins, in fact, you see some areas 

in which companies are flaring natural gas, so certainly you could 

unambiguously state that in many parts of the country, you see 

some surpluses of natural gas. 

Mr. TERRY. Thank you. 

Mr. Wright, a question for you. Based off of the reason why we 

needed to streamline permitting of export—I am sorry, import facilities in the United States so we could take more natural gas, an 

amendment that Gene Green and I had. So currently now for exporting, what role do State and county and local agencies play in 

connecting with siting of any LNG facilities under Section 7 of the 

Nat Gas Act? 

Mr. WRIGHT. Well, actually under Section 3 of the Natural Gas 

Act—— 

Mr. TERRY. Or Section 3. 

Mr. WRIGHT. Yes. States are invited to participate in the process 

and they are—if they wish to assign an agency to comment upon 

it, they are to do so within 30 days of the filing of the application. 

So their involvement begins early on in the process. 

Mr. TERRY. And counties and localities have the same ability to 

provide you information? 

Mr. WRIGHT. Oh, certainly. Anyone has the ability to provide information to us. 

Mr. TERRY. But they don’t have the ability to stop a project now, 

other than if you take into account their comments? 

Mr. WRIGHT. Well that is part of what the environmental process 

is, the NEPA process. 

Mr. TERRY. Now what is the position of your office on whether 

the State has authority under the Coastal Zone Management Act 

to allow county officials to effectively veto a Section 7 natural gas 

pipeline application by withholding a local permit? 

Mr. WRIGHT. Well, that has actually happened. In thinking back, 

it was a proposal to bring a pipeline across Long Island Sound 

some years ago and that was effectively vetoed by the delegated— 

federally delegated authority to the State. 

Mr. TERRY. So that could happen again? 

Mr. WRIGHT. Yes, it could. 

Mr. TERRY. All right. And last—and this is to both Mr. Smith 

and Mr. Wright and Ms. Moyer. Have you heard of—have any lawsuits been filed against your agencies by environmental groups permitting—regarding permitting LNG export facilities? Mr. Smith? 

Mr. SMITH. We would certainly expect all of the actions of the 

Department to be scrutinized and contested, and in fact, we have 

had some legal issues that we are currently litigating, so yes. 

52 

Mr. TERRY. All right. 

Mr. WRIGHT. We have had rehearings filed in the Sabine Pass, 

the one action we did take. I do not believe we were taken to court 

over that, though. 

Mr. TERRY. All right. 

Ms. MOYER. I am not aware of any, but I can—— 

Mr. TERRY. Thank you. 

Mr. WHITFIELD. Gentleman’s time is expired. At this time, I recognize the gentlelady from Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman. 

This hearing presents us with an issue that America must confront. With everything science is telling us about climate change 

and carbon pollution, should our country be promoting and increasing exports of coal? I tend to agree with the ranking member, Mr. 

Waxman, when he says there is a difference between coal exports 

and natural gas. For coal, coal is the single largest contributor to 

climate change and global warming, and the resulting impacts, 

looking out at the years ahead, are quite dire for our country and 

all across the globe. It is going to impact our national security as 

our military leaders have said. It is a great risk to coastal areas 

like my home State of Florida, health issues. So can America, on 

the one hand, provide any global leadership to fight climate 

change, and then on the other hand, promote and increase exports 

of coal? 

Ms. Moyer, I know in your previous testimony here today you 

said that examination of the broader climate change impacts really 

are not within the framework of the Army Corps, but you did acknowledge that climate change is very serious. So shouldn’t someone, some agency consider the larger impacts of expanding coal exports on climate change? 

Ms. MOYER. Certainly I think that climate change is a huge issue 

that is facing us all. That is my personal opinion, and what was 

in my testimony and what I will reflect on again is that NEPA and 

the Corps zone regulations direct that the Corps consider whether 

the Corps’ permit action is part of a larger action, or whether it is 

a limited—whether we have a limited handle on what is being proposed. And if it is part of a larger project, we have to decide what 

aspects outside of our jurisdiction do we have control and responsibility for and therefore, expand our scope of analysis. 

And in the context of these proposed terminals, we have looked 

at the context and we have determined that we don’t control coal 

mining. We don’t control shipping by rail or shipping on the high 

seas—— 

Ms. CASTOR. Well a number of elected officials and community 

leaders, environmental groups, public health organizations have 

raised concerns about the potential impacts of building and operating new coal export terminals in Washington State and Oregon. 

The impact of the coal export terminals on water quality in the region’s fisheries are one important concern. In a letter to the Army 

Corps, the Puget Sound Partnership, a State agency established to 

lead efforts to protect and restore Puget Sound, outlined several 

concerns with the proposed Gateway Pacific terminal near Cherry 

Point, Washington. The Partnership raised ocean acidification as a 

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sorbing carbon dioxide from the atmosphere, and the State of 

Washington has launched a major initiative to address the impact, 

since it harms the State’s shellfish populations and commercial 

fisheries. How will the Army Corps examine the impact of the proposed coal export terminals on ocean acidification in the Pacific 

Northwest? 

Ms. MOYER. It is my understanding that ocean acidification is 

another resulting—or another result from climate change, so it 

leads back to—— 

Ms. CASTOR. But is it regional. You said some impacts are too attenuated for the Corps, but that is a regional impact or a very localized impact. 

Ms. MOYER. Well ocean acidification, it is the result—what is in 

those letters is tied back to the local impacts from overall ocean 

acidification. And I am not at all discounting that there are those 

concerns from folks in that area. 

Ms. CASTOR. All right, let me ask another specific question. The 

Washington State Department of Fish and Wildlife suggested the 

Corps evaluate potential impact of coal dust generated by the Ute 

Gateway terminal, which would affect water quality in nearby 

streams and wetlands. Others have raised broader concerns about 

the water quality impacts along the rail and barge routes. How will 

the Army Corps study the impacts of coal dust from the proposed 

coal export terminals? 

Ms. MOYER. As I mentioned in my testimony, the Corps is going 

to look at those effects that are within its scope of analysis so the 

ones that are occurring within the facility itself and those areas in 

which we have—— 

Ms. CASTOR. What about the health of the Columbia River and 

other important salmon habitats? 

Ms. MOYER. Those aspects of it that are within our control and 

responsibility certainly will be considered. Both all of the effects, 

direct, indirect, and cumulative will be considered, but those areas 

that are outside of our scope of analysis will not be considered. 

Ms. CASTOR. Thank you very much. 

Mr. WHITFIELD. Gentlelady yields back. At this time, I recognize 

the gentleman from Louisiana, Dr. Cassidy, for 5 minutes. 

Mr. CASSIDY. Thank you. 

Mr. Wright, the Sabine Pass liquefication project in Cameron 

Parish took 441 days, and it may—I don’t know if this is going to 

be Mr. Wright or Mr. Smith. I think, Mr. Smith, you mentioned 

that it was only 2 months between the closing of the application 

process to approval, so 60 days, so clearly there are 381 days in 

which the process took the time to get done. So what bottlenecks 

are coming up that are prolonging this process? 

Mr. SMITH. So thank you for the question. So we certainly understand the sense of urgency around these regulatory processes, and 

we are endeavoring to move these forward as expeditiously as possible in all cases. 

In the timeline that you just mentioned, after the Sabine Pass 

order was finished, we stated in the Sabine Pass order that we did 

have to consider the cumulative impact of that order and any subsequent orders when we are looking at additional authorizations. 

This is a very important and complex public interest determination 

54 

that has to look at domestic and global impacts, domestic markets, 

global markets, impacts on consumers, American businesses and 

families, jobs, et cetera. It is not a trivial point, and we did—— 

Mr. CASSIDY. So was there a bottleneck, per se, or was it just 

that complexity of the issue was such that it just takes that long? 

Mr. SMITH. I think it was a tremendously complex and important 

issue, and—— 

Mr. CASSIDY. Now since a lot of those issues are generic, as presumably subsequent approvals will not take as long? 

Mr. SMITH. I would agree. One of the reasons that we pointed out 

that the period between the end of the comment period and the actual issuing of the order was something, you know, just north of 

2 months was to state that the public—the cumulative impact 

study, which was a complex study, is not something that we see 

that we are going to have to replicate between each one of these 

orders. 

Mr. CASSIDY. Now just because I know this is how the game 

works, there may be an agency that sits on it and doesn’t process 

it. Is there any way to one, identify agencies which perhaps were 

not as expeditious as they could be, and two, if there was such an 

agency—it doesn’t have to be named—is there any way to put the 

Bunsen burner underneath them to get them to actually get it 

moving? 

Mr. SMITH. Our job is very specific. It is to—and very explicit. 

It is to work together to move as expeditiously as possible to get 

a good public interest determination—— 

Mr. CASSIDY. That is not really answering my question. 

Mr. SMITH. Well, Congressman, I think it does address the issue. 

I mean, we are currently—— 

Mr. CASSIDY. So there is never an agency that seems to be a little dilatory in terms of how quickly they respond? 

Mr. SMITH. Well in this case, we have got two primary agencies 

that have jurisdiction. We control the authorization to export the 

molecule. FERC controls the authorization to build the terminal. 

We are working together very closely to make sure that we are getting this work done. 

Mr. CASSIDY. Mr. Wright, would you add anything to what has 

been said? 

Mr. WRIGHT. What I would say, and I said earlier this morning, 

a lot of our problems or difficulties in processing do stem from the 

applicant. We encourage or by statute they are supposed to stay in 

the pre-filing period for at least 6 months. Some companies are 

very eager to get out of the pre-filing, thinking that going to the 

application mode would hasten the processing. It does not. Pre-filing is a very free flowing information flow period. You go to a formal application, our ex parte rules take over. Things have to be 

done much more in writing and on the record. That said, I believe 

Cheniere would have been processed much sooner. They did not 

complete their air modeling analysis during the pre-filing, so substantial—they jumped right to the formal application, therefore 

substantial information was required after their certificate filing 

was made. 

55 

Mr. CASSIDY. Got you. Is there any limitation or timeframe in 

which individuals or organizations can file claims in court to request a rehearing of the Commission orders? 

Mr. WRIGHT. Thirty days after the Commission issues its order 

rehearings are due. 

Mr. CASSIDY. So there is a definite kind of define timeframe, cannot exceed? 

Mr. WRIGHT. Yes, sir. 

Mr. CASSIDY. Great. Mr. Smith, any comments? You look like you 

were looking off in space pensively. 

Mr. SMITH. No additional comments. 

Mr. CASSIDY. Got you. I yield back. Thank you. 

Mr. WHITFIELD. Thank you, Dr. Cassidy. At this time, I recognize 

the gentleman from West Virginia, Mr. McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. I have a series of 

things I would like to get a react to on it. The Energy Policy Research Foundation has said that neither net world coal combustion 

nor the greenhouse gas emissions will change substantially as the 

result of an expansion of our coal exports. Interesting statement. 

That was one. The other comes from McClellan, who used to be 

chairman of the National Research Council, Committee on Toxicology. He was past chairman of the EPA’s Clean Air Scientific Advisory Committee. He said that coal continues to play an important 

role of meeting the energy needs around the world, with steady improvements made in its transport and use. Coal has been transported through the Northwest by rail for decades, and there has 

never been any evidence of harm associated with this rail transport. Could any of you respond to those two comments? 

Mr. SMITH. Well, I can give a response. We don’t have oversight 

over coal exports, but I would certainly say two things. First, we 

do have significant concerns about climate change and we think 

there are specific things that we need to do to be reducing greenhouse gas emissions into the environment. The second is that we 

are—— 

Mr. MCKINLEY. If I could, on climate change. Could you tell me 

what is your end game? If we are 400 parts per million of CO2, 

where do you want to stop it, at 400 or do you want it back at 250, 

or where are we trying to go? 

Mr. SMITH. Well, I cannot give you a specific answer to that 

question because it is not simply something that is not under my 

jurisdiction, but I can say that in terms of the research and development we are doing for coal, we are making an historic investment to ensure that coal is part of the clean energy economy of the 

future, that we are making steps to ensure that we are able to reduce greenhouse gas emissions from coal-fired power plants, that 

we are creating the technologies that we can sequester it in a way 

that is safe and environmentally sustainable, and that we are able 

to take advantage of this very important domestic energy resource. 

So there are technological research and development solutions to 

the challenges that we see of making sure that all of our energy 

resources remain relevant and contribute to our—— 

Mr. MCKINLEY. All right, so we didn’t really answer either of the 

two questions, but go back—if we don’t export coal, do we really 

think the other nations are going to not find coal someplace else? 

56 

Mr. SMITH. Again, Congressman—— 

Mr. MCKINLEY. My question—really, are we trying to take ourselves out of the market and all the jobs that are related to it, from 

transportation to mining it and all the support facilities? I am trying to understand, because I think the Congressman from Illinois 

was right. This isn’t a fight about exports; this is a fight about coal. 

The war on coal continues here in Washington. So I am trying to 

really grasp where we are going, because they are going to find coal 

someplace else, or they are going to find natural gas, LNG, from 

someone else, are they not? Are they not? Are they not going to— 

if we don’t sell it to them, will they not find it someplace else? 

Mr. SMITH. Well, one can observe that there is lots and lots of 

coal that is being burned in China and India. There are lots of 

plants going up. There is lots of activity there. There are things 

that we are doing that are very proactive in terms of—— 

Mr. MCKINLEY. So we are just taking ourselves out of the market 

if we were to allow this to either be postponed, delayed, or terminated, isn’t that right? 

Mr. SMITH. I can’t speak to exports. Again, Ms. Moyer could 

speak to exports. 

Mr. MCKINLEY. Could you please add into this, because I am curious about from all the jobs that are associated with it in our industry, and coming from West Virginia, 50 percent of the export of 

coal comes from West Virginia, and so I take it very personally 

when someone says we potentially could ban the exporting of coal 

and/or natural gas. 

Ms. MOYER. And certainly—— 

Mr. MCKINLEY. Could you get closer to your mike, please? 

Ms. MOYER. Sure. 

Mr. MCKINLEY. Thank you. 

Ms. MOYER. And certainly knowing that you are from West Virginia, you are certainly most likely very familiar with the fact that 

the Corps of Engineers doesn’t regulate the—or have the responsibility for regulating the development of coal resources. 

Mr. MCKINLEY. I understand, but I am trying—but you have got 

the terminal and they are threatened, but yet we have testimony 

from people, we have got mayors from all over the Northwest who 

say they support this. 

Ms. MOYER. And what I explained in my testimony is that the 

Corps of Engineers has very limited authority in these shipping facilities where you have a limited scope of analysis. We are not looking at a lot of these attenuated effects. We are sticking to the footprint of the project itself and the associated indirect effects. 

Mr. MCKINLEY. I am sorry, I have run out of my time. I am 

sorry. Maybe we can chat more about the—— 

Mr. WHITFIELD. Gentleman’s time is expired. 

Mr. MCKINLEY. Thank you very much. 

Mr. WHITFIELD. At this time, I recognize the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. I kind of feel like we are tag teaming. McKinley 

just tagged me. 

Let’s pick it up where we left off. Virginia has—and most of them 

are in my district, 9,000 plus workers who deal with coal, and one 

of my concerns is as I was listening to some of the other questions 

57 

that you would think that some of the folks, you know, want to dictate to the rest of the world everything that happens, and I think 

we learned a long time ago that while the United States has huge 

influence, we can’t dictate to other countries of the world. And so 

I do feel your pain, Ms. Moyer, in trying to, you know, you are trying to do your job within the parameters that you are given, but 

you can’t make decisions because it is complex as to what happens 

and whether or not coal production in the United States for exports 

would really change the amount of coal being burned, because you 

would not disagree with me if I were to tell you that over the last 

several years, the Australians, the Indonesians, the Indians, the 

Russians, the Chinese, some of the southern African countries have 

all increased their coal production, and I would submit in part because there is some hesitancy to use American coal for fear that 

the American coal resources will be shut down. But you wouldn’t 

disagree with me if I indicated that there were numerous nations 

around the world that have increased their coal production and 

their coal usage, would you? 

Ms. MOYER. I don’t know what they have done. I am not familiar 

with those. 

Mr. GRIFFITH. And that is why you can’t make a decision when 

you are trying to decide whether or not a new facility should be 

opened up, you can’t look at all of that. You have to decide what 

the impact is on building that facility and do what your job is in 

the parameters that are given to you by the law on that facility, 

not looking at the worldwide impact of what might or might not 

happen as we move forward. Isn’t that correct? 

Ms. MOYER. Correct. 

Mr. GRIFFITH. And Mr. Smith, I am glad to hear that you all are 

looking at coal and things that we can do. I have been very excited 

about the work at Ohio State where they have come up with a 

process that has worked in the small scale to do a chemical looping 

that has virtually no pollutant, a little bit—I think 1 percent of the 

carbon dioxide currently produced, but they get the energy out of 

the coal without having any of the NOX and SOX and mercury, 

and only 1 percent of what is currently produced on carbon dioxide, 

and I would wonder if you could tell me what you know about that 

project and as they move forward on the project in Alabama, how 

much assistance you all are going to give them in moving that 

project on to the fast track. Because if that works, not only can we 

export American coal, but we can export technology that makes it 

so that Mr. Waxman and I can agree that it is good to have jobs 

and we don’t have global warming in the process. What are you 

doing? 

Mr. SMITH. Thank you, Congressman, for that question. 

So over the course of the last several years, we have made an 

historic $6 billion investment in technologies to reduce the cost to 

capture CO2 out of the coal-fired power plants and to demonstrate 

that we can successfully and sustainably store CO2 either in saline 

aquifers or in depleted oil fields for enhanced oil recovery. That is 

a critically important goal to ensure that we are using all of our 

domestic resources as part of our all-of-the-above strategy. 

Mr. GRIFFITH. But if I might, because obviously we all have limited time, but you know, if this technology that Ohio State UniverVerDate Nov 24 2008 12:20 Jan 27, 2014 Jkt 037690 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-57 CHRIS
58 

sity has developed and has been working on, if that works, that answers all those other questions. I mean, we don’t have to worry as 

much about carbon sequestration, because there isn’t going to be 

very much carbon output. You end up with basically a process that 

is all housed within, you know, the box, and of course, the bigger 

the box we have to see how it works. And so I would strongly encourage that the Department of Energy take a very serious look at 

that and see what we can do to fast track that project to see if it 

works, because I think it has the same potential to have us sitting 

here in 5 years going you know, we thought we weren’t going to 

be able to do this, and schazaam, it happened that we are now saying about natural gas, because just a couple of years ago, they were 

saying we were going to have to import and now we are talking 

about what we can do to expedite exports. And I would note in that 

regard, hoping that you all are looking at the impact of jobs if we 

do approve LNG for export, but some people have said well that 

will make the prices go up. We are still waiting in Virginia for the 

approval to do offshore drilling. We think we have a lot of natural 

gas. We think we might have some oil, but we think we have got 

a lot of natural gas out there. If we are able to export, not only do 

we create jobs in the United States, but I don’t think there is any 

impact to—any significant impact to the price because that will 

just spur more exploration in the United States for more natural 

gas. We ought to use our resources to create jobs, wouldn’t you 

agree? 

Mr. SMITH. We are enthusiastic about chemical looping and all 

the projects you mentioned, and we are working together on those 

goals. 

Mr. GRIFFITH. Anything you can help us to do to get approval for 

offshore drilling in Virginia would be fantastic. 

Thank you. I see my time is up and I yield back. 

Mr. WHITFIELD. Gentleman yields back. At this time, I recognize 

the gentleman from New York, Mr. Tonko, for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

It appears DOE’s consideration of public interest is somewhat 

limited in part due to the declarations of statute that exports of 

LNG to countries we have a trade agreement with are consistent 

with the public interest. I want to explore the concept a bit more. 

Unlike metal, paper, cloth or agricultural commodities, one natural gas is exported and used, that is it. The fossil reserves of it 

cannot be regenerated and it cannot be reclaimed through recycling. So if we could, Mr. Smith, how does DOE account for this in 

its determination of public interest? 

Mr. SMITH. Well, the statute creates two different and separate 

categories. There is a categories with which the United States has 

a free trade agreement. There is a separate category for those 

countries with which the United States does not have a free trade 

agreement. So by statute, we don’t have discretion over exports to 

those countries, so following the letter in the spirit of the law, 

those applications are approved without delay or modification or 

further consideration by the Department. So when we talk about 

public interest determinations and all the work that we are doing, 

studies, evaluations, those apply to those countries with which the 

United States does not have a free trade agreement. 

59 

Mr. TONKO. OK, thank you. And the determination of the price 

that will benefit domestic manufacturing without providing a distinctive—or a disincentive, excuse me, to continue extraction is a 

difficult task. How does DOE consider each application for export 

in a national context? 

Mr. SMITH. So the Department certainly doesn’t set prices or determine business models, so the way that we have to look at that 

is look at our global dynamic equilibrium models that would help 

us consider what would be the impact on the domestic prices to 

various scenarios for export to other countries. So these are studies, they are estimates. They are based on the best available data 

that we have in place, and that is the methodology that we use to 

try to estimate what might be the impact of approving applications. 

Mr. TONKO. Is the number of facilities you would approve contingent on our oversupply and the number of existing facilities? 

Mr. SMITH. Well certainly as we look at each facility, we are 

going to have to consider the cumulative impact of facilities that 

we already approved. So part of that is understanding, well, what 

is the supply and demand balance in the United States. What do 

we think about the size of the resources that are available, and our 

ability to ensure that we can prudently and safely develop those resources. So those are all things that go into the modeling and the 

consideration where we are making these public interest determinations. 

Mr. TONKO. Yes, and how does the public interest test apply to 

the reduction of domestic reserves of any essential fuel and feed 

stock that can not be easily replaced? 

Mr. SMITH. I am sorry, I am not sure I understood the question. 

How does the—— 

Mr. TONKO. Right, how does the public interest test apply to the 

reduction of domestic reserves of an essential fuel and feed stock 

that cannot be easily replaced? 

Mr. SMITH. So we do believe that we have got a vast supply of 

natural gas in the United States, 100 years of supply, 800 trillion 

cubic feet of natural gas within the Marcellus Shale alone, so we 

think this is a large resource that will be attractive if we can 

produce it in a way that is safe and environmentally sustainable. 

So we have to consider the size of the resource, and that is part 

of the public interest determination that we make for each of these 

applications. 

Mr. TONKO. And the extraction of fossil fuels obviously has benefits, both private and public, but it also has costs, especially in the 

communities where this activity is occurring. If exporting LNG 

stimulates additional extraction and the gas is not being used as 

a fuel or feed stock here, how are the costs to communities where 

extraction takes place accounted for in your determination of public 

interest? 

Mr. SMITH. Well thanks for that question, and certainly we have 

a keen understanding and awareness that the most important factor in prudent development and effective use of the resource is to 

ensure that the people who live and work close to where the wells 

are being drilled are comfortable with the processes that we have 

scientifically quantified the risks, and that we are demonstrating 

that the regulations are mitigating those risks. So that is the core 

60 

part of the research and development that we do within my office 

in terms of environmental sustainability and safety of domestic 

coal and gas production. So we consider that in our public interest 

determination, but we are also doing that in real time in terms of 

real research and development that is helping us to ensure that 

those resources develop safely. 

Mr. TONKO. OK. Thank you very much. I yield back, Mr. Chairman. 

Mr. WHITFIELD. Gentleman yields back. At this time, I recognize 

the gentleman from Ohio, Mr. Latta, for 5 minutes. 

Mr. LATTA. Thanks, Mr. Chairman. I appreciate that, and also I 

want to thank our witnesses today. I appreciate your testimony. 

You know, it has been a common theme that has kind of gone 

through a lot of the questioning is a lot on the timeline for the applications to go through, and if I could just maybe follow up on a 

couple of these, if I may. 

Ms. Moyer, one of the things when you are looking at these applications, how often do you have third party litigants that are 

going to be filing lawsuits? Do you have any idea, like in the current cases out West how many third party litigants you have? 

Ms. MOYER. As far as I know, we don’t have anybody that has 

sued us yet because we haven’t taken an agency action. 

Mr. LATTA. OK. if I could turn, then, to Mr. Smith. I think that— 

I am sorry, Mr. Wright. I believe that Mr. Barton had asked a 

question as to from start to finish and filing of an application how 

long it takes, did I understand it was 18 to 24 months? Is that correct what I heard? 

Mr. WRIGHT. I was using the example of our experience with the 

regasification plants, the import terminals, but I tried to point out 

is using the Sabine Pass example of about 15 months is kind of 

risky in that it is each one of the export terminals are presenting 

kind of issues of first impressions. So I can’t put my exact finger 

on a processing time for export terminals. 

Mr. LATTA. OK. Well because I am just kind of curious, because 

in your testimony where you kind of lay out your timelines and 

what is happening, from the pre-filing process it says for a period 

of about at least 6 months, and then you have right in the same 

paragraph the question again—if I could bring this up, is on the 

interveners become parties to the proceedings and have the right 

to request a rehearing of Commission orders and seek relief of final 

agency actions in the U.S. Circuit Court of Appeals. When that 

happens, how much time is needed for that to get something out 

of the Court of Appeals. 

Mr. WRIGHT. Well, that would be up to the actual project proponent. If you get through our rehearing process and we find that 

your project is approved, if someone sues you in the Court of Appeals, you can go ahead and commence construction activities at 

your risk. People do that on the pipeline side. 

Mr. LATTA. OK, and if I could turn—Mr. Smith, if I could ask 

you, it is kind of interesting that in your testimony you show— 

state that in the one case, I think it was the Sabine, if I got that 

correct, it says in response to the Notice of Availability, DOE received over 188,000 initial comments and approximately 2,700 

61 

reply comments. How long did it take you all to get through that? 

Any idea? 

Mr. SMITH. From the time that we closed that comment period 

to the time we issued the order, it was somewhere around 2, 21⁄2

months was the period of time that we took to evaluate all of the 

comments, write the order, and get the report published and the 

Federal Registry notice and out to the applicant. 

Mr. LATTA. OK. In that period of time, just out of curiosity then, 

how many folks do you have looking at the comments and then also 

how much time is spent looking at pretty much each of those comments, since you had, again, 188,000 initial comments and then 

again the 2,700 reply comments. Any idea how much you spent on 

each one of those? 

Mr. SMITH. Thanks for the question. Some of those comments are 

repetitive because some of them are letter writing campaigns. Some 

of them are very comprehensive, so they could be entire studies or 

comments that are very complex, so I couldn’t really give you a rule 

of thumb for each comment, because it depends. 

Mr. LATTA. And also, just again because I said that there is a 

common theme here of folks on the committee looking at—on the 

time side. When you issued, it says here, that on May the 17th, 

2013, DOE granted the second long-term application on the Freeport, and it said—in your statement, it says the order was granted 

after an extensive review of the application to export LNG for Freeport. How long—when you say extensive, how much time is that for 

that review? 

Mr. SMITH. Well, there are two things that happened between 

Sabine Pass and Freeport. First, we commissioned an extensive 

study that looked at domestic and international impacts of LNG 

and how those would impact American businesses and families and 

consumers, so that took a period of time. That study, once completed, we want this to be an open and transparent and very visible process, so we put that study in the docket for public review. 

That was when various stakeholders had the opportunity to comment, and so that was the genesis of those comments that you just 

asked me about. When that was completed, we took a period of 

time to evaluate the comments and then we got the order written. 

Mr. LATTA. Thank you very much, Mr. Chairman. My time is expired and I yield back. 

Mr. WHITFIELD. Gentleman’s time is expired, and that concludes 

the questions for this panel, except Ms. Moyer, one question I 

wanted to ask you. How many export facilities are under review by 

the Corps right now? 

Ms. MOYER. In the Pacific Northwest? 

Mr. WHITFIELD. Yes—no, nationwide. 

Ms. MOYER. I don’t know. I could get back to you on that. I don’t 

know. 

Mr. WHITFIELD. But in the Northwest, three? 

Ms. MOYER. Just the three. 

Mr. WHITFIELD. OK. Well we will stay in touch with you on that. 

I want to follow up on that. 

But thank you all very much for being with us. We appreciate 

your expertise and testimony. 

62 

At this time, I would like to call up the second panel, and on the 

second panel today we have the Honorable Mike McGinn, who is 

the Mayor of the City of Seattle. We have Mr. Ross Eisenberg, who 

is the Vice President, Energy and Resources Policy for the National 

Association of Manufacturers. We have Mr. Harold Quinn, President and CEO of the National Mining Association. Mr. KC Golden, 

Policy Director for Climate Solutions. We have Mr. Bill Cooper, 

President of the Center for Liquefied Natural Gas, and we have 

Mr. Lucien Pugliaresi, President for the Energy Policy Research 

Foundation. 

So I want to thank all of you for joining us today. We look forward to your testimony on this important subject matter, and each 

one of you will be given 5 minutes for an opening statement, and 

then I am sure that there will be some questions from members as 

they come back in. So thank you for joining us, and Mr. McGinn, 

we will call on you for your opening statement to begin with, and 

each one of you will be given 5 minutes. As I said earlier, there 

is a little box that—if it is working. Is it working? If it is working 

a red light will come on, but we look forward to your testimony and 

Mr. McGinn, you are recognized for 5 minutes. 

STATEMENT OF HONORABLE MIKE MCGINN, MAYOR, CITY OF 

SEATTLE; HAROLD P. QUINN, PRESIDENT AND CEO, NATIONAL MINING ASSOCIATION; ROSS E. EISENBERG, VICE 

PRESIDENT, ENERGY AND RESOURCES POLICY, NATIONAL 

ASSOCIATION OF MANUFACTURERS; KC GOLDEN, POLICY 

DIRECTOR, CLIMATE SOLUTIONS; LUCIAN PUGLIARESI, 

PRESIDENT, ENERGY POLICY RESEARCH FOUNDATION, INC.; 

AND BILL COOPER, PRESIDENT, THE CENTER FOR LIQUEFIED NATURAL GAS 

STATEMENT OF HONORABLE MIKE MCGINN 

Mr. MCGINN. Thank you, Chairman. It is—— 

Mr. WHITFIELD. I am sorry, I should say Mayor McGinn. 

Mr. MCGINN. That is—anything works. Chairman, thank you for 

the invitation to testify. It is a real honor to be here. 

A long time ago when my hair wasn’t gray and my beard was 

red, I worked for Congressman Jim Weaver of Oregon over there 

in the Longworth Office Building, and Northwest politics often involve energy. Congressman Weaver was deeply involved in champion conservation as opposed to new nuclear power plants at that 

time, and conservation was indeed the wiser choice. The whoops 

nuclear power plants that were endorsed by Congress ended up defaulting on billions of dollars of municipal bonds. 

We now face another significant energy choice for the Pacific 

Northwest, one that could have dramatic consequences for our economic and environmental well-being: whether 110 million tons of 

coal a year will be transported across the Northwest and shipped 

to China from Northwest ports. To put that in perspective, the carbon emissions from that coal are more than the emissions projected 

from the Keystone XL Pipeline. 

So I want to describe this just a little bit. To ship this coal to 

China, terminals are proposed north of Bellingham, Washington, 

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lumbia is looking at coal ports as well. To ship this coal, we would 

be looking at—to get to Bellingham, we would be looking at 18 coal 

trains a day, each a mile and a half to 2 miles long, traveling from 

the Powder River Basin in Montana and Wyoming, through Spokane and eastern Washington, down the length of the Columbia 

River, the border between Oregon and Washington, and then from 

south to north, almost to the northwest corner of the State in Bellingham, traversing multiple towns and traveling along the Puget 

Sound coastline. The coal trains are uncovered. They lose approximately 2 percent of their load on the route. The proposed coal terminal near Bellingham sits on ancestral Native American lands 

and is opposed by the Lummi Nation, both because it violates the 

burial grounds and because coal pollution in Puget Sound threatens their salmon rights, and those are treaty rights. 

I tell this story because the local impacts of coal trains upon communities throughout Washington are significant. Over 40 local 

elected officials, including tribal leaders, have joined me in the 

leadership alliance against coal because of the serious negative impacts on their communities, and I would like to talk about that. 

Coal train traffic will clog the railroads. Coal dust and diesel exhaust from the engines pollute water and lungs. Neighborhoods 

along the rail lines will see decreased quality of life, and it will 

have significant negative transportation impacts. I ask you to consider the impacts upon communities as these coal trains go 

through. 

In Seattle, in our industrial area we have four at-grade crossings, 

and then we have four at-grade crossings between our downtown 

and our waterfront. Each of these areas are significant job-creating 

areas in their own right, and in order for freight traffic to reach 

our port, they have to go across these rail lines. We worked with 

consulting firm parametrics to take a close look, and we are talking 

about increased gate down time up to 2 to 3 hours each day. That 

has economic impacts as well as public safety impacts upon our police and fire departments. Now imagine that impact on cities and 

towns along the entire route. These railroad lines tend to go right 

through the middles of towns at grade. 

And then let’s take a look again at just the broader impacts. We 

have spoken about the climate impacts already. This is equivalent 

to all the gasoline burned by 50 million people each year. Now unless we stop these coal terminals from being built, we will be responsible for hastening the advance of climate change here at home 

and around the world. 

Now I have heard members of this group talk quite a bit about 

jobs. I just want to say, we have been working really hard in Seattle to recover from the recession caused by lax oversight of our 

financial institutions in this country, and we are creating jobs. We 

are building the greenest buildings in the world. We are retrofitting buildings, and those are local jobs. You have to be in that 

crawlspace. You have to be operating those energy control systems. 

We have been eliminating waste, putting savings—putting the 

money we save to productive use. That is frugal, that is efficient, 

and that is reducing demand for our clean wind and water power, 

which means we can put that electricity to better use in our economy. In fact, we should be exporting our green building technology, 

64 

not coal. In fact, we are. Our architects are building buildings in 

China and all over the world, because they are some of the leading 

architects in the world. 

I want to return to the issue of the whoops nuclear power plants 

that I mentioned at the beginning. We somehow have this belief 

that economic growth requires ever-increasing amounts of energy 

use. We prove that to be wrong in the Northwest. We have had significant economic growth while reducing our energy use. We have 

grown by being more efficient and cleaner, enhancing our quality 

of life. That is the pathway to creating good jobs. 

The same is true with coal trains. They will hurt us economically. We have better ways to create jobs. Thank you. 

[The prepared statement of Mr. McGinn follows:] 

65 


85447.024

City of Seattle 

Office of the Mayor 

TESTIMONY OF SEATTLE MAYOR MIKE MCGINN 

BEFORE THE SUBCOMMITTEE ON ENERGY AND POWER OF THE HOUSE ENERGY AND COMMERCE 

COMMITTEE 

JUNE 18, 2013 HEARING 

US ENERGY ABUNDANCE: REGULATORY, MARKET AND LEGAL BARRIERS TO EXPORT 

Chairman Upton, Ranking Member Waxman, Chairman Whitfield, Ranking Member Rush, and 

members of the Committee, thank you very much for the invitation to testify before you today. And 

thank you in particular for your attention to this crucial issue: coal export. 

My message to you today is twofold: 1) Coal exports will have serious negative impacts on local 

communities as we" as on the environment, both loca"y and globally; and 2) The leadership Alliance 

Against Coal is opposed to the permitting and development of any new coal export facilities on the 

West Coast. 

In Washington State and across the Pacific Northwest, coal companies are joining with railroads 

and international shipping companies to propose new export facilities for coal. Terminals are proposed 

north of Bellingham, Washington and near Longview, Washington as well as in Oregon and British 

Columbia. As they travel to Northwest ports from the Powder River Basin, coal trains will leave behind 

coal dust and diesel exhaust along the rail lines. Coal train traffic will clog our railroads, ports, and 

roads, risk our families' health, pollute our air and water, hurt local economies and contribute to climate 

change. In our cities, these coal trains will create unacceptably long delays for reSidents, visitors, freight, 

first responders, and others who are trying to cross the busy rail corridor. On Washington State tribal 

Testimony of Seattle Mayor Mike McGinn 1 
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lands, coal trains will cause those same disruptions, but will do additional damage to cultural heritage 

and treaty rights. 

The corporations that want to export coal through our communities want us to believe that 

there's nothing wrong with their plans. But it is my job as Mayor of Seattle to stand up to protect our 

community from these coal export facilities and associated rail traffic. We need an area-wide 

Environmental Impact Statement to evaluate the local, regional and global impacts of coal export. The 

geographic scope of the EIS should be broad and all potential impacts in local communities, from 

increased health risks to traffic delays, from the disruption of freight movement to the impacts on our 

local businesses should be considered. 

I stand together with the leadership Alliance Against Coal to tell you that we do not want coal 

trains or coal export facilities in the Pacific Northwest. 

Impact of Coal trains on local Communities 

In Washington State and across the Pacific Northwest, coal companies are joining with railroads 

and international shipping companies to propose new export facilities for coal. The coal industry is 

responding to a shrinking domestic market with plans to strip-mine coal in Montana and Wyoming, 

transport it on long coal trains through Northwest cities and towns, ship it on massive cargo ships off the 

West Coast, and sell it overseas. The largest coal company in the world, Peabody Energy, wants to build 

the massive Gateway Pacific Terminal north of Bellingham, Washington at Cherry Point, so they can ship 

coal all over the world. Another terminal is proposed near longview, Washington along with others in 

Oregon and British Columbia. 

As they travel to Northwest ports from the Powder River Basin, coal trains will leave behind coal 

dust and diesel exhaust along the rail lines. Coal train traffic will clog our railroads, ports, and roads, risk 

Testimony of Seattle Mayor Mike McGinn 2 
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our families' health, pollute our air and water, hurt local economies and contribute to climate change. In 

our cities, these coal trains will create unacceptably long delays for residents, visitors, freight, first 

responders, and others who are trying to cross the busy rail corridor. On Washington State tribal lands, 

coal trains will cause those same disruptions, but will do additional damage to cultural heritage and 

treaty rights. 

Coal Export Will Fuel Climate Change 

Unless we can stop coal terminals from being built in Washington State, at least 110 million tons 

of coal will be shipped from ports on the West Coast overseas to Asia every year. The proposed Gateway 

Pacific Terminal would export at least 59.5 million tons of coal per year, making it the largest coal export 

facility in North America. The proposed longview terminal would ship at least 48.5 million tons per year. 

Just the 110 million tons of coal from Cherry Point and Longview would result in more carbon 

emissions than the entire Keystone Xl pipeline each year'. Those 110 tons would also more than double 

total U.S. coal exports. A Sightline Institute study in 2011 found that burning just 60 million tons of 

Washington state coal in China would produce as much climate-changing carbon pollution as all the 

gasoline burned by 50 million people each year'. Now that we're looking at 110 tons of coal every year 

rather than 60, this coal is the equivalent of the gas burned by everyone on the entire western seaboard 

plus Colorado, Montana, Idaho, Alaska, Nevada, New Mexico, Arizona and most of Texas. 

Unless we can stop these coal terminals from being built and keep our coal in the ground where 

it belongs, Washington state coal exports will be responsible for hastening the advance of climate 

change here at home and around the world. 

1 http:Udaily.sightline.org/2011/11/16Icoal-exports-are-bigger-threat-than-tar-sands-pipelinel 

, http:Udaily.sightline.org/2011/02/22/coal-exports-and-carbon-consequencesl 

Testimony of Seattle Mayor Mike McGinn 3 
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In addition, the Department of Interior's Office of the Inspector General recently released a 

report confirming U.S. coal companies receive massive subsidies from U.S. taxpayers for mining leases 

on public lands'. The Inspector General's findings come on the heels of the Institute for Energy 

Economics & Financial Analysis 2012 report which revealed that the current Bureau of Land 

Management (BLM) leasing program cuts U.S. taxpayers out of billions of dollars in revenue'. The 

Inspector General report faults BLM for failing to take into account potential profits for coal export and 

for failing to follow an Interior Secretary Order intended to ensure unbiased evaluations of the fair 

market value for federal coal. The report explains, "Since even a i-cent-per-ton undervaluation in the 

fair market value calculation for a sale can result in millions of dollars in lost revenues, correcting the 

identified weaknesses could produce significant returns to the Government." 

I don't think American taxpayers should be on the hook to subsidize large corporations that 

damage our environment and continue to advance the climate crisis. 

Community Concerns 

As Mayor of Seattle, I have heard concerns from many in our community about the possible 

impacts of the propose coal terminal and coal trains. last fall and winter, the Army Corps of Engineers 

along with the Washington State Department of Ecology and Whatcom County, held a series of hearings 

to take comments on the potential scope of environmental analysis for the proposed Gateway Pacific 

Terminal. The response they received was almost unprecedented; thousands of people turned out for 

each of six hearings. 

3 View the full report "Coal Management Program, U.S. Department of the Interior": 

http://www.eenews.net/assets/20i3106/11/document pm 01.pdf 

'For additional details on the report see: http://www.ieefa.org/study-almost-30-billion-in-revenues-lost-totaxpayers-by-giveaway-of-federally-owned-coaHn-powder-river-basinl 

Testimony of Seattle Mayor Mike McGinn 4 
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The Seattle hearing was attended by approximately 2,300 people, with the vast majority 

representing the anti-coal side. The regulators heard from dozens of people concerned about both the 

local impacts and the larger impacts on climate and then environment from the coal proposal. I testified 

on behalf of the City of Seattle, calling on the regulatory agencies to perform a comprehensive analysis 

the encompassed the full rail corridor and all of the potential health, environmental and economic 

impacts of the coal trains. 

By the end of the comment period, the agencies received over 125,000 individual comments, 

with strong opposition to the proposal in general and clear call for a comprehensive analysis potential 

impacts. Many federal, state and local agencies weighed in to voice similar positions. For example, the 

US EPA recommended that not only is an analysis considering the full rail corridor as well as fugitive coal 

dust and diesel emissions warranted, they also urged that the regulatory agencies consider the air, 

water and greenhouse gas impacts from burning the exported coal (see Attachment 1). 

Since the scoping hearings, local and state officials have continued to weigh in with concerns 

over the environmental review process. The Governors of Washington and Oregon have sent a letter 

urging he Council on Environmental Quality to "undertake and complete a thorough examination of 

the greenhouse gas and other air quality effects of continued coal leasing and export before the U.S. 

and its partners make irretrievable long-term investments in expanding this trade" (see Attachment 

2) and the King County (Washington) Executive Dow Constantine has also weighed in asking for an areawide assessment ofthe impacts of coal export terminals proposed in Washington and Oregon (see 

Attachment 3). 

The Leadership Alliance Against Coal 

On Earth Day, I stood together with a number of city governments and tribal nations from across 

the Pacific Northwest to announce a new coalition to oppose coal trains and coal exports. The 

Testimony of Seattle Mayor Mike McGinn 5 
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leadership Alliance Against Coal', already over 50 strong, is working together to raise awareness about 

the damaging economic, cultural, and health impacts of coal trains and coal exports, as well as, take 

action to protect our communities (see Attachment 4). We have ali agreed that the proposals to export 

coal from the Northwest present unacceptable impacts to our communities. 

In addition to the members of the leadership Alliance, hundreds of other public officials at all 

levels of government have voiced concern and/or opposition to the coal export proposals. A summary 

of this outpouring of concern is summarized in Attachment 5. 

Impacts in Seattle 

last year, the City of Seattle worked with consulting firm Parametrix to take a close look at the 

traffic impacts of the coal train proposal6

• 

The findings indicated that running as many as 18 coal trains per day through Seattle, each over 

a mile long, at an average speed of 20 miles per hour, will significantly increase delays along our 

waterfront and in the industrial area south of downtown. 

The traffic study indicated railroad crossing gates will be down an additional one to three hours 

each day. Those coal trains will separate our waterfront and the maritime, industrial, and other small 

businesses on the waterfront side of the tracks from the rest of the City. The trains will essentially form 

a wall, cutting off a critical part of Seattle's economy. It will also limit the ability of people to access the 

businesses and attractions on Seattle's waterfront and hinder emergency response to these areas. 

5 More information on the Alliance is available here: https:l!www.facebook.com/LeadershipAliianceAgainstCoal 

6 For additional details on the traffic study, please see: http://www.seattle.gov/transportation/coaltrainstudy.htm 

View the full report, "Coal Train Traffic Impact Study": http://www.seattle.gov/transportation/docs/12110SPRCoalTrainTrafficlmpactStudy.pdf 

Testimony of Seattle Mayor Mike McGinn 6 
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We already know the traffic and safety impacts of this proposal. Those impacts raise a logical 

question: what do coal trains mean for our regional economy? What do they mean for the health of 

people living in our communities? 

Proponents of the Gateway Pacific Terminal claim that it will be a job creator. I'm concerned 

that on the whole the terminal will actually have a negative impact on jobs because it will significantly 

impact business in Seattle and throughout the rail corridor. We're currently studying the economic 

impacts of coal trains here in Seattle. We are analyzing the impacts on operations and employment for 

the Port of Seattle and businesses along the proposed coal train route, evaluating the displacement of 

higher value goods being shipped by rail and making a determination on additional infrastructure 

improvements or policy measures that would be required to support coal train operations and/or 

mitigate coal train impacts. 

Our work also helped convince the Puget Sound Regional Council to do a region-wide economic 

impact study. This study will assess the effects of the Gateway Pacific Terminal proposal on the regional 

transportation system, future trade throughout the regional freight and goods transportation system, 

current and future land use within the region, water and air quality and adverse impacts on minority 

and/or low income communities. It will also identify additional infrastructure improvements or policies 

that may be required to mitigate potential impacts. 

In addition, Seattle is supporting studies on the air quality and health impacts from the coal 

proposals. A University of Washington researcher plans to analyze the air quality impacts of coal and 

diesel emissions along the rail corridor this summer. later this year, a team led by Washington State 

University in collaboration with experts at the University of Washington and the Oregon Public Health 

Institute will launch a Health Impact Assessment to encompass coal transport routes from mines in the 

Powder River Basin to proposed coal export terminals in Washington and Oregon. 

Testimony of Seattle Mayor Mike McGinn 7 
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85447.031

Sierra Club, along with a number of other environmental groups, recently filed suit against BNSF 

under the provisions of the Clean Water Act based on emissions of coal dust and chunks into our 

waterways from existing coal trains. According to BNSF testimony at hearings before the Surface 

Transportation Board, each rail car loses an average of 500-3,500 pounds of coal dust. Coal trains are 

composed of approximately 120 rail cars, resulting in an average of 60,000-420,000 pounds of coal lost 

per train, each trip, according to a Sierra Club press release announcing the lawsuit. We do not know the 

impacts of these discharges on the environment, particularly on Puget Sound, nor on the health of our 

communities, and this deserves further study as well. 

Impacts in Other Cities 

Communities up and down the train line can expect similar impacts to those being quantified in 

Seattle. In addition, we're hearing from a number of these other cities about the potential impacts they 

may experience. 

Marysville 

Within the City of Marysville, there are 23 at-grade railroad crossings with 6 intersections 

signalized and interconnected with railroad preemption. The City has three, four-lane east/west 

arterials connecting to Interstate 5. All three roadways have at-grade railroad crossings within 0.4 miles 

of I-S and immediately to the west of the main north/south City arterial street, State Avenue. Each of 

the three east/west connectors to 1-5 is separated by 1.6 miles. Average daily traffic (ADT) on 4th Street 

(SR 528) and 88th Street NE is approximately 30,000 vehicles per day with 20,000 ADT on 116th Street 

NE. Currently an average of 19 trains travel through Marysville per day with the long freight and coal 

trains at just over a mile in length. The City has in the past looked at grade separation options for the 

three east/west arterials with the conclusion that grade separation is not feasible due to site 

Testimony of Seattle Mayor Mike McGinn 8 
73 


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constraints, extreme non-funded costs and very disruptive impacts to existing and planned City 

neighborhoods. 

The proposed coal trains are estimated to add an additional eighteen 1.5 mile long trains per 

day rumbling through Marysville. Trains of this length are likely to block at least two of the three 

east/west arterials simultaneously and with a speed from 5 mph to 30 mph will result in roadway 

closures from 6-18 minutes per train with anticipated transportation delay of at least an additional 2-3 

hours per day. The City and bordering jurisdictions have invested and planned for construction projects 

to alleviate safety and congestion issues on 1-5, 4th Street (SR 528), 88th Street NE, and 116th Street NE, 

however the addition of the proposed coal trains would negate the effect of these projects. Additional 

to transportation delays are concerns of the capability for emergency response during times in which 

the City is cut in half by additional train traffic. 

Spokane 

Spokane, Washington is the largest Northern U.S. city between Minneapolis and Seattle. All of 

the rail lines from Montana, Wyoming and Idaho converge in Spokane. If rail traffic carrying coal 

increases from the current volume of 2 to 3 trains a day to the proposed 30 or more, the city will see 

many negative effects. Each train represents an economic and public safety risk. 

Spokane has numerous at-grade crossings that are along commercial truck routes as well as 

emergency first responder routes, each presenting unique challenges when train volume increases. The 

rail lines leading out of town are already close to capacity and additional train volume is likely to cause 

congestion problems around at-grade crossings. This will have real consequences for commercial traffic 

as well as emergency response. In addition, existing above-grade railroad crossings are already highly 

degraded. If coal train traffic is massively increased, scarce infrastructure dollars will need to be 

Testimony of Seattle Mayor Mike McGinn 9 
74 


85447.033

diverted to improve railroad crossing infrastructure in order to accommodate activity that does not 

benefit our city. 

Each coal train also represents a threat to public health and the Spokane River. Spokane is 

geographically located on and named for the Spokane River. Community volunteers have found 

significant pollution to both the river and community. They have found coal dust and pieces of coal that 

have fallen from the 2 to 3 trains that currently pass through the city each day. 

Impacts to Tribes 

For tribes, treaty rights and cultural heritage are also at stake. Jay Julius, a councilmember for 

the lummi Nation whose lands will be directly impacted by the Gateway Pacific Terminal, has stated, 

"it's like putting a coal terminal in Arlington National Cemetery" since the terminal will sit directly on an 

historic lummi burial ground. In addition, the exponential increase in ship and train traffic across the 

, Northwest crated by coal export will directly and negatively affect tribal enterprises and treaty rights. 

Tribal economies are among the major economic forces in our cities and regional economy. 

Tribes employ more than 27,000 people statewide, paying more than $1.3 billion annually in employee 

wages and benefits. Tribes purchase more than $2.4 billion annually in goods and services from our 

private companies and generate more than $2S5 million annually in state and local taxes. For example, 

just north of Seattle, the Tulalip Tribes alone generated more than $40 million in state and local taxes 

and is the second largest employer, along with Boeing. 

As sovereign nations, 20 Indian tribes in Western Washington signed treaties with the United 

States, ceding most of the land that is now Western Washington, but reserving our rights to harvest 

salmon and other natural resources. For those rights to have meaning there must be salmon available 

for us to harvest. 

Testimony of Seattle Mayor Mike McGinn 10 
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85447.034

In 2011, the Norwest Indian Fisheries Commission, representing the 20 tribes of Western 

Washington, developed a report on the status of the salmon recovery in the Puget Sound, otherwise 

known as the Salish Sea'. Today fishing rights have been rendered almost meaningless because the 

federal and state governments are allowing salmon habitat to be damaged and destroyed faster than it 

can be restored. Salmon populations have declined sharply because of the loss of spawning and rearing 

habitat and Tribal harvest levels have been significantly reduced. As the salmon disappear, tribal 

cultures, communities and economies are threatened as never before. Some tribes have lost even their 

most basic ceremonial and subsistence fisheries - the cornerstone of tribal life. 

The threat of this new industry will be detrimental to treaty resources. Coal train derailments 

are a common occurrence now, with 22 in 2012 and 14 in 2013 so far. Bulk cargo ships have the worst 

record of oil spills in our State. We cannot afford this damage in the Salish Sea or along the wetlands 

and habitat between the Salish Sea and the Powder Mountains of Wyoming. 

Conclusion 

The corporations that want to export coal through our communities want us to believe that 

there's nothing wrong with their plans. But it is my job as Mayor of Seattle to stand up to protect our 

community from these coal export facilities and associated rail traffic. 

We are the first generation that can see the effects of global warming right in front of us. We 

are the last generation that has the chance to take action to stop it. We don't need to ship coal to Asia 

where it will be burned in dirty power plants and the toxins and greenhouse gas emissions will come 

back to damage our health and communities here in the Northwest. We have better ways to create jobs 

without putting our health, our economy, and our climate at risk. 

7 View the full report, "Treaty Rights at Risk": http://nwifc.org/w/wpcontent/uploads/downloadsI2011/08/whitepaper628finalpdf.pdf 

Testimony of Seattle Mayor Mike McGinn 11 
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85447.035

We need an area-wide Environmental Impact Statement to evaluate the local, regional and 

global impacts of coal export. The geographic scope of the EIS should include all of the areas proximate 

to the proposed train routes, beginning at the mines, as well as the areas in the vicinity of the proposed 

coal terminals. It should consider all potential impacts in local communities, from increased health risks 

to traffic delays, from the disruption of freight movement to the impacts on our local businesses. 

I stand together with the leadership Alliance Against Coal to tell you that we do not want coal 

trains or coal export facilities in the Pacific Northwest. 

Attachments 

Attachment 1: Scoping comments from Administrator Dennis McClaren, USEPA Region 10 

• Attachment 2: Letter from Governor Jay Inslee, Washington, and Governor John Kitzhaber, Oregon 

Attachment 3: letter from King County (Washington) Executive Dow Constantine 

• Attachment 4: Leadership Alliance Against Coal Member List 

• Attachment 5: Highlighted Statements of Concern/Opposition to Coal Export 

Testimony of Seattle Mayor Mike McGinn 12 
77 


85447.036

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGION 10 

1200 Sixth Avenue. Suite 900 

Seattle, WA 98101·3140 

January 22,2013 

Mr. Randel Perry 

CS Army ofEllgineers, Seattle District 

Care of: BNSF Custer Spur EIS Co·lead Agencies 

1100 I Avenue Northeast, Suite 400 

Bellevue, Washin!,>ton98004 

Dear Mr. Perry: 

The U.s. Environmental Protection Agency has reviewed the U.S. Army Corps ofEnginccrs' September 

21, 2012 Notice of Intent to prepare an Environmental Impact Statement for the proposed Gateway 

Pacific Terminal Bulk Dry Goods Shipping Facility and the Cusier Rail Expansion Project~ (the 

Gateway Pacific project). This ErS will be prepared with the Department of Ecology and 

Whatcom County as Co-Lead Agencies, leading to a single, analysis of the potential 

environmental impacts ofthe proposal. EPA's conunents are pursuant to our authorities under 

tbe National Environmental Policy Act, Section 309 of the Air Act, the Clean Water Act and our 

responsibilities as a Cooperating Agency. 

of an ms is both to provide decision makers with necessary intormation regarding potenti;;11 

cll'Jinmnal..'tltal impacts before a decisioll is made and to infonn the puhlic debate. The Gateway Pacific 

project is one of several terminal projects proposed in the Pacific Northwest to provide fnr the export of 

coal being cxtracted from the Powder River Basin. These projects are of great interest to the 

local communities, and \.ve appreciate your efforts to several public meetings during this scoping 

period. 

EISs for projects of this magnitude regularly evaluate a broad range ofpotcntial environmenral impacts. 

The EIS for this project should examine the direct environmental impact~from constructing and 

the llew terminal and expanding the rail spur line. including the impacts to on-site 

(over 150 acres), streams and nearshore as well tL~ habitat import'lllt to heo-jng and 

salmon. 

In addition to lool:ing at direct impacts in the immediate vicinity of the proposed teoninaJ, CEQ 

regulations (Section 1502.16) instruct agencies to consider other effects that are reasonably foreseeable. 

Thus, in addition to considering the impacts occwring at and near the site of the telminal, we 

recommend that the EIS evaluate the potential impacts along the full route associated with tI"<msporta!ion 

of dry bull: goods, including coal, to the new tenninal. That evaluation would appropriately include the 

potential increases in fugitive coal dust and diesel emissions that would accompany the additional rail 

traffic to the proposed new terminaL and the potential related human health impacts to communities 

along the proposed routes. These types of impacts are exactly the kind of reasonably foreseeable 

potential impacts tbat NEP A was dcsignt.'d to address, 

Other rea~()nably foreseeable impacts that we recommend be evaluated in the EIS include the potential 

for effects in the United States from combustion of the exported coal. The anticipated use of the tetminal 

is shipping bulk commodities. mostly Jow-sulfur, low-ash coal, primarily to Asia. Because pollutants, 
78 


85447.037

including mercury, particulate matter and ozone precursors, can travel long distances in the air, we 

would recommend using existing models to re,iew the reasonably foreseeable potential for air and water 

quality impacts in the UnitL'<i States. The life cycle greenhouse gas emissions associated with the project 

are also appropriate to considt.'f in this analysis. The methodologies for conductiug that analysis are 

available and well developed; the Corps could draw examples oflife cycle greenhouse gas 

emissions done inNEPA analyses by other federal 

EPA also reeommends that environmental impacts from increases in regional rail traffic and combustion 

of coal in receiving markets be examined in the context of other pmposed export facilities in the Pacifk 

Northwest region, so that reasonably foreseeable cumulative environmental impacts from additional 

facilities can be understood before a decision is made, as NEPA contemplates. The cumulative effects 

analysis would appropriately include increases in regional train tranic and related air quality effects on 

human hcalth, and the potential for effects to human health and the environment from increases in the 

long-range transportation of air pollution, including h'Tccohouse gas emissions. 

We also note that there afC several Tribes that have expressed interest in the proposed project, lind we 

beHeve it will be important that the Corps engage in meaningful govcrlJlncnt-to-govel11mcn! 

consultations with Tribes. 10 particular, we are aware that Tribes have raised questions OVL"f potential 

to 11sh babitat and cultural resources from the temlinal and incrcased marine traffic, in addition 

to decreased water quality from fugitive coal dust. 

We appreciate the coordination you have carricd out to date, and we look forward to working with you 

as a Cooperating Agency in developing the El5. EPA has expertise and data that may be useful to you in 

preparing your analysis of potential impacts, and we arc prepared to pmvide tcchnical assistance, 

including more detaik'<i information on recommended approaches and predicting impacts 

and for potential mitigationllleasures. If you have COl1tact me or 

Rcichgott at (206) 553-1601 or by electronic mail at rej;ch,\ot!.christine,@)~)pa.gov. 

Regional Administrator 

2 
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85447.038

STATE OF OREGON 

March 25, 2013 

The Honorable Nancy Sutley, Chair 

Council on Environmental Quality 

Executive Office of the President 

722 Jackson Place NW 

Washington, DC 20503 

Dear Chairwoman Sutley: 

STATE OF WASHINGTON 

The U.S. Anny Corps of Engineers is reviewing several permit applications for coal export 

shipping terminals in Oregon and Washington under Section 404 of the federal Clean Water Act, 

and Section 10 of the federal Rivers and Harbors Act. The permit applications include the 

Gateway Pacific terminal north of Bellingham, Washington (Peabody Energy - up to 48 million 

tons per year); the Millennium Bulk Terminals proposal in Longview, Washington (Ambre 

Energy - up to 44 million tons per year); and the Morrow Pacific Terminal at the Port of Morrow 

in Boardman, Oregon with a downstream barging component to Port Westward, also in Oregon 

(Ambre Energy - up to 8 million tons per year). Collectively, these proposals could result in the 

export of up to 100 million tons of coal per year. The expected end use of this coal is for energy 

production in Asia. No final decisions have been made on the related applications for state 

permits for these facilities. Our agencies are committed to a rigorous, fair and objective process 

to review these applications, within the scope of our respective authorities. 

As you know, while coal consumption is declining in the United States, consnmption in Asia is 

driving a substantial increase in global coal use. Although China and India are working to 

increase their use of other fuels and renewables, coal consumption in Asia has more than doubled 

in the last ten years. According to the International Energy Agency (rnA), global coal demand 

will grow by 16.9 percent over the next five years, or 2.6 percent per year. To date, coal exports 

from the United States have not been a major source of supply for foreign markets, but that is 

beginning to change. U.S. coal exports already have grown from 50 million tons in 2006 to just 

under 100 million tons in 2012 according to the U.S. Energy Information Agency (EIA). The 

U.S. holds the world's largest recoverable coal reserves, according to the EIA, much of which are 

found on federal lands in the western U.S. The recent interest in coal export shipping terminals 

along the west coast, along with decreasing domestic demand, is a clear indication that the U.s. 

could become a significant supplier of coal to Asia. 
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85447.039

The Honorable Nancy Sutley 

March 25, 2013 

Page 2 

Coal will inevitably play an important part in the global energy supply in the short tenn. 

However, before the United States and our trading partners make substantial new investments in 

coal generation and the infrastructure to transport coal, extending the world's reliance on this 

fuel for decades, we need a full public airing of the consequences of such a path. Coal is the 

major source of global greenhouse gas emissions, and its share is increasing rapidly. Increasing 

levels of greenhouse gases and other pollutants resulting from the burning of coal, including 

pollutants other than C02, are imposing direct costs on people, businesses and communities in 

the U.S. and around the world. These costs include the public health costs of increased 

atmospheric deposition of mercury in drinking water sources, as well as costs resulting from 

ocean acidification, rising sea levels, wildfires, and shrinking snow packs that are key sources of 

water for the western U.S. 

As the major owner of coal reserves in the western U.S., the federal government must consider 

whether it has appropriately priced the coal leases that it continues to grant, including the 

practice of granting non-competitive leases. Senators Ron Wyden and Lisa Murkowski recently 

asked the U.S. Department of the Interior for infonnation concerning alleged industry practices 

using in-house trading affiliates to avoid paying royalties that reflect actual export sales. These 

issues raise significant concerns that we are subsidizing the export of coal at the same time we 

are winding down domestic consumption due to serious enviromnental and health concerns. 

We believe the federal government must examine the true costs oflong-tenn commitments to 

supply coal from federal lands for energy production, whether that production occurs 

domestically or in Asia. We caunot seriously take the position in international and national 

policymaking that we are a leader in controlling greenhouse gas emissions without also 

examining how we will use and price the world's largest proven coal reserves. 

The Council on Environmental Quality (CEQ) has issued draft guidance for agencies concerning 

when and how they need to consider the climate change effects of their actions. Given that the 

cumulative total of coal exports from Oregon and Washington could result in C02 emissions on 

the order of240 million tons per year, well above the significance level described in the draft 

guidance it is hard to conceive that the federal government would ignore the inevitable 

consequences of coal leasing and coal export. We believe the decisions to continue and expand 

coal leasing from federal lands and authorize the export of that coal are likely to lead to longtenn investments in coal generation in Asia, with air quality and climate impacts in the United 

States that dwarf those of almost any other action the federal government could take in the 

foreseeable future. 

For these reasons, we urge the CEQ in the strongest possible tenns to undertake and complete a 

thorough examination of the greenhouse gas and other air quality effects of continued coal 

leasing and export before the U.S. and its partners make irretrievable long-tenn investments in 

expanding this trade. We understand that the draft CEQ guidance under the National 

Environmental Policy Act (NEPA) that is referenced above is likely to be finalized in the near 

future, and applaud that step and urge that the new policy be applied to coal export tenninal 

proposals now pending as well as to all future decisions concerning coal leases. We also ask that 

you evaluate and detennine the proper policies for pricing coal leases from federal lands, both as 
81 


85447.040

The Honorable Nancy Sutley 

March 25,2013 

Page 3 

a matter of securing a fair return for this resource, and to account for the direct costs of the 

resulting emissions to U.S. businesses and communities. These steps are needed for the U.S. to 

make sound decisions as the international demand for the coal resources in the U.S. continues to 

grow, and to ensure that we do not simply pass these tough issues on to future generations. 

Thank you in advance for your careful consideration of this matter. We would welcome the 

opportunity to discuss these concerns in more detail. 

Sincerely, 

~~D Governor of Oregon Governor of Washington 

cc: The Honorable Ken Salazar, Secretary of the Interior 

The Honorable Bob Perciasepe, Acting Administrator, Environmental Protection Agency 

The Honorable John McHugh, Secretary of the Army 

The Honorable Jo-Ellen Darcy, Assistant Secretary of the Army for Civil Works 

The Honorable Lisa Murkowski, United States Senate 

Oregon State Congressional Delegation 

Washington State Congressional Delegation 
82 


85447.041

ti 

King County 

Dow Constantine 

King County Executive 

401 Atth Avenue, Suite 800 

Seattle, WA 98104-1818 

206-263-9600 Fax 206-296-0194 

TTY Relay: 711 

www.kingcounty.gov 

June 12,2013 

The Honorable J o-Ellen Darcy 

Assistant Secretary of the Army, Civil Works 

108 Army Pentagon 

Washington, D.C. 20310-0108 

Colonel John W. Eisenhauer 

Commander and District Engineer 

Portland District 

U.S. Army Corps of Engineers 

P.O. Box 2946 

Portland, OR 97208-2946 

Brigadier General Anthony C. Funkhouser 

Commander and Division Engineer 

U.S. Army Corps of Engineers 

Northwestern Division 

P.O. Box 2870 

Portland, OR 97208-2870 

Colonel Bruce A. Estok 

Commander 

Seattle District 

U.S. Army Corps of Engineers 

P.O. Box 3755 

Seattle, WA 98124-3755 

Dear Assistant Secretary Darcy, Brigadier General Funkhouser, Colonel Eisenhauer, and 

Colonel Estok: 

I continue to closely follow proposals for coal export to Asia through ports in Washington and 

Oregon. As of this June, the three remaining proposals include the Gateway Pacific terminal 

north of Bellingham, the Millennium Bulk Terminals proposal in Longview, and the Morrrow 

Pacific Terminal in Boardman, Oregon. Collectively, these proposals are estimated to result in 

hauling and export of 100 million metric tons of coal per year. 

The scope and magnitude of these proposals is unprecedented for our region. The greenhouse 

gas emissions from burning 100 million metric tons of coal are twice that produced in all of 

Washington State. Up to eighteen mile-and-a-half coal trains traversing King County per day 

would cause significant delays at each rail crossing, affecting traffic, transit, and commerce. 

King County has concerns about the potentially significant impacts of these proposals on 

health, environment, traffic, and economic development. These issues require a thoughtful and 

comprehensive approach. We expect that individual Environmental Impact Statements (EI8) 

~.-.... King Cou/ttJ is 411 Eqaa/ Opportu.nI./yI.ilJj'lmuUiv. Action Employ., 

and comp"" with til. Am"';.4II. with DisobiUtlt •• Act 
83 


85447.042

The Honorable Jo-Ellen Darcy 

Brigadier General Anthony C. Funkhouser 

Colonel John W. Eisenhauer 

Colonel Bruce A. Estok 

June 12, 2013 

Page 2 

will be required for all three of the proposed terminals to thoroughly analyze these impacts and 

identify the scope and cost of actions necessary to mitigate likely impacts: 

At the same time, the impacts of these projects on the enviromnent (including climate change, 

water quality, air quality, and fish habitat), health, traffic, and economic development are 

complex, geographically wide-ranging, and interconnected across our northwest region. 

Consistent with my earlier comments on the Gateway Pacific Terminal, I strongly encourage 

the United States Army Corps of Engineers to conduct a comprehensive, area-wide and 

cumulative Enviromnental Impacts Statement for the three remaining coal terminal proposals. 

An area-wide analysis would allow for more thorough and efficient analysis of similar impacts 

from the terminals and associated rail and barge transport of coal and provide a fuller picture of 

cumulative and related impacts on traffic, economic development, health, the enviromnent, and 

treaty fishing rights. An area-wide analysis would also support public engagement in 

identifying the impacts of a proposed terminal that may be hundreds of miles away but will 

trigger very real impacts in local communities along the rail line. Only through a programmatic 

EIS can the cumulative impacts of these related proposals thoroughly be analyzed and 

understood. As a nation we should also be examining for the full range of economic and 

enviromnental costs of the current coal leasing system on the health and environment on our 

local communities and our collective efforts to reduce climate pollution. 

We are at the precipice of decisions that will determine whether we will continue to expand our 

reliance on extraction and export of a polluting, fmite resource, or invest in a clean energy 

future that attracts innovation, long-term investment, and creation of sustainable job 

opportunities. An area-wide impact analysis will give the public and decision-makers essential 

information to fully consider the interrelated and cumulative impacts of the proposed coal 

terminals across the Northwest region. . 

Sincerely, 

Dow Constantine 

King County Executive 

cc: The Honorable Sally Jewell, United States Secretary of the Interior 

N aney Sutley, White House Council on Environmental Quality 

The Honorable Patty Murray, United States Senate 

The Honorable Maria Cantwell, United States Senate 

The Honorable Suzan DelBene, U.S. House of Representatives 
84 


85447.043

The Honorable Jo-Ellen Darcy 

Brigadier General Anthony C. Funkhouser 

Colonel John W. Eisenhauer 

Colonel Bruce A. Estok 

June 12,2013 

Page 3 

The Honorable Rick Larsen, U.S. House of Representatives 

The Honorable Jaime Herrera Beutler, U.S. House of Representatives 

The Honorable Doc Hastings, U.S. House of Representatives 

The Honorable Cathy McMorris Rodgers, U.S. House of Representatives 

The Honorable Derek Kilmer, U.S. House of Representatives 

The Honorable Jim McDermott, U.S. House of Representatives 

The Honorable Dave Reichert, U.s. House of Representatives 

The Honorable Adam Smith, U.S. House of Representatives 

The Honorable Dermy Heck, U.S. House ofRepreseseniatives 

The Honorable Jay Inslee, Governor, State of Washington 

The Honorable John Kitzhaber, Governor, State of Oregon 

The Honorable Peter Goldmark, Washington State Commissioner of Public 

Lands 

The Honorable Pat McCarthy, Pierce County Executive 

The Honorable John Lovick, Snohomish County Executive 

The Honorable Jack Loews, Whatcom County Executive 

The Honorable Timothy Ballew II, Chairman, Lummi Nation 

The Honorable Virginia Cross, Chair, Muckleshoot Indian Tribe 

The Honorable Leonard Forsman, Chairman, Suquamish Tribe 

The Honorable Brian Cladoosby, Chairman, Swinomish Tribe 

The Honorable Melvin Sheldon, Jr., Chairman, Tulalip Tribes 

The Honorable Pete Lewis, Mayor, City of Auburn 

The Honorable Suzette Cooke, Mayor, City of Kent 

The Honorable Denis Law, Mayor, City of Renton 

The Honorable Mike McGinn, Mayor, City of Seattle 

The Honorable Keith McGlashan, Mayor, City of Shoreline 

The Honorable Jim Haggerton, City ofTukwiIa 

Maia Bellon, Director, Washington State Department of Ecology (DOE) 

Josh Baldi, Northwest Regional Director, DOE 

Dennis McLerran, Regional Administrator, U.S. Enviromnental Protection 

Agency 

Tay Yoshitani, Chief Executive Officer, Port of Seattle 

Joni Earl, Chief Executive Officer, Sound Transit 

Bob Drewel, Executive Director, Puget Sound Regional Council 

Craig T. Kenworthy, Executive Director, Puget Sound Clean Air Agency 

Christie True, Director, King County Department of Natural Resources aild 

Parks 

Ngozi Oleru, Director of Enviromnental Health, Seattle-King County 

Department of Public Health . 

Harold Taniguchi, Director, King County Department of Transportation 
85 


85447.044

The Honorable lo-Ellen Darcy 

Brigadier General Anthony C. Funkhouser 

Colonel John W. Eisenhauer 

Colonel Bruce A. Estok 

June 12,2013 

Page 4 

Carrie S. Cihak, Chief Advisor, Policy and Strategic Initiatives, King County 

Executive's Office (KCEO) 

Megan Smith, Environmental Policy Advisor, KCEO 
86 


85447.045

LEADERSHIP 

ALLIANCE 

AGAINST 

COAL 

Councilmember Sally Bagshaw. Seattle 

Mayor Steve Bonkowski. Bainbridge Island 

Councilmember Tim Burgess. Seattle 

Mayor Stephen H. Buxbaum. Olympia 

State Representative Reuven Carlyle. WA 

State Senator Maralyn Chase. WA 

Chairman Brian Cladoosby, Swinomish 

Councilmember Richard Conlin, Seattle 

Councilmember Rick DeGloria, Burlington 

Councilmember Nancy M. Dumas, Sumner 

Mayor Dave Earling, Edmonds 

Deputy Mayor Chris Eggen, Shoreline 

State Representative Jessyn Farrell, WA 

State Representative Joe Fitzgibbon. WA 

Councilmember Kathleen Fitzpatrick, Mosier 

Council President Seth Fleetwood. Bellingham 

Councilmember Jean Godden. Seattle 

Council member Mike Grady, Mercer Island 

Councilmember Jennifer Gregerson. Mukilteo 

Councilmember Will Hall, Shoreline 

Councilmember Kristen Hytopoulos. 

Bainbridge Island 

Councilmember Jay Julius. Lummi Nation 

State Representative Ruth Kagi, WA 

State Senator Jeanne Kohl-Welles. WA 

Councilmember Cathy Lehman. Bellingham 

Council member Nick Licata, Seattle 

Council member Michael Lilliquist, Bellingham 

State Representative Kristine Lytton, WA 

Council member Kate McBride, Hood River 

Councilmember Doris McConnell, Shoreline 

Mayor Mike McGinn. Seattle 

Mayor Keith McGlashan, Shoreline 

Councilmember Ryan Mello, Tacoma 

State Senator Ed Murray, WA 

Mayor Jon Nehring, Marysville 

Council member Mike O'Brien. Seattle 

Chairman Rudy Peone. Spokane Tribe 

State Representative Jamie Pedersen. WA 

Council member Strom Peterson, Edmonds 

Council member Larry Phillips, King County 

Councilmember Laurent Picard. Hood River 

Council member Chris Roberts, Shoreline 

Council member Jesse salomon, Shoreline 

Chairman Melvin Sheldon, Jr.,Tulalip Tribes 

Council member Stan Snapp, Bellingham 

Council member Daniel Spatz, The Dalles 

Council President Ben Stuckart. Spokane 

Council member Moli S. Thomas. Stevenson 

Council member Ryan Walters, Anacortes 

Councilmember Shari Winstead. Shoreline 

Councilmember Lloyd Zimmerman. Ferndale 
87 


85447.046

Coal 

Table of Contents June 13, 2013 

U.S. Senators Patty Murray & Marla Cantwell (WA) 

U.S. Senator Jon Tester (MT) 

U.S. Representative Jim McDermott (WAI 

U.s. Representative Earl Blumenauer [OR) 

Oregon Governor John Kitzhaber 

EPA Region 10 

National Marine Fisheries Service 

WA Dept. of Ecology 

WA Dept. of Health 

WA Utilities and Transportation Commission 

King County Executive Dow COnstantine 

Pierce COunty Executive Pat McCarthy 

Skagit County Board of Commissioners 

King COunty Council member Larry Phillips 

San Juan Island National Historical Park (NPS) 

U.s. Senators Ron Wyden & Jeff Merkley (OR) 

U.S. Representative Suzan OelBene (WA) 

U. S. Representative Adam Smith (WA) 

U.S. Representative Peter DeFazio (OR) 

Washington Governor Jay Inslee 

U.S. Department of Housing and Urban Oev. 

National Park Service, Pacific West Region 

WA Dept. of Fish and Wildlife 

WA Dept. of Agriculture 

Puget Sound Clean Air Agency 

Multnomah County Chair Jeff Cogen 

Clark COunty COmmissioners 

San Juan County Council 

Thurston County: Romero, Wolfe, Valenzuela 

lyon Burditt the Area Manager of the USFS, Columbia River Gorge National Scenic Area 

WA State Representatives: Carlyle, Dunshee, Farrell, Fitzgibbon, Hudgins, Jinkins, Kagi, Lytton, Maxwell, 

Moeller, Morris, Pederson, Pollett, Reykdal, Ryu, Takko, Tarleton, Tharinger 

WA State Senators: Billig, Chase, COnway, Darneille, Fraser, Frockt, Harper, Keiser, Kline, Murrav, Nelson, 

Ranker, Regala, Shin, Swecker 

Bainbridge Island, WA 

Edmonds,WA 

North Bonneville, WA 

Spokane, WA 

Vancouver, WA 

Hood River, OR 

Portland, OR 

The Dalles, OR 

Washington 

Bellingham, WA 

Longview, WA 

Puyallup,WA 

Stevenson, WA 

Washougal, WA 

Milawaukie, OR 

Salem,OR 

Missoula, MT 

Anacortes: Ryan Walters City Councilmember 

Bellevue: Steven R. Sarkozy, City Manager 

Blaine 

Camas, WA 

Marysville, WA 

Seattle, WA 

Thurston County, WA 

Eugene, OR 

OR Metro Regional COuncil 

Scapoose, OR 

Bainbridge Island: Mayor Bonkowski 

Bellingham: Mavor Linville, Council members 

Burlington: Mayor Brunz 

Dallesport: COmmunity Council 

Elma: Mayor David Osgood 

Cheney: Mayor Tom Trulove 

Edmonds: Mayor Dave Earling 

Everett, WA 

Friday Harbor: Mayor Carrie lacher, City Council 

Lacey: Mayor Clarkson, CounCil mmbr Pratt, Lawson 

Mercer Island: Councilmember Mike Grady 

Ferndale: Councilmernber lloyd Zimmerman 

Kent: Mayor Suzette COoke, Council 

Marysville: Mayor Jon Nehring 

Monroe: Mayor Zimmerman 

Mount Vernon: City Council Members Mukilteo: Mayor Marine, City Council President 
88 


85447.047

Table of Contents June 13. 2013 

Olympia: Mayor Buxbaum. Councilmember Hawkins Seattle: Mayor McGinn and City Council members 

Sedro-Woolley: City Attorney Eron Berg Shoreline: Mayor McGlashan. City Council members 

Snohomish: Mayor Guzak. Councilmember Hamilton Stanwood: Mayor White 

Sumner: Mayor Enslow. Councilmember Dumas Tacoma: Council member Ryan Mello 

Tumwater: Councilor Joan Cathey La Connor: Mayor Ramon Hayes 

Washougal: Mayor Guard Woodway: Mayor carla Nichols 

Oregon 

Eugene: Mayor Piercy, Councilor Alan Zelenka 

Milwaukie: Mayor Jeffrey Ferguson 

Portland: Councilmember Amanda Fritz 

Montana 

Helena: City Council 

Eco!lomk Entities 

Metro Councilor Rex Burhholder 

Mosler, OR: Mayor Rogers and City Council 

Roseburg: Councilmember Tuchscherer 

livingston: Steve Caldwell, City Comm. Chair 

Port of Edmonds Port of Skagit 

Port of Skamania County Vancouver Downtown Association (Vancouver, WA) 

Burfington Chamber of Commerce Edmonds Chamber of Commerce 

Snohomish County Tomorrow Washington Transportation Commission 

Stanwood (WA) Area Merchants Association leslie Smith, E.D .• The Alliance for Pioneer Square 

Kyle Griffith, owner and operator, Seattle Great Wheel 

Gibson Traffic Consultants have analyzed traffic impacts in the cities of Burlingtol'l, Marysville, Mt. Vernon, 

Seattle and Edmonds 

Portland General Electric, opposed coal lease over concerns of coal dust on their operations In St. Helens, OR 

Columbia Gorge Windsurfing Association 

San Juan Island Board of Health 

Skagit Regional Health, Skagit Valley Hospital 

Spokane Regional Health District Board of Health 

Spokane Regional Clean Air Agency 

Bozeman City-County Health Board 

Gallatin City-County Board of Health (MT) 

Washington Academy of Family Physicians, King County Academy of Family Physicians 

Washington Association of Naturopathic Physicians 

Bob Elliott, Executive Director of the Southwest Clean Air Agency 

Whatcom Docs - 160 physicians in Whatcom County + more than 400 health care professionals in Oregon 

Robert Blake, M_D., Chief of Staff, Bozeman Deaconess Hospital 

Arthur Winer, PhD, Professor Emeritus, Environmental Health Sciences Dept., UCLA School of Public Health 

21 
89 


85447.048

Table of Contents June 13. 2013 

and 

National Council of American Indians (566 Tribes) 

Affiliated Tribes of Northwest Indians (57 Tribes) 

Swinomish Indian Tribe 

The Lummi Nation 

Nez Perce Tribe 

The Tulalip Tribes 

Confederated Tribes and Bands of the Yakama Nation Confederated Tribes of Umatilla 

Columbia River Inter-Tribal Fish Commission EPA Region 10 Tribal Operations Committee 

Re!h,!OII15 Leaders 

Bishop Greg Rickel, Episcopal Diocese of Olympia (Western Washington) 

Bishop Jim Waggoner, Episcopal Diocese of Spokane (Eastern Washington) 

Bishop Chris Boerger, Evangelical lutheran Church in America, Northwest Washington Synod 

Rev. Mike Denton, Conference Minister, United Church of Christ Pacific Northwest Conference 

Rev. Dr. Marcia Patton, Executive Minister; Evergreen Association of American Baptist Churches 

Bishop Martin D. Wells, Evangelical Lutheran Church in America (E. WA/ldaho Synod) 

Community 

Robert F. Kennedy Jr 

San Juan Marine Resources Committee 

Whatcom County Marine Resources Committee 

Washington State Democrats 

Will Reichardt, Skagit County Sherriff 

Cheney Public Schools 

Bellingham, WA -former Mayor Pike (2011) 

Northwest Straits Commission 

Puget Sound Partnership 

Columbia County Democratic Central Committee (OR) 

Seattle Parks Board 

Ferndale School District Mount Vernon School District 

Bob Apple, former Spokane City Council member Fmr. Seattle Port CommiSSioner Gael Tarleton 

Unlv. of Washington Student Body Resolution Associated Students of Western WA Univ. 

John Nelson, fmr City Planning Comm'r, The Dalles Portland, OR - former Mayor Sam Adams 

Cliff Mass, PhD, Professor, Department of Atmospheric Sciences, University of Washington 

Everett Herald, 'Coal trains are poor policy," April 2013 

Eugene Register Guard, "Coos Bay Coal Derailed,' April 2013 

Everett Herald, "Tribal concerns over coal," January 2013 

Everett Herald, "Why coal royalties matter,' January 2013 

Everett Herald, "A stronger voice on coal: December 2012 

Everett Herald, "The need for a longer lens," November 2012 

Cheney Free Press, ·Coal trains public hearing will provide answers," November 2012 

Everett Herald, "Preparing for Cherry Point," November 2012 

31 
90 


85447.049

Table of Contents June 13, 2013 

The Seattle Times, "Editorial: Coal trains, terminals need comprehensive environmental reviews,· Oct. 2012 

The Eugene Register-Guard, "Multnomah County is right to study health hazards: September 2012 

Spokesman Review, "Coal export permitting should look at all impacts,· September 2012 

Bozeman Daily Chronicle, ''Train impact study worthy of discussion by Bozeman officials·, August 2012 

Marysville Globe, "New complaints about coal trains," August 2012 

The Eugene Register-Guard, "Merkley calls for coal study: A senator joins the governor in seeking federal 

review: July 2012 

Tracy Warner, Wenatchee World, ·Coal trains are coming this way: July 2012 

The Eugene Register,Guard, ·Oppose coal exports: Eugene has much to lose, little to gain,· July 2012 

Lance Dickie, Seattle Times, "Review proposed coal terminals for impacts across Washington: July 2012 

The Olympian, "A bumlng question: Should Northwest be coal-export hub?" June 2012 

The Eugene Register-Guard, "Study coal export projects, Federal officials should heed Kitzhaber's concerns: 

May 2012 

The Oregonian, "Oregon and northwest neighbors must decide wisely on coal export proposals: April 2012 

Vancouver Columbian, "In Our View: Coal Trains Rumbling?" April 2012 

Lance Dickie, Seattle Times, "Huge coal-export terminal needs rigorous environmental, health and traffiC 

reviews,» March 2012 

Bend Bulletin, "Coos Bay port's demands defy records laws: April 2012 

Heather Acheson, Camas-Washougal Post Record, "Potential local impacts of coal trains need to be taken 

seriously: March 2012 

The Daily Astorian, "Coal will dwarf the LNG debate," Feb 2012 

The Spotlight, (Columbia County, OR), "Port approach on coal lease disappointing, but not surprlslng/ 

February 2012 

Bozeman Daily Chronicle, "Train traffiC could have ill effects for Bozeman,· April 2012 

Lance Dickie, Seattle Times, "Washington does not need to help feed China's coal habit," August 2011 

The Arlington Times, ·Counting Rail Cars: 2011 

Morysville Globe, "The trains are coming," 2011 

"Gateway Pacific Terminal coal port train traffic could Impact Boulevard Park," Shannon Wright, Community 

Wise Bellingham, Bel/ingham Herald, May 2013 

"Agriculture could lose out with expanded coal mining, shipping," Arlo Skari, wheat grower, Chester, MT, 

Billings Gazette and Missoullan, May 2013 

'State should deny coal project pennits to protect the Columbia River: GorgeAndrea Rogers, mayor of 

Mosier, Kate McBride, Hood River city councilor, and Dan Spatz, The Dalles city councilor, Oregonian, 

April 2013 

HOregon is taking a fair, measured approach on coal permits, 'Chris Winter, co-executive director, Crag Law 

Center, Oregonian, April 2013 

"Local and global impacts of coal," Steve Thompson, Flathead Climate Alliance, Whitefish Pilot, March 2013 

"Let's have healthy conversations about coal," Dr. Paul Smith (Missoula), Dr. Robert Shepard (Helena) and 

Dr. Robert Merchan (Billings), Billings Gazette, March 2013 

·Speak up on health effects of burning coal: Dr. Georgia Milan, Billings Gazette, March 2013 

"Coal exports are a no-win business model," Eric Strid, co-founder and former CEO of Cascade Micratech, 

The Oregonian, February 2013 

"Coal's no way to make the job market hop," Daniel Kammen, Professor of Energy at UC Berkeley and Michael 

Riordan, author, Crosscut, January 2013 . 

"Climate change poses a public-health threat: Dr. Howard Frumkin, Dean, UW School of PubliC Health, 

Seattle Times, January 2013 

41 
91 


85447.050

to 

Table of Contents June 13, 2013 

"Global warming should rule out the expansion of coal: Bruce Ramsey, Editorial columnist, Seattle Times, 

December 2012 

"Called by faith to protest Whatcom County coal transport: Mike Denton, United Church of Christ Conference 

Minister, and Kent French, Bellingham UCC pastor, Bellingham Herald, November 2012 

"Study seismic effects on bluffs," Dean Smith, Everett citizen, Everett Herald, November 2012 

"Negatives of Mid-Valley coal trains outweigh positives," Eric Spivak, Eric Spivak Consulting. Statesman 

Journal, October 2012 

"Local impacts of coal exports unacceptable: Alan Zelenka, Eugene City Council and Kitty PlercY,Eugene 

Mayor, Eugene Register-Guard, October 2012 

NCoal export makes no sense for Oregon,· Tom Kelly, Neil Kelly Inc. with Gregg Semler, lucid Energy 

Technologies and Chris Taylor, Element Power US, Portland Business Journal and SUstainable Business 

Oregon, October, 2012 

"How many jobs will coal shipments really generate?" Barbara G. Ellis, Occupy Portland, The Oregonian, 

October 2012 

·Cost-benefit analysis of coal trains deep in red: Ernie Niemi, president, Natural Resource Economics Inc., 

Eugene Register-Guard, October 2012 

"Heavy traffiC ahead: Plan now to live with more trains,· Terry Whiteside of Whiteside and Associates, and 

Gerald Fauth of G. W. Fauth & Associates, Inc., Billings Gazette, September 2012 

"B.C. exporting carbon emissions with coal sales to Far East," Geoff Meggs, Vancouver City Councillor, 

Business Vancouver, August 2012 

"Coal exports bring unacceptable risks," Brett VandenHeuvel, Columbia Riverkeeper, Portland Tribune, July 

2012 

"Salem should worry about risks from coal trains: Jim Scheppke, The Statesman Journal, July 2012 

"Rails can't handle extra: Diane Dick, The Daily News (Longview), July 2012 

·Coal train plans need careful study." Amber Waldref, Spokane City Council member & Dr. Robert Truckner. 

Pediatric emergency physician, Spokesman Review, June 2012 

"Reject plan for coal export tenminals - it's the neighborly thing to do: Kevin O'Brien, 'professor of Christian 

Ethics, Pacific lutheran University, Tacoma News Tribune, June 2012 

"Gregoire needs to weigh in on proposed coal-terminal: Stephan Michaels. Seattle Times, April 2012 

"Visualize Edmonds - without coal trains, please: Strom Peterson, Edmonds City Council member, 

Edmonds Beacon. March 2012 

"lummi Nation reviewing proposed deep-water port terminal: Merle Jefferson, Sr., Bellingham Herald, 

Dec. 2011 

"Are coal-carrying trains a sign of progress?" Kurt Walden berg is owner of North Sound Energy & Remodel, 

of Bellingham. Mike Smith is a Realtor/broker with John L Scott in Longview, The Puget Sound Business 

Journal, December 2011 

"Impacts of proposed Cherry Point Coal Export Terminal: Mayor Jon Nehring. Marysville Globe. Aug 2011 

"Stopping coai at the coast: Bill McKibben, LA Times, March 5, 2011 

5 f 
92 

Mr. WHITFIELD. Thank you, Mayor Quinn—I mean, McGinn. 

At this time, I would like to call on Mr. Quinn for a 5-minute 

opening statement. 

STATEMENT OF HAROLD P. QUINN 

Mr. QUINN. Thank you, Mr. Chairman and members of the subcommittee. I appreciate you having this hearing today. My remarks 

focus on the economic contributions of U.S. coal exports as well as 

potential for contributing more through the expansion of that capacity. 

As you, Mr. Chairman, know, many members of this subcommittee are aware, coal has been the fastest growing energy 

source globally over the past decade, and some forecasts actually 

peg coal surpasses oil as the leading energy source globally within 

the next 2 years. As it so happens, the United States happens to 

have the most of what the rest of the world needs and demands, 

260 billion tons of recoverable coal reserves. To put that in perspective, U.S. coal reserves equal the proven oil reserves of the entire 

Middle East, Russia, and the continent of Africa combined. 

So when it comes to energy independence, U.S. coal stands in the 

forefront by providing our Nation the resource to build and power 

our economy while also supplying this energy resource to countries 

around the globe. In fact, U.S. coal exports represent the only positive addition to the U.S. trade balance from the energy sector. Now 

last year we shipped about 125 millions of steam and metallurgical 

coal, double the amount we shipped 4 years ago. We shipped this 

coal to 76 countries around the globe through ports located in 

States on the East Coast, the Gulf, West Coast, and Great Lakes. 

The economic contributions from coal export activity are documented in a report prepared by Ernest and Young released last 

month by the National Mining Association. Here are a few of the 

highlights: $16.6 billion was added to the GDP; coal exports supported more than 168,000 jobs and a wide range of businesses, 

from coal mines, railroads, barges, trucks, cargo handling, and 

ports. For every million tons of coal exported, more than 1,300 jobs 

are added to the U.S. economy. These direct jobs created by coal 

exports pay on average $96,000 annually in wages and benefits, 

nearly 50 percent more than the national average. 

The trend of growing seaborne coal market is unmistakable. The 

developing world is demanding more coal to power historic transformation from agrarian societies to commercial powers. This 

transformation, unprecedented in terms of scope and pace, is built 

upon a coal-centric infrastructure of steel, cement, and of course, 

electricity. But coal is also supplying the energy and infrastructure 

needs of a developed world as the cost and reliability of energy supplies becomes an increasing concern in sustaining our economic futures. With a top of class reserve base, workforce, and transportation infrastructure, the U.S. is well-positioned to participate more 

fully in the growing seaborne coal trade. 

Now whether we are able to participate to our full potential will 

turn on the building of our port capacity, in terms of volume as 

well as location. Proposals to build coal export facilities in the Pacific Northwest are critical to connecting our western mines to the 

growing Asian markets. The Interior Basin coal fields have been 

93 

extraordinary growth in export demand and the proposals to expand existing capacity in the Gulf will make that region even more 

competitive. 

Now like any major infrastructure project, major risks are posed 

by timing and capital costs. This is why an efficient, timely, and 

reliable process for reviewing permit applications are critical to ensuring that these long-term investments become a reality and bring 

enormous economic benefits locally and nationally. 

Make no mistake, if we do not seize this opportunity, other coal 

exporting nations will, along with the benefits of economic growth 

and jobs. Major exporting nations like Canada and Australia fully 

understand the fierce competition exists for these markets and that 

an efficient and timely regulatory process provides a competitive 

advantage. Last year, Canada’s Prime Minister Steven Harper announced the ‘‘One Project, One Review’’ initiative to streamline the 

process for permitting major infrastructure projects. Here are some 

of the features: deadlines for determining the type and scope of environmental assessments; binding deadlines for completing reviews 

and issuing decisions on permits; enhanced coordination, consolidation, and responsibilities for provincial and federal agencies reviewing these projects, eliminating duplication between the provincial 

and federal environmental assessments. These best practices for coordination, clarity, and responsibilities and accountability with 

goals and timeframes are not unlike the directives in the President’s Executive Order 13604 on improving performance of federal 

permitting on infrastructure projects. They are also reflected in recommendations to the President’s Council on Jobs and Competitiveness. Applying these practices to reviewing coal export projects will 

unleash our full potential for providing more Americans opportunities for high wage and highly skilled jobs right here in the United 

States. 

Thank you, Mr. Chairman. Thank you, members. 

[The prepared statement of Mr. Quinn follows:] 

94 


85447.051

Testimony of 

Hal Quinn 

President and CEO 

National Mining Association 

before the 

NMA 

United States House of Representatives 

Committee on Energy and Commerce 

Subcommittee on Energy and Power 

"The "u. S. Energy Abundance: Regulatory, Market, and Legal Barriers to 

Export" 

June 18, 2013 
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Good morning. I am Hal Quinn, president and chief executive officer of the 

National Mining Association (NMA). NMA is the national trade association 

representing the producers of most of the nation's coal, metals, industrial 

and agricultural minerals; manufacturers of mining and mineral processing 

machinery, equipment and supplies; and engineering and consulting firms, 

financial institutions and other firms serving the mining industry. 

I want to thank the chairman and the members of the subcommittee for 

holding this hearing on the importance of U.S. energy exports. U.S. coal 

exports drove economic growth both here at home and globally, adding 

$16.6 billion to the U.S. economy. In fact, coal represents the only net 

positive addition to our nation's trade balance from the energy sector. 

THE FACTS ABOUT U.S. COAL EXPORTS 

In a report released recently by NMA, "U.S. Coal Exports: National and 

State Economic Contributions," Ernst & Young documented the valuable 

contributions that our economy derives from U.S. coal exports (available at 

http://www.uscoalexports.org/.). Last year, the U.S. coal industry exported 

a record volume of more than 125 million tons of coal, supporting 168,430 

jobs at mines, railroads, ports and many other businesses that comprise 

the wide range of industries in the supply chain. For every million tons of 

U.S. coal exported an estimated 1,320 total jobs are added to the U.S. 

economy. These high-wage jobs pay nearly 50 percent more than the 

national average in wages. The direct jobs created from coal exports 

average approximately $96,100 annually in total wages and benefits, a rare 

example of new high-wage job creation in an economy still struggling to 

create good employment opportunities. 

The share of U.S. coal that is exported abroad has been increasing in 

recent years. From 2000 to 2010, U.S. coal mines exported about 5 

percent of total production on average but more recently the share of coal 

exported has doubled to average 10 percent of production. To put that into 

perspective, in 2012 the United States produced more than 1 billion tons of 

coal, of which 125.7 million tons (12 percent of total production) was 

exported. This marks an increase in both the volume and the share of total 

U.S. production that is exported compared with five years ago in 2007, 

when exports totaled 55 million short tons of coal (5 percent of total 

production). In 2011, U.S. coal exports accounted for 8.4 percent of world 

seaborne coal shipments, up from 5.7 percent in 2007. Of the 125.7 million 

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tons of U.S. coal exports in 2012,56 percent was metallurgical coal for 

steel production and 44 percent was steam coal for electricity generation. 

The U.S. ranks second in the world in metallurgical coal exports. 

COAL EXPORTS PROVIDE SIGNIFICANT ECONOMIC BENEFITS 

BEYOND THE U.S. COALFIELDS 

The economic benefits of U.S. coal exports extend well beyond the coal 

fields. Coal exports create jobs throughout the supply chain that include 

rail, barge, port operations, cargo handling and goods and service suppliers 

to each of these links in the supply chain. Coal exports comprised 16 

percent of the total vessel weight of exported goods passing through U.S. 

ports. Coal export facilities located in Virginia, Louisiana, Maryland and 

Alabama alone generated $5.5 billion of economic activity and supported 

more than 45,000 jobs. The economic lift provided by coal exports in these 

states underscores the potential for other states, especially on the West 

Coast, to benefit economically from sharply rising coal demand from Asia. 

COAL EXPORTS DRIVE GLOBAL ECONOMIC GROWTH AND 

PROVIDE ENERGY ACCESS TO HUNDREDS OF MILLIONS IN THE 

DEVELOPING WORLD 

Coal is powering the historic transformation of developing countries from 

agrarian societies to commercial powers. The ongoing build out of 

humanity is occurring for the most part in the developing world through 

industrialization and urbanization that is unprecedented in both scope and 

pace. Much of this transformation depends upon a coal-centric 

infrastructure that requires coal for steel, cement and, of course, electricity. 

Access to electricity is correlated with every measurable indicator of human 

development. Between 1990 and 2010, electricity access extended to 1.7 

billion people. With coal being the fastest growing energy source over the 

past decade, it is probably responsible for lifting half of them from energy 

poverty. However, 3.6 billion people still remain without any or only partial 

access to electricity. As the International Energy Agency's Coal Industry 

Advisory Board recently noted: 

At present 19% of the world's population, 1.3 billion people, 

lack access to electricity and on New Policy Scenario 

projections there will still be 1 billion people without such 

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access in 2030. To meet the UN Millennium Development Goal 

of eradicating extreme poverty by 2015, 395 million more 

people need access to electricity. 

Over the next four years, more than 300 gigawatts (GW) of coal-based 

electricity generation is expected to be constructed globally in order to drive 

economic growth and raise the standard of living for hundreds of millions of 

people. Steel consumption will increase as these emerging economies 

accommodate the migration of their populations from rural areas to urban 

centers. This rising and growing middle class with greater purchasing 

power will in turn provide new markets for goods and services made here in 

America. 

GROWING GLOBAL DEMAND PRESENTS THE U.S. WITH VAST COAL 

EXPORT OPPORTUNITIES 

The global economy is growing with coal. The Energy Information Agency 

forecasts coal will remain the dominate fuel source for electricity generation 

through 2035 - both in the U.S. and the rest of the world. Some forecasts 

peg coal to surpass oil as the leading global energy source within two 

years. 

China, the world's second largest economy, is building and lighting up 

scores of giant new cities with coal. Coal now generates 65 percent of 

India's electricity. The country's fast-rising middle class is driving plans to 

double the size of its power grid by 2025. China and India are not the only 

chapters in this story. Vietnam plans to add more than 30 GW of coalbased power this decade. Thailand, Taiwan, Indonesia, Malaysia and the 

Philippines are following a similar path. 

The increasing appetite for coal is not confined to the developing world. 

Japan is expected to increase its coal imports by to replace part of its 

nuclear capacity. South Korea has increased its coal imports by 45 percent 

over the past five years. Europe is turning to more coal in response to 

natural gas prices that are three times those in the U.S. and because riSing 

concerns about the future of nuclear power on the continent. 

The trend of a growing seaborne coal market is clear. And the U.S. has the 

most of what the rest of the world needs: a recoverable reserve base of 

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262 billion tons and a demonstrated reserve base of 484 billion tons. The 

U.S. coal industry has unmistakably demonstrated its capacity to meet this 

growing demand-doubling its exports in four years. 

In announcing the National Export Initiative, the president declared that: 

We need to export more of our goods. Because the more 

products we make and sell to other countries, the more jobs we 

support right here in America. We will double our exports over 

the next five years, an increase that will support two million jobs 

in America ... We have to seek new markets aggressively, just 

as our competitors are. If America sits on the sidelines while 

other nations sign trade deals, we will lose the chance to create 

jobs on our shores. 

The planned U.S. port expansions on the Atlantic and Pacific coasts, the 

Gulf of Mexico and the Great Lakes would support a more than doubling of 

coal exports once again. That would mean the creation of at least another 

168,000 high wage jobs here in the United States. But the countries looking 

for more coal to build and power their economies will not wait for us. There 

are other suppliers they can turn to if we do not expand our export 

infrastructure in a timely manner. 

Two leading coal export countries-Australia and Canada-have 

demonstrated that permitting major projects can be both timely and 

thorough. Yet, they both continue to strive to improve the efficiency and 

timeliness in reviewing and permitting major infrastructure projects 

including coal export facilities. They understand that we are in a global 

competition for investment and that an effective and efficient permitting 

process provides a competitive advantage. 

Just last year, Canada's Prime Minister Stephen Harper announced a new 

initiative-'one project, one review'-to provide greater certainty, reliability 

and efficiency in the permitting process. The key features of this initiative 

include: 

• Deadlines early in the process for determining the type and scope of 

environmental assessments; 

• Specific timelines for completing those environmental assessments; 

• Legally binding deadlines for key regulatory permits; 

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• Enhanced coordination and consolidation of responsibilities for 

provincial and federal agencies reviewing projects; and 

• Allowing provincial environmental assessments to substitute for 

federal assessments in order to eliminate duplication. 

These best practices for coordination, clarity in responsibilities and 

accountability with goals and timeframes are similar to the principles 

reflected in Executive Order 13604 on improving performance of federal 

permitting and review of infrastructure projects. They also align with many 

of the recommendations from the President's Council on Jobs and 

Competitiveness. It is time to put them into practice. 

Valid concerns should be fully addressed. At the same time, they should 

not serve as an excuse to trap projects in a limbo of duplicative, 

unpredictable and endless review without a decision point. We should not 

confuse the length of the process with the rigor of review. Predictability and 

reliability in our regulatory system are essential elements for supporting 

long term investments that produce high-paying and highly skilled jobs. 

CONCLUSION 

I appreciate the opportunity to testify today. Coal exports are making 

significant contributions to America's economic growth and job creation in 

the coal fields and beyond. With the right public policies, we can double 

that contribution and provide more Americans the opportunities for high 

wage and highly skilled jobs. 

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Mr. WHITFIELD. Thank you, Mr. Quinn. 

Mr. Eisenberg, you are recognized for 5 minutes. 

STATEMENT OF ROSS E. EISENBERG 

Mr. EISENBERG. Good afternoon, Chairman Whitfield, members 

of the subcommittee. Thank you for having me here today to express the views of the National Association of Manufacturers and 

our 12,000 members, and also of the Alliance for Northwest Jobs 

and Exports, a broad coalition of manufacturers and agricultural, 

labor, civic, and other organizations that support new export 

projects in Oregon and Washington State, the projects we have 

been talking about today. 

The NAM was founded in 1895 on principles of free trade. At the 

time, the United States was in the midst of a very deep recession, 

and many of the Nation’s manufacturers saw a strong need to export their products. The NAM believes that free trade and open 

markets should govern in the context of energy exports, and we 

also oppose bans or other similar market-distorting mechanisms to 

energy exports. 

Although today’s hearing has focused on both LNG and coal, my 

testimony today will focus primarily on coal. Manufacturing jobs 

support coal exports in the United States. These jobs include mining and support activities for mining, construction, railroad transportation, transport by water and truck, port operations and cargo 

handling, and all the manufacturing supply chain jobs that support 

all of these activities. Now the economic impact of the three terminals here today, Marrow Pacific, Millennium Bulk terminals, and 

Gateway Pacific terminal, if allowed to move forward, would be 

very significant. All together, the three port expansions hold the 

potential to create as many as 11,730 jobs and $831.4 million in 

wages for the Pacific Northwest. This is an undeniably large economic boost for our region which, like the rest of the country, still 

continues to fight against high unemployment. These projects 

would trigger increased activity from a wide range of manufacturing industries, including cement, iron and steel, wood products, 

aluminum, transportation, and shipping, among others. 

The NAM and the Alliance were very pleased to hear today that 

the Army Corps will abide by the law and the regulations and carefully consider each coal export proposal on its merits while appropriately bounding the scope of their analysis and their consideration of the impacts. The Corps determined that neither a programmatic nor an area-wide or regional EIS are appropriate when 

considering the proposed permits for the three projects. The facts 

and circumstances related to each project differ substantially, and 

they are not the type of connected actions that warrant any sort 

of combined review. We are encouraged that the Corps is committed to carrying out its duties in accordance with the law. This 

is a great first step towards creating thousands of manufacturing 

jobs in the region. 

Now, opponents of these projects have characterized this as a 

choice between the environment and the economy. It is not. These 

three infrastructural projects plan to fully comply with all the required environmental laws and regulations. The projects will thoroughly examine air quality, water quality, marine life, wetlands, 

101 

human health, rail traffic, vessel safety and traffic, endangered 

species, and the dozens of other potential impacts of their projects 

required by all federal, State, and local permitting laws. They 

would like nothing more than to proceed with the permitting process in an orderly fashion as the law requires. The Corps appears 

ready to give them that opportunity. 

Understand, however, that what the law requires isn’t necessarily what the opponents are calling for. They are asking to 

broaden the scope of the environmental review to such a degree 

that the analysis will be so long and so exhaustive that it will 

delay the projects indefinitely. Both Mayor McGinn and Mr. Golden 

will testify here today that they flat out oppose the terminals and 

they believe a cumulative programmatic or area-wide EIS is what 

it takes to stop the projects from being built. To their credit, they 

are being pretty transparent about their goal. Now I respect their 

opinions and their positions, but I worry that their quests to stop 

these projects can have serious consequences for all exports. 

A cradle to grave life cycle impact analysis that includes the environmental impact of the cargo, in this case, the coal, would be a 

very, very dangerous precedent to be setting, because everything 

we ship has a life cycle and environmental impact. So what if the 

cargo was another fuel or a bulk agricultural product like wheat or 

corn or soybeans? Would the government need to perform a programmatic EIS to determine the life cycle and environmental impact of that? In the case of corn, would the EIS have to look at the 

environmental impact not only in the transportation of the products, but also the planting, cultivating, growing, and harvesting of 

crops? What if the cargo were cars, tractors, electronics, toys, steel, 

chemicals, pumps, air conditioners? You can see where I am going 

here. How far up and down the supply chain would agencies be required to go to assess the impact? The possibilities are literally 

endless and are very, very deeply troubling to manufacturers. 

When NEPA was enacted in 1969, the intent was require federal 

agencies to account for, document, and disseminate to the public 

the environmental impacts of their actions. Congress’s intent in enacting NEPA was not to curtail or significantly delay federal action. NEPA requires excellent action, but there are boundaries to 

that action and those boundaries must be respected. Free trade and 

exports aren’t particularly divisive concepts in the United States, 

but for some reason—and as we are seeing here today, for some 

reason when you put the word ‘‘energy’’ in front of export, we all 

wind up wrapped around the axle. The United States is energy-rich 

and domestic supply will soon exceed demand. Exports of energy 

are a reality. Manufacturers support an objective, orderly, and ultimately legal permitting process for energy exports. 

Thank you. 

[The prepared statement of Mr. Eisenberg follows:] 

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Testimony of Ross Eisenberg 

Before the House Committee on Energy and Commerce 

Subcommittee on Energy and Power 

Hearing on: "U.S. Energy Abundance: Regulatory. Market, and Legal Barriers to Export" 

June 18. 2013 

The National Association of Manufacturers (NAM) was founded in 1895 on principles of 

free trade; these principles continue to be embedded in the NAM's policies today. The NAM 

believes free trade and open markets should govern in the context of energy exports, and we 

oppose bans or similar rnarket-distorting barriers to energy exports. Manufacturers support the 

President's National Export Initiative and his goal of doubling U.S. export capacity by 2015. 

The strategiC advantages the Pacific Northwest presents for trade with Asia have led 

investors to propose three projects to expand existing port infrastructure to export coal. 

Although domestic coal demand is waning due to a combination of market forces and stricter 

regulations, international demand for coal is surging. To meet growing worldwide demand for 

coal and other exports, a consortium of port operators and coal producers have proposed an 

expansion of three existing ports in Oregon and Washington. The port expansions will be paid 

for by private investment, not taxpayers, and built in compliance with strict local, state and 

federal environmental regulations. These three projects-the Morrow Pacific Project, Millennium 

Bulk Terminals, and the Gateway Pacific Terminai-hold the promise of over 11,500 jobs for the 

region, an undeniably large economic boost for areas which, like the rest of the country, 

continue to fight against high unemployment. 

In the case of coal exports, the market is not a barrier. The barriers are entirely 

regulatory and legal. The three proposed export projects plan to fully comply with all required 

environmental laws and regulations. They will thoroughly examine air quality, water quality, 

marine life, wetlands, human health, rail traffic, vessel safety and traffic, endangered species 

and the dozens of other potential impacts of their projects required by federal, state and local 

permitting laws. They would like nothing more than to proceed through the permitting process in 

an orderly fashion, as the law requires. However, 'what the law requires' does not appear to be 

good enough for the groups that oppose these projects. These groups have waged a campaign 

to block the projects by calling on regulators to broaden the scope of the environmental review 

to such a degree that the analysis will be so long and so exhaustive that it will delay the projects 

indefinitely. Specifically, opponents have called for a 'cumulative, programmatic' environmental 

review that includes a broad-ranging analysis of the impacts from all proposed coal export 

projects in the Pacific Northwest. This 'cumulative, programmatic' review would also include a 

lifecycle environmental analysis of the commodity being transported-in this case, coal. 

A "cumulative, programmatic" EIS of this type would be contrary to the law and would 

create a very dangerous precedent that could be used to block exports. The agencies involved 

could be laying the foundation for similar exercises for virtually every infrastructure project within 

the United States that would transport and export cargo of any kind. Similarly, opponents of 

LNG exports almost certainly would use a bad decision from the Army Corps that expands the 

scope of the coal export EIS process to then broaden the reviews for LNG export projects to 

include the upstream environmental impact of hydraulic fracturing. 
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Testimony 

of Ross Eisenberg 

Vice President 

Energy and Resources Policy 

National Association of Manufacturers 

before the House Committee on Energy and Commerce 

Subcommittee on Energy and Power 

on "U.S. Energy Abundance: Regulatory, Market and legal Barriers to Export" 

June 18, 2013 
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TESTIMONY OF Ross EISENBERG 

BEFORE THE HOUSE COMMITTEE ON ENERGY AND COMMERCE 

SUBCOMMITTEE ON ENERGY AND POWER 

Hearing on: 

·U.S. Energy Abundance: Regulatory, Market and Legal Barriers to Export" 

JUNE 18, 2013 

Good morning, Chairman Whitfield, Ranking Member Rush and members 

of the Subcommittee on Energy and Power. My name is Ross Eisenberg, and I 

am vice president of energy and resources policy at the National Association of 

Manufacturers (NAM). The NAM is the nation's largest industrial trade 

association, representing nearly 12,000 small, medium and large manufacturers 

in every industrial sector and in all 50 states. The NAM is also a founding 

member of the Alliance for Northwest Jobs & Exports (the Alliance), a broad 

coalition of manufacturers and agricultural, labor, civic and other organizations. 

The coalition has come together to support new export projects in Oregon and 

Washington State. I am pleased to represent the views of both the NAM and the 

Alliance at today's hearing on U.S. energy abundance and the regulatory, market 

and legal barriers that stand in the way of energy exports. 

The NAM was founded in 1895 on principles of free trade. At the time, the 

United States was in the midst of a deep recession, and many of the nation's 

manufacturers saw a strong need to export their products. This commitment to 

free trade and open markets continues to be embedded in the NAM's policies 

today. Exports have been and continue to be a critical source of growth and 
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opportunity for manufacturers throughout the United States. The 40 percent 

increase in goods exports that the United States has enjoyed between 2009 and 

2011 has enabled many manufacturers to sustain and, in some cases, even grow 

employment during very difficult economic times. Export growth is vital not just 

for businesses that directly export, but for the many suppliers of inputs and 

services to those businesses throughout every state. Manufacturers support the 

President's National Export Initiative and his goal of doubling U.S. export 

capacity by 2015. 

The United States has a mix of energy resources and innovative 

technologies unmatched by any other nation in the world. The United States is 

the "Saudi Arabia of coal" and has for years relied on its dominant coal reserves 

for base load power generation. More than 100 nuclear power plants cleanly and 

efficiently produce a substantial portion of the nation's electricity. Renewable 

sources are growing quickly and diversifying the nation's energy portfolio. 

Advances in energy efficiency continue to cut manufacturers' energy costs. Most 

recently, technological breakthroughs have made vast domestic deposits of oil 

and gas cheaply and easily accessible, offshore and onshore. 

The United States is, perhaps more than any other nation, energy rich. 

Therefore, we believe a true "all-of-the-above" energy strategy that embraces all 

of our nation's energy sources and available technologies-including oil, gas, 

coal, nuclear, energy effiCiency, alternative fuels and renewable energy-can 

help fuel a manufacturing resurgence in the United States. 

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The nation's commitment to an "all-of-the-above" energy policy has 

already borne significant fruit: domestic supplies of fossil fuels greatly exceed 

projected domestic demand. As a result, producers of these commodities, and 

the manufacturers that support them, are turning increasingly to global markets. 

Consistent with our policy, the NAM believes free trade and open markets should 

govern in the context of energy exports, and we oppose bans or similar marketdistorting barriers to energy exports. 

Pacific Northwest Exports. Coal Exports and Their Value to Manufacturers 

Today, one in four jobs in the Northwest is related to trade. Hundreds of 

thousands of jobs are supported by the hundreds of billions of dollars in products 

that pass through Washington and Oregon ports each year. In 2012, Oregon 

exported more than $18 billion worth of goods, including electronics, wheat, 

chemicals, soybeans, civilian aircraft, semiconductors, trucks, road tractors, 

petroleum products, potatoes and X-ray film.1 More than half of the state's 

exports were to Asia. Washington exported twice that much-more than $36 

billion worth of goods, including civilian aircraft, soybeans, wheat, apples, 

petroleum products, wood, silicon, mink fur skins, petroleum coke, cherries, 

copper and enriched uranium.2 Just under half of Washington's exports were to 

Asia. 

The strategic advantages the Pacific Northwest presents for trade with 

Asia have led investors to propose three projects to expand existing port 

1 Source: U.S. Census. 2 Id. 

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infrastructure to export coal. Although domestic coal demand is waning due to a 

combination of market forces and stricter regulations, international demand for 

coal is surging. Within five years, annual global coal demand is expected to grow 

by approximately 1.3 billion tonnes. 3 The bulk of this demand will come from 

Asia. By 2016, coal-fueled generation of more than 395 gigawatts is expected 

worldwide. Steel production will grow 20 percent, requiring an additional 200 

metric tons per year of metallurgical coal. Seaborne demand is expected to grow 

at 7 percent compound annual growth rate. 

The United States has been exporting coal for years. Over the past two 

decades, 4-10 percent of the coal produced annually in the United States has 

been exported. Coal has been exported through ports in more than 20 states, 

including Virginia, Louisiana, Maryland, Alabama, Washington, Ohio, New York 

and California. Virtually every region in the country has exported coal, including 

the Pacific Northwest. 

Manufacturing jobs support coal exports in the United States. These jobs 

include mining and support activities for coal mining; construction; railroad 

transportation; transport by water and truck; port operations and cargo handling; 

and all the manufacturing supply chain jobs that support these activities. A study 

performed by Ernst & Young for the National Mining Association4 concluded that 

in 2011, there were 39,350 people whose employment was directly tied to coal 

exports. There were also tens of thousands of indirect and induced jobs from 

3 Peabody Energy 2012 Annual Report, available at 

http://www.peabodyenergy.com/mm/files/lnvestors/Annual-ReportsIPE-AR2012.pdf. 

4 "U.S. Coal Exports: National and State Economic Contributions," May 2013, available at 

http://www .uscoalexports.orgl datalNational-and-State-Economic-Contributions-5-22-13 .pdf. 

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coal exports, ranging from retail, wholesale and logistics to hotels and 

restaurants to the manufacturing supply chain. Overall, the study concluded that 

coal exports added $16.5 billion in gross value to the U.S. economy. 

Three Proposed Export Expansion Projects 

To meet growing worldwide demand for coal and other exports, a 

consortium of port operators and coal producers have proposed an expansion of 

three existing ports in Oregon and Washington. The port expansions will be paid 

for by private investment, not taxpayers, and built in compliance with strict local, 

state and federal environmental regulations. These three projects are the 

following: 

• The Morrow Pacific Project, which would transport coal from 

Intermountain states to the Port of Morrow near Boardman, Oregon. From, 

there, it will be transferred to an enclosed storage facility and loaded onto 

covered barges through an enclosed conveyor. The coal will then be 

shipped down the Columbia River to Port of St. Helens' Port Westward 

Industrial Park. From there, enclosed transloaders will transfer the coal 

onto covered oceangoing Panamax ships. Initially, one four-barge tow per 

day will move down the Columbia River, shipping 3.5 million metric tons of 

coal per year to trade allies such as Japan, South Korea and Taiwan. At 

full capacity, barge tows will increase to two per day, with expected 

shipment of 8 million metric tons per year. 

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• Millennium Bulk Terminals, a state-of-the-art storage and loading facility 

in Cowlitz County, Washington. The project would reinvest in an 

underutilized 416-acre site, upgrade the existing import/export bulk facility 

and construct a coal receiving, storage and shipping terminal. 

• The Gateway Pacific Terminal, a deepwater multimodal terminal for the 

import and export of dry bulk commodities in the Cherry Point industrial 

area of Whatcom County, Washington. The total site is roughly 1,500 

acres, and development would occur on approximately 334 acres. At full 

operation, the Gateway Pacific Terminal would have the capacity to export 

and import approximately 54 million metric tons per year of dry bulk 

commodities, including, but not limited to, coal, grain products, potash and 

calcined petroleum coke. In a separate project, BNSF Railway Company 

plans to modify existing rail facilities to accommodate increased rail traffic 

to the expanded port facility. 

The economic impact of the three port expansions, if allowed to move 

forward, would be significant. The Morrow Pacific Project would create 2,100 

direct and indirect jobs and $126.9 million in wages during construction, and 

1,000 direct and indirect jobs and $67.2 million in wages during operation. The 

Millennium Bulk Terminals would create 2,650 direct and indirect jobs and $135 

million in wages during construction, and 300 direct and indirect jobs during 

operation. The Gateway Pacific Terminal would create 3,587-4,429 direct and 

indirect jobs and $282.2 million-$348.7 million in wages during construction, and 

867-1,251 direct and indirect jobs and $91.5 million-$128.6 million in wages 

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during operation. Altogether, the three projects hold the potential to create 

10,504-11,730 jobs and $727.8 million-$831.4 million in wages for the region. 5 

The three proposed projects can provide an undeniably large economic 

boost for the region, which, like the rest of the country, continues to fight against 

high unemployment. Both Morrow County (7.5 percent to 9.7 percent) and 

Cowlitz County (9.7 percent) have unemployment rates substantially higher than 

the national average. These projects would trigger increased activity from a wide 

range of manufacturing industries, including cement, iron and steel, wood 

products, aluminum, transportation and shipping. 

Source: Alliance for Northwest Jobs & Exports 

5 Alliance for Northwest Jobs & Exports, htlp://creat~]1wiobs.colJ.l. 

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The Alliance for Northwest Jobs and Exports 

The Alliance was formed in 2012 to promote the value of increased 

exports in the Pacific Northwest, particularly proposals to expand existing port 

capacity to accommodate coal exports. Since its inception, the Alliance has seen 

its membership grow substantially; it now includes companies and labor, civic 

and other organizations that understand the importance of exports to the Pacific 

Northwest and want to strengthen our trade economy.6 More information about 

the Alliance can be found at http://createnwjobs.com. 

Regulatory and Legal Barriers to Complete the Projects 

In the case of coal exports, the market is not a barrier. The barriers are 

entirely regulatory and legal. Because these are multimodal projects with a 

6 The Alliance's diverse membership includes the following: Agrium Inc.; Ambre Energy North America, 

Inc.; American Council of Engineering Companies of Montana; American Council of Engineering 

Companies of Washington; Arch Coal; Associated General Contractors of Washington; Associated 

Industries of Spokane; Association of Washington Business; Billings Chamber of Commerce/Convention 

and Visitors Bureau; BNSF Railway Company; Brotherhood of Locomotive Engineers and Trainmen, 

Washington State Legislative Board; Brotherhood of Maintenance of Way Employees Division of the 

International Brotherhood of Teamsters; Campbell County Chamber of Commerce; Campbell County 

Economic Development Corporation; Carpenters Industrial Council; Cloud Peak Energy; Durham & Bates 

Agencies Inc.; Franklin County Farm Bureau; Greater Spokane Incorporated; Gunderson Marine; Idaho 

Association of Commerce and Industry; Idaho Chamber Alliance; International Trade Alliance; m Kelly; 

J.R. Simplot Company; Lampson International Cranes; Lydig Construction; Monical Engineering; Montana 

Chamber of Commerce; Montana Coal Council; Montana Contractors' Association; Montana Rail Link, 

Inc.; National Association of Manufacturers; National Mining Association; Oregon Building Trades 

Council; Pacific Merchant Shipping Association; Pacific Northwest International Trade Association; 

Peabody Energy; Pederson Brothers Incorporated; Portland Business Alliance; Portland & Western 

Railroad, Inc.; Southeastern Montana Development Corporation; SSA Marine; Tidewater; Transportation 

Communications Union-International Association of Machinists; Union Pacific; United Transportation 

Union-Montana State Legislative Board; United Transportation Union-Oregon State Legislative Board; 

United Transportation Union-Washington State Legislative Board; U.s. Chamber of CommerceNorthwest Region; Vigor Industrial; Washington Farm Bureau; Washington Farm Labor Association; 

Western Business Roundtable; Western Environmental Trade Association; Wyoming Business Alliance; 

and Wyoming Mining Association. 

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federal nexus, each project's sponsors must navigate a web of federal and state 

permitting regulations, including the National Environmental Policy Act (NEPA). 

That, in and of itself, is a daunting task. However, in this case, the regulatory and 

legal barriers have become significantly more complex because the commodity 

being shipped is a fossil fuel, and that fossil fuel is coal. 

Both the Millennium Bulk Terminals and Gateway Pacific Terminal will be 

evaluated through an Environmental Impact Statement (EIS) under NEPA; the 

Morrow Pacific Project, due to its smaller size, is likely to receive an 

Environmental Assessment (EA). There is no statutory time limit, which means 

the environmental review process can drag on as long as agencies allow. Often, 

as in the case of the Keystone XL pipeline, it can drag on for many years. The 

only known quantitative analysis of the time required for agencies to complete an 

EIS-a December 2008 study by Piet and Carole A. deWitt-found that the 

average time for aJl federal entities to prepare an EIS was 3.4 years. 7 During the 

deWitt's study period, the average time to complete an EIS increased by 37 days 

each year. 8 This does not include any lawsuits for which the general six-year 

statute of limitations applies-meaning that even if a project does get approved, 

opponents can wait until the last possible minute before construction to file a 

lawsuit and halt the process. 

The three proposed export projects plan to fully comply with all required 

environmental laws and regulations. They will thoroughly examine air quality, 

water quality, marine life, wetlands, human health, rail traffic, vessel safety and 

7 Piet deWitt and Carole A. deWitt, "How Long Does It Take to Prepare an Environmental Impact 

Statement?" ElTVironmental Practice 10 (4), December 2008. 

81d. 

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traffic, endangered species and the dozens of other potential impacts of their 

projects required by federal, state and local permitting laws. They would like 

nothing more than to proceed through the permitting process in an orderly 

fashion, as the law requires. However, "what the law requires" does not appear to 

be good enough for the groups that oppose these projects. These groups have 

waged a campaign to block the projects by calling on regulators to broaden the 

scope of the environmental review to such a degree that the analysis will be so 

long and so exhaustive that it will delay the projects indefinitely. 

When NEPA was originally enacted in 1969, the intent was to require 

federal agencies to account for, document and disseminate to the public the 

environmental impacts of their actions. Congress's intent in enacting NEPA was 

not to curtail or significantly delay federal action. Yet, that is precisely what 

opponents of these projects are trying to accomplish through their advocacy on 

NEPA. Rather than allowing the traditional, project/action-specific EIS process 

called for by the statute and prevailing case law, opponents have instead called 

for a "cumulative, programmatic" environmental review that includes a broadranging analysis of the impacts from all proposed coal export projects in the 

Pacific Northwest. This "cumulative, programmatic" review would also include a 

lifecycle environmental analysis of the commodity being transported-in this 

case, coal. 

Proponents of a "cumulative, programmatic" EIS likely hope to suffocate 

each project with years of studies until the project's sponsors become frustrated 

with continued delays and walk away. To do so would directly violate the 

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regulations implementing NEPA, which clearly state that "NEPA's purpose is not 

to generate paperwork-even excellent paperwork-but to foster excellent 

action.,,9 Federal courts have held that "[a] programmatic statement is appropriate 

only where the proposal itself is regional or systemic in scope, or where the 

proposal is one of a series of interrelated proposals that will produce cumulative, 

system-wide effects that can be meaningfully evaluated together ... 10 Neither is the 

ca:;e here. 

Similarly, expanding the focus of each review to include the cradle-tograve environmental impact of the cargo is not permitted by existing law. NEPA 

requires a "reasonably close, causal relationship" for an impact to be relevant. 11 

The Fourth Circuit recently held that the scope of an EIS should be limited to "the 

impacts of the specific activity requiring a [Corps] permit and those portions of 

the entire project over which the district engineer has sufficient control and 

responsibility to warrant federal review."12 In the case of the three proposed 

projects, this clearly does not extend to coal mining, which has already been 

evaluated and subjected to a variety of environmental permits and NEPA reviews 

through the relevant federal land management agencies, or the consumption of 

coal overseas. 

More troubling, a cradle-to-grave, lifecycle impact analysis that includes 

the environmental impact of the cargo and all similar cargo transported through 

the region would create a very dangerous precedent that could be used to block 

9 40 C.F.R. § 1500.1(c). 

10 Izaak Walton League of America v. Marsh, 655 F.2d 346, 374 (D.C. Cir. 1981). 

11 US. Department of Transportation v. Public Citizen, 541 U.S. 752, 767 (2004). 

12 Ohio Valley Environmental Coalition v. Aracoma Coal Co., 556 F.3d 177 (4th Cir. 2009). 

II 
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exports. The agencies involved could be laying the foundation for similar 

exercises for virtually every infrastructure project within the United States that 

would transport and export cargo of any kind. What if the cargo was another fuel 

or a bulk agriculture product like wheat, corn or soybeans? Would the 

government need to perform a programmatic EIS to determine the life cycle 

environmental impact of that cargo? In the case of corn, would the EIS have to 

look at the environmental impact related not only to the transportation of the 

products, but also the planting, cultivating, growing and harvesting of crops? 

Would agencies be required to take into account the impact of processing these 

crops and the impact that its workers had on the environment as they traveled to 

and from work? What if the cargo were cars, tractors, electronics, toys, steel, 

chemicals, pumps, air conditioners, elevators or airplanes? How far up and down 

the supply chain would agencies be required to go to assess the impact? The 

possibilities are endless and are deeply troubling to manufacturers. 

The notion that bad precedent here could cascade to other types of 

exports is far from fiction. In fact, opponents of exporting liquefied natural gas 

(LNG) have already tried a similar tactic. The Federal Energy Regulatory 

Commission (FERC) was urged recently to consider the upstream implications of 

natural gas development (e.g., hydraulic fracturing) when permitting LNG 

terminals and related pipeline infrastructure in Maryland and Oregon. FERC 

concluded that upstream natural gas development is not a reasonably 

foreseeable impact of the construction of an export terminal or related pipeline 

infrastructure, a finding consistent with NEPA, which requires a "reasonably 

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close, causal relationship" for an impact to be relevant. 13 In the context of NEPA, 

coal and LNG exports are inextricably intertwined: opponents of LNG exports 

almost certainly would use a bad decision from the Army Corps that expands the 

scope of the coal export EIS process to broaden the reviews for those projects to 

include the environmental impact of hydraulic fracturing. 

Conclusion 

There is a fundamental belief embedded in our nation's environmental 

laws that the environment and the economy can coexist; that we can depend on 

our laws and the agencies obligated to carry them out to identify what we have to 

do to minimize a project's impact on the environment and then move forward and 

build. That is all we are asking for on coal exports. 

Energy exports from the Pacific Northwest could provide a major 

economic boost to a region of the country that desperately needs it and could 

bring the Administration closer to its goal of doubling exports by 2015. The NAM, 

on its own and on behalf of the Alliance, strongly supports a project/actionspecific environmental review for each individual coal export terminal proposal, in 

keeping with NEPA's goal of "straightforward and concise reviews and 

documentation that are proportionate to potential impacts:14 

13 us. Department a/Transportation v. Public Citizen, 541 U.s. 752, 767 (2004). 

14 Council on Environmental Quality, Memorandum for Heads of Federal Departments and Agencies, 

"Improving the Process for Preparing Efficient and Timely Environmental Reviews Under the National 

Environmental Policy Act," March 6, 2012. 

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Mr. WHITFIELD. Thank you, Mr. Eisenberg. 

Mr. Golden, you are recognized for 5 minutes. 

STATEMENT OF KC GOLDEN 

Mr. GOLDEN. Mr. Chairman, Ranking Member Rush, members of 

the committee, thank you for the opportunity to testify today. My 

name is KC Golden. I am the policy director for Climate Solutions. 

We are a regional organization focusing on promoting practical and 

profitable solutions to global warming. I am here today to talk 

about coal export. Not about corn, not about toys, but about coal 

exports. 

Proposed coal export projects are a very big deal for our region, 

and so we appreciate your willingness to carefully examine the 

costs and benefits before proceeding. Northwest citizens and communities are deeply concerned about the impacts of coal export on 

public health, on property values, on existing jobs, on Main Street 

businesses, and our economic future. In my brief comments, I will 

focus primarily on the climate impacts, but I want to emphasize 

that all of these impacts deserve full and fair consideration before 

any public decisions are made to issue permits or leases, let alone 

subsidies for coal export. 

We take climate disruption very seriously in the Northwest. We 

have to. Our mountain snow pack is critical economic infrastructure for our region. Our fishing, our farming, our forestry communities depend critically on that snow pack. Our power system is 

built on it. And like communities everywhere, we are concerned 

about increasing and growing risks from extreme weather to 

human life and human property in the Northwest. And so Washington and Oregon and communities in the Northwest are implementing climate action plans now. We know we can’t fix this problem alone, but we are determined to do our part. We are determined to prove up effective solutions in our communities. The centerpiece of these plans is our transition to a clean energy economy. 

Our commitments to energy efficiency and to clean energy and to 

transportation choices are working. Our economy is stronger. Our 

industries are more competitive. Our communities are healthier. 

Our emissions are down, and our future is looking up because of 

these commitments. 

And so now, turning from that strategy to coal exports would be 

a tragic and abrupt reversal from that successful strategy for the 

Northwest. And dumping over 100 million tons of coal a year into 

global energy markets would have significant irreversible impacts 

on the climate, and therefore on our communities as well. 

Now the coal industry argues that our coal would simply replace 

other sources of supply and not increase in that emissions. Our understanding is that supply and demand doesn’t work that way. It 

will only replace other sources of supply insofar as it is cheaper, 

otherwise they wouldn’t buy it. And if it is cheaper, then more of 

it will be consumed. Now if it turns out to not be cheaper and this 

coal isn’t competitive in these markets, then these projects may 

well go belly up as previous coal export projects did, leaving our 

community with substantial stranded costs. Neither outcome is acceptable to us. 

118 

Economic modeling of this emissions effect shows that emission 

increases would be substantial, and even more troubling, they 

would have the effect of green lighting the investment of enormous 

amounts of capital into new coal infrastructure in the fast growing 

Nation economies. And by the way, these are coal plants that lack 

the technology to sequester or responsibly dispose of the carbon. 

The International Energy Agency is one that these long-lived capital intensive investments would lock in emissions that virtually 

guarantee dangerous climate disruption. The coal industry disputes 

this analysis, so instead of trying to exclude analysis of climate impacts from the environmental process, I would suggest that they 

welcome the opportunity to set the record straight and a rigorous, 

transparent evaluation of these impacts. This is obviously a much 

longer discussion than we have today, and so let me close by emphasizing this simple request for federal agencies and decision 

makers. Please examine all of the relevant impacts carefully, rigorously, transparently, and comprehensively, including climate effects, before any public permits or subsidies are issued for coal activity. Let’s look at whether coal leases for export are fair to federal 

taxpayers and in the public interest before BLM issues any more 

of them. Let’s not be afraid to ask and answer the big questions 

about how this will affect our economic future and the climate that 

our kids will live in. These are big, fateful decisions, not just for 

the region, but for the country. These choices deserve full transparency and public accountability. All we are asking is that we 

simply look before we leap, and make these decisions in the full 

light of day. 

Thank you. I look forward to any questions you may have. 

[The prepared statement of Mr. Golden follows:] 

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Testimony ofKC Golden 

Policy Director, Climate Solutions 

before the 

Committee on Energy and Commerce 

Subcommittee on Energy and Power 

U.S. House of Representatives 

June 18, 2013 

Mr. Chairman, Ranking Member Rush, members of the committee, thank you for this opportunity to 

testify on the impacts of coal export on climate disruption and the Pacific Northwest. With the prospect 

of coal export, our region finds itself unwittingly positioned at an important global crossroads with 

respect to climate and energy. Our decisions will bear heavily on the energy future, advancing or 

undermining our ability to deploy effective climate solutions in a timely and responsible way. 

Coal export decisions will also have far-reaching impacts on the health and vitality of our local 

communities and the strength of our regional economy, impacts that will be addressed in other 

testimony today. My testimony will touch on some of these impacts, as they are related to the larger 

questions about our energy future and climate impacts. I will focus on five points: 

1. Coal export would represent an abrupt reversal for states and communities that have staked their 

economic strategies on clean energy, healthy communities, and economic innovation. 

2. Exporting publically subsidized coal from the Powder River Basin would significantly increase net 

emissions of climate pollution, not just displace other supplies. 

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3. The most destructive impact would be economic "lock-in": commitments of enormous amounts 

of capital to long-lived energy infrastructure that make dangerous climate disruption unavoidable. 

4. Coal export is a weak economic strategy for America and the Pacific Northwest. 

S. Coal export presents a fateful choice: Will we pioneer the development of clean energy 

technologies and systems that deliver sustainable prosperity, and reap the economic rewards of 

that leadership? Or will we lag behind, facilitating and fueling the development of energy systems 

that lock us in to a future of dangerous climate disruption and economic stagnation? 

1. Coal export would represent an abrupt reversal for Northwest states and communities that have 

staked their economic strategies on clean energy, sustainable development, and economic 

innovation. 

Renewable energy isn't "alternative" energy in Washington and Oregon. It's the backbone of our 

existing power system, and the reason we enjoy some of the lowest energy costs and cleanest air in the 

nation. We have honed our "renewable edge" with decades of investment in energy efficiency, 

squeezing more work out of our hydroelectric supplies while improving the comfort of our buildings and 

the competitiveness of our industries. 

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In recent years, we have begun to add substantial amounts of new renewable resources to our energy 

portfolios. And we have adopted climate plans1 that commit our jurisdictions to responsible limits on 

climate pollution and accelerated deployment of dean energy systems. Climate disruption and ocean 

acidification represent clear and present dangers2 to Northwest communities and economiesthreatening our water, power, and food production systems, undermining the health and productivity of 

our forests, eroding our shorelines, and increasing the loss of lives and property from extreme weather. 

We cannot solve this problem alone, but we are committed to do our part, and we believe that doing so 

helps us build a healthier future and a stronger, more durable economy. 

These historic and new clean energy commitments are vital to the region's economy. They support our 

existing manufacturing and industrial base, including global leaders in aviation, wood products, and 

materials. They are accelerating the development of dynamic new, job-creating industries including 

renewable energy, energy efficiency, advanced transportation, software, and smart grid technology. 

And our dean energy edge is an important part of the overall quality of life that attracts investment, 

innovation, and an excellent workforce to our region. Clean energy leadership is part and parcel of our 

regional identity and our economic profile. 

As a result ofthis leadership, we are phasing coal out of our regional energy supplies. Seattle City light 

sold off its share in a coal plant in 2000, and completely eliminated net carbon emissions for the City's 

1 Washington State Executive Order 09-05, "Washington's leadership on Climate Change," at 

http://www.ecy.wa.gov!climatechange!2009EO.htm ; Oregon Global Warming Commission Interim Roadmap to 

2020 at 

http://www.keeporegoncool.org!sites!default!files!lntegrated OGWC Interim Roadmap to 2020 Oct29 11-

19Additions.pdf 

2 See, e.g., Washington State impact assessment at: http://www.ecy.wa.gov!cllmatechange! 

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power supply in 2005. In 2011, we reached a consensus agreement' to phase out that same coal plantthe only coal-burning commercial power plant in Washington, and the source of roughly 10% of the 

state's total emissions of climate pollution. That agreement enjoyed unanimous support from the 

plant's owner, the local community, conservation groups, and the workers at the plant. Our successful 

experience with clean energy created a widely-shared sense of confidence in our ability to power our 

future with cleaner energy sources. 

We take pride in our clean energy achievements and our commitment to climate solutions. Our 

communities are healthier, our economy is stronger, and our future is more secure as a result of these 

investments. But we know full well that no city or state can successfully address the climate challenge 

unilaterally. And so our climate strategies are designed to pioneer and prove out the technologies, 

energy systems, and transportation strategies that can power a healthy future, in our region or 

anywhere else. Rising to the climate challenge means not just reducing our own carbon footprint, but 

opening up energy pathways to economic security - pathways that work for the long haul, not just for 

us, but for the billions of people worldwide who yearn for economic opportunity. We call this 

sustainable prosperity, and we believe it's our best future. 

As Edmonds, WA City Council member Strom Peterson wrote, "Ourfutures are brighter and our 

communities are stronger because we are building vibrant local economies - great places where people 

want to live, work, shop, and play. Coal export is the direct opposite of that vision."'ln a region that 

places a high economic and cultural value on innovation and quality of life, coal export would commit 

some of our most valuable resources to a low-value, high-impact, economically unsound use. In a region 

that aims to pioneer and export sustainable prosperity, coal export would position us as promoters and 

, "Transalta Agreement Shows the Power of Compromise,» Olympian, March 11, 2011 at 

http://www.theolympian.com!20l1!03!11l1574719!transalta-agreement-shows-the.html 

4 "Visualize Edmonds, without coal crains please," Edmonds Beacon. March 22, 2012. 

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suppliers of unsustainable fossil fuel development to the world. In a region working for climate 

solutions - a region that depends on climate stability for its water, food, and power supplies - coal 

export would make us merchants of climate disruption. 

It will be a sad day for America and a tragic reversal for the Northwest if, a few short years from now, 

our children can stand on our shores, watching ships sail in from Asia with solar panels and wind turbine 

blades and flat screen lVs, passing ships sailing from America, loaded with coal. This is not our best 

future. 

2. Exporting cheap, subsidized coal from the Powder River Basin would significantly increase net 

emissions of climate pollution, not just displace other supplies. 

Proposed coal export terminals in the Northwest could ship well in excess of 100 million tons of coal a 

year through our communities. In addition to the massive local impacts of these shipments, the carbon 

emissions' from burning the coal would overwhelm the region's many positive commitments to climate 

solutions and emission reduction. 

Of course, coal export from the Northwest would not be the only driver of coal combustion in Asia, and 

Asian nations have other sources of coal supply if we choose not to export U.S. coal. Citing this fact, coal 

export proponents argue that these proposals would not affect the amount of coal that is ultimately 

burned or the net carbon emissions from that coal6

• (We note that these same proponents argue that 

emissions of climate pollution should not be included within the scope of the environmental review for 

5 See "Coal export and carbon consequences II," Sightline Institute, at http:Udaily.sightline.org!2012!05!23!coalexports-and-carbon-conseguences-ii! 

• Vic Svec, VP of investor relations for Peabody Coal, said: "It's safe to say that not one more pound of coal will be 

used in Asia because of this terminal." National Geographic Daily News, October 20 2011 at: 

http:Unews.nationalgeographic.com!news!energy!2011!10!111020-coal-port-pacific-northwest! 

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these projects - a somewhat curious position if they genuinely believe that there will be no increase in 

emissions.) 

This argument runs contrary to the basic principles of economics. If indeed Powder River Basin coal can 

be delivered to Asia as a competitive source of supply, then, by definition, it would be cheaper than the 

next available source of supply to the relevant markets (otherwise, they wouldn't buy it). And if it is 

cheaper, the basic dynamics of supply and demand suggest that more of it will be consumed. (And if it 

is not, then these projects may go belly up, as previous coal export projects did7

, leaving port 

communities with substantial stranded investments.) 

In "The Greenhouse Gas Impact of Exporting Coal from the West Coast: An Economic Analysis:8 Dr. 

Thomas Power outlines this argument, noting that the market for coal in China is sensitive to price, and 

that the introduction of cheap new supplies will increase emissions and reduce investment in energy 

efficiency and cleaner energy supplies. 

Dr. Power followed up this conceptual analysis with more detailed economic modeling in "The Impact of 

Powder River Basin Coal Exports on Global Greenhouse Gas Emissions.'" In this analysis he found that 

Powder River Basin coal could substantially undercufthe existing import market in South Coastal China, 

which would apply pressure on other suppliers to reduce their prices, and significantly increase net 

emissions in the whole market. These emission increases would not be offset, he finds, by emission 

decreases in the u.s. resulting from export. 

7 See "Gambling on coal and losing: Sightline Institute, at: http://daily.sightline.org!2011!09!12!gambling-oncoal-and-Iosing! 

• http://www.sightline.org!wp-content!uploads!downloads!2012!02!Coal-Power-White-Paper.pdf 

• http://www.powereconconsulting.com/WP/assets/GHG-Impact-PRB-Coal-Export-Power-Consulting-May2013Jinal.pdf 

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If the proponents of coal export dispute this analysis, we hope and expect that they will not object to a 

comprehensive and fair examination of the issue so that decision-makers have the opportunity to make 

well-informed decisions and citizens can evaluate those decisions in the full light of all the relevant facts. 

It should also be noted that the overwhelming weight of the scientific evidence, summarized in the 

EPA's endangerment finding,'0 confirms that unchecked climate disruption will have grave human 

consequences. Indeed, some of these consequences are already upon us. In light of these 

consequences, the argument that "someone else will supply the coal if we don't" seems fatalistic and 

irresponsible. No one can take complete responsibility for addressing climate change, but if we are to 

address it collectively, we do need to assume responsibility for the actions we take, regardless of what 

anyone else does. 

3. The most disruptive impact globally would be economic "lock-in": near-term commitments of capital 

to long-lived energy infrastructure that make dangerous climate disruption unavoidable. 

While the increases in climate pollution from coal export due to the near-term market effects of 

introducing a cheap new source of supply would be significant, there is a more important and 

destructive impact: the effect of coal export on long-term energy infrastructure investment. 

In its 2011 World Energy Outlook", the International Energy Agency warned that the global pattern of 

energy infrastructure investment must shift, decisively and immediately, away from fossil fuels or we 

will "lose forever" the chance to avert catastrophic climate disruption. This does not mean that we need 

to cease fossil fuel consumption immediately. It does, however, mean that we must stop making the 

10 http://www.epa.gov/climatechangelendangerment/ 

11 http://www.iea.org/newsroomandevents/pressreleasesi2011inovember/name.20318.en.html 

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situation worse with large and irreversible new investments that "lock-in" emission trajectories which 

guarantee dangerous climate disruption. And the most critical of these investments are the huge new 

capital expenditures for energy infrastructure in the fast-growing Asian economies -the intended 

market for coal export. Once these long-term investments are made, their emissions are locked in not 

for months or years, but for decades. And the impacts of those emissions will persist for centuries. 

Fuel price forecasting is notoriously risky business, but if you are making a long-term capital bet on a 

coal plant, at a minimum you want to know that there's a lot of fuel available, and that there will be 

enough different suppliers to give buyers some competitive leverage. The all-important question that 

export of Powder River Basin coal answers is not "Where will China and India get coal tomorrow?" The 

question is "Will China and India have unlimited to access the world's coal supplies, giving them enough 

confidence in future prices to justify construction of a whole generation of new coal plants?" And if 

they make those investment decisions, there is no turning back from the climate consequences. 

If you believe that carbon capture and sequestration technology will be economically viable in the 

future, then you would be especially concerned about the effect of these near-term investments. The 

coal plants that hang in the balance -the ones that would be constructed in the next decade in 

anticipation of cheap supplies of American coal- have neither the technological nor the geological 

requirements for sequestering carbon. And if you believe that solar and other clean energy 

innovations or new nuclear designs will make fossil fuels uncompetitive, then you should be equally 

determined to avoid these near-term capital investments in coal infrastructure. Once they are made, it 

doesn't matter what clean energy breakthroughs we achieve - we will already be economically 

committed to an emissions path that guarantees a future of unrelenting climate disruption. And the 

capital that might have been deployed to create clean energy pathways and markets for American 

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innovation and technology leadership would have been squandered. The American economy would 

sacrifice a dynamic driver of innovation and job growth, and receive only modest fuel loading fees in 

exchange. 

Nationally and globally, we simply do not have enough time or enough money to spend the next decade 

digging the hole deeper in ways that make it impossible to fill. 

4. Coal export is a weak economic strategy for America and the Pacific Northwest 

We strongly support the aspirations of all Washington communities to enjoy economic opportunity and 

good jobs. We respectfully submit that on balance, coal export would undermine those aspirations, 

while imposing unacceptable costs on existing businesses, local economies, and communities. This is 

not a jobs vs. environment situation. It's a coal export vs. jobs and the environment situation. 

All economic development decisions are strategic resource allocation decisions. Among the resources 

that would need to be allocated to coal export are: 

Freight capacity, including scarce capacity on existing rail lines and the freight mobility that 

would be adversely affected by the many at-grade rail crossings between Montana and the west 

coast. 

Public investment for rail upgrades, grade separations, bridge reinforcement, erosion control, 

etc . 

.. Airshed" capacity - the finite amount of air pollution that is allowed in some areas in order to 

protect public health. 

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Other public subsidies including below-market leases for federal coal and the health and 

external public costs associated with coal extraction, transportation, and combustion. 

Brand and reputation - the quality of life attributes that attract investment and skilled 

workforces. 

So the question for coal export is not whether it will produce jobs. It's whether it will produce more jobs 

and other economic benefits than other, competing uses of these finite resources. It is difficult to 

imagine an economic development strategy that would consume more of these resources while 

producing fewer jobs than coal export. 

University of California Energy Professor Daniel Kammen suggests that coal export may produce 

significant profits, but few jobs for American workers, particularly insofar as it Hwill help Asian firms 

continue undercutting U.S. manufacturers, causing further job losses here at home." Kammen says Hthe 

majority of terminal profits would leave Washington and flow to Wall Street, not Main Street. The 

pittance paid locally in taxes - less than 34 cents a ton, according to official estimates - will be 

negligible compared to the public health and environmental impacts Washington citizens and 

ecosystems will be forced to bear."12 

What is the net jobs impact in Washington of devoting our ability to move freight - one of the scarcest 

and most valuable economic resources for a trade-oriented economy like ours - to hauling fuel from 

Montana for use in Asia? How will increased congestion at rail crossings affect trucks, emergency 

vehicles, and citizens, and how will that affect our economic prospects? How will the impacts to quality 

of life across the state affect the health and well-being of our communities, and our ability to attract 

12 "Coal's no way to make the job market hop" Crosscut, January 14, 2013 at 

http:Ucrosscut.com/2013(01/14/coal·ports(1123841coal·ports-jobs-etonomvl 

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investment and a skilled workforce for Washington's economy? What is it worth to our economy to be 

consistently ranked among the best places to live, and how will coal shipments affect that ranking? 

What is the impact on the fishing industry and tourism jobs from ocean acidification and dramatic 

increases in marine industrial traffic? ... on hydropower production and irrigated agriculture from 

snowpack loss? ... on the wood products industry from declining forest health? All of these questions 

need to be answered in order to assess the net economic impact of coal export. 

As Pete Knutson, owner of loki Fish Company said in his testimony at a coal export hearing: #Anyone 

who claims that this massive coal project is about jobs had better learn to subtract. We're weighing jobs 

based on the one-time exploitation of a fossil fuel versus livelihoods based on a sustainable resource." 

Sustainability is a core value and a prosperity driver for communities like Bellingham13, where Peabody 

Coal aims to build a major coal terminal. As former Bellingham Mayor Dan Pike said, • ... Because of our 

reputation as a place that values sustain ability, we've had a lot of businesses that choose to locate here. 

And things that damage that reputation damage our economic viability as a community ... [T)here are 

few things that are as anti-sustainability as coal is. ,,14 

It's important to note that the prospective economic benefits of coal export would occur in a few 

communities where the coal is mined and the terminals are sited, while adverse impacts fall on 

communities all the way from Eastern Montana to the coast. But even in the terminal communities, the 

13 See, e.g., Sustainable Connections, Bellingham's largest business association, at 

http://sustainableconnections.org/ 

14 "In Northwest town, a fight against global coal: NPR, October 26, 2011 

http://www.npr.org/2011/10!26!141687537!in-northwest-town-a-Iocal-fight-against-global-coal 

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benefits are ambiguous at best. An economic study on the impact in Bellingham" concluded that the 

net local effect on jobs may well be negative. 

Longview, WA, another proposed target for a coal export terminal, has a very different economic profile 

than Bellingham. It's a hard-working community known for heavy industry and raw log exports - the 

kind of place, presumably, where coal export might fit in. But they've got something better in 

mind. The vision statement from the Cowlitz County Economic Development Plan, "The Turning Point", 

captures that difference: "Cowlitz County will transition from a natural resource dependent economy, 

embrace higher value projects, and raise its profile within a broader regional market." Coal export would 

bury that vision, committing the port community to bear impacts that would preclude the kinds of 

economic development envisioned in their plan. Reverend Kathleen Patton, rector at St. Stephen's 

Episcopal Church worries, "If Longview winds up becoming a coal-export facility, I really do wonder if 

that's the last 135 jobs this town will see. Who else would be attracted to come here? I don't see how 

we can justify saying a few jobs here makes it all worthwhile when we're jeopardizing the health of not 

just the planet but even the people who are supposedly going to benefit from this export facility." 

Finally, the economic merits and costs of coal export must be evaluated in light of recent revelations 

that coal leases in the Powder River Basin are substantially undervalued - a significant public subsidy to 

coal companies serving foreign energy demand. A new report'· from the Department of Interior's 

Inspector General highlights flaws in the calculation of Fair Market Value and failure to consider the 

increase in coal exports. Over 80% of the sales in the last 20 years have received only one bid. A report 

15 "The Impact of the Development of the Gateway Pacific Terminal on Whatcom County: Public Financial 

Management, March 2012, at: http://www.communitywisebellingham.org/economic-impacts-of-the-gptdevelopment! 

16 "Coal Management Program, US Department of Interior", June 2013 

http://www.eenews.net/assets/2013/06/11/document pm 01.pdf 

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last year from the Institute for Energy Economics and Financial Analysis17 found that uncompetitive 

bidding and below-market pricing has cost federal taxpayers nearly $30 billion. Whatever merits this 

policy may have had in terms of lowering energy prices for American consumers do not apply in the case 

of coal export. We ask for a suspension of federal coal leasing'· and a thorough examination of 

whether and under what circumstances it is in the public interest to lease for export. 

5. Coal export presents a fateful choice: Will we pioneer the development of clean energy technologies 

and systems that deliver sustainable prosperity, and reap the economic rewards of that leadership? 

Or will we lag behind, facilitating and fueling the development of energy systems that lock us in to a 

future of dangerous climate disruption and economic stagnation? 

The United States is a can-do nation, and the Pacific Northwest is proud home to some of our nation's 

foremost innovators and problem-solvers. And yet our national discussion of climate is afflicted with a 

peculiar fatalism. The discussion of coal export sometimes fails into this same pattern - a sense that 

things like climate disruption and global energy investment patterns are simply too big and outside our 

sphere of influence. 

Coal export proponents find it advantageous to avoid examination ofthe larger implications of these 

proposals - particularly the impacts on climate disruption. These implications, they suggest, are simply 

beyond our control and beyond the appropriate jurisdiction of the relevant decision-makers. This is, of 

course, the problem with climate disruption in general; it's above everyone's pay grade. 

17 "The Great Giveaway: An analysis of The United States' long-Term Trend of Selling Federally Owned Coal for 

less Than Fair Market Value", Institute for Energy Economics and Financial Analysis, June 2012, available at 

http:Uwww.ieefa.org/study-almost-30-biliion-in-revenues-lost-to-taxpayers-by-giveaway-of-federally-owned-coalin-powder-river-basin! 

,. Letter to Interior Secretary Jewell at http://climatesolutions.org/files/ietter-to-secretarv-jewell 

13 
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And so I include this final point in order to urge that we approach these decisions in the American 

tradition of defining and driving our own destiny. To be sure, larger forces are at work, and we do not 

have unilateral control over all the relevant variables. But a variety of public decisions must be made in 

order to facilitate coal export -leasing public lands, issuing permits, providing public subsidies to 

mitigate impacts, bearing the costs of the climate disruption that coal export will help cause. We are 

decision-makers at a fateful crossroads, not innocent bystanders. 

Because of the energy investment imperatives described above and in lEA's World Energy Outlook, it is 

not possible to travel both paths - sustainable prosperity and expanded coal infrastructure 

development. They are flatly inconsistent. And coal export presents us with a stark choice between 

them. Obscuring this choice is not a responsible course of action. We should make it, with our eyes 

open. 

Above, I have outlined some of the arguments for rejecting coal export and reaffirming our commitment 

to sustainable prosperity. We are confident that any full and fair analysis of the costs and benefits will 

lead to this conclusion. And so, without further documenting the arguments against coal export here, I 

will conclude by simply reiterating our request to the federal agencies and decision-makers involved: 

please conduct a transparent, rigorous, comprehensive, cumulative analysis of the costs and benefits of 

these coal export proposals. Let's carefully examine the economic tradeoffs, the impacts on Northwest 

communities and America's future, and the climate impacts. Let's look at whether federal coal leases 

for export are in the public interest before we issue any more of them. Let's not be afraid to ask the big 

picture questions, like how this would affect America's global economic position and our ability to rise to 

14 
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the climate challenge before the problem becomes intractable. Let's look before we leap, and make 

these decisions in the full light of day. We're confident that the facts will speak for themselves. 

Thank you again for this opportunity to testify. I look forward to any questions you may have. 

15 
134 

Mr. WHITFIELD. Thank you, Mr. Golden. 

Mr. Pugliaresi, you are recognized for 5 minutes. 

STATEMENT OF LUCIAN PUGLIARESI 

Mr. PUGLIARESI. Thank you, chairman. Chairman Whitfield, 

Ranking Member Rush, thank you so much for inviting me to testify on this very important topic. 

[Slide shown.] 

Let’s go to the first slide. I have a few graphs I would like to 

show you. Let me just say that over the last 10 years, we have had 

economic growth rate for the national economy of less than 2 percent. This is not a problem; this is a national crisis. I want to start 

out by seeing what happened with natural gas. If you came here 

in 2008 and testified of natural gas and members of the committee 

asked what can we do about the shortage of natural gas? Should 

we lease more land? Should we try new kinds of innovation? All 

the government witnesses would have said it doesn’t matter what 

we do. The path you see there in blue, if you look at the vertical 

axis, that is truly in cubic feet per year, and in 2008, we all believed that we were going to have massive imports of natural gas. 

But, in fact, because of the advances in hydraulic fracturing, because of the incurred private land, because there was no NEPA review, because ideas could move quickly from one province to another, we rapidly increased our gas supplies. These are very important lessons here. It is not just the technology, it was the whole 

process. 

[Slide shown.] 

Next slide. The next slide I think shows us very clearly why the 

real debate is not whether we are going to export too much natural 

gas, but whether we may lose out from a highly competitive market 

and export too little. The vertical axis shows you billion cubic feet 

per day, and you see that narrow blue line that goes across there? 

That is the most likely world demand for LNG in the world market 

between 2020 and 2025. It is a very competitive market. All these 

projects we have going forward are of not much—should not be of 

much concern. We don’t even need a DOE export process. The capital markets themselves are going to determine who gets these 

projects, and the real issue for our country is how do we contain 

the political and the regulatory risks? 

I can tell you today there is no Canadian pipeline company that 

will consider building a line across the U.S. border. The experience 

of Keystone has shifted long-term expectations. This is not a friendly place to do business. 

[Slide shown.] 

Next slide. This shows you the Federal Energy Regulatory Commission timelines for approving projects. Once again, as you can 

see, it can take up to—until you get the final project, up to 9 years. 

I think we are much too preoccupied with exporting too more. The 

more likely outcome is that we are going to go slowly, very measured, and we may miss out on some markets. 

[Slide shown.] 

Next slide, please. If you just take the projects which are—the 

vertical axis here is billion cubic feet per day, and these are the 

projects which have contracts. Actually, these are the projects that 

135 

are most likely to get permission to proceed. And as you can see, 

it is very modest, somewhere between 5, 6, maybe 7 billion cubic 

feet a day. We don’t have a process that—we should not be worried 

about exporting too much. That is not our problem. We have to 

learn to—we have to work on how we can be competitive to get a 

big part of this market. 

[Slide shown.] 

Next slide. I know we talked about coal today. One of the things 

I would like to point out is that, you know, how you get economic 

value is that you sell something for more than it costs, and it is 

true that if we were to expand—you see in the middle there? This 

curve shows you what we call the supply curve or merit order 

curve. The relative cost of producing coal and delivering it to Asian 

markets. And the U.S. can expand, for example, in the Powder 

River Basin, take a lot of that value and we will, as Mr. Golden 

pointed out, help to lower the price, but that lowering the price will 

be very small. The implications of that lower price will not be substantial on total coal use worldwide. 

[Slide shown.] 

And then finally the last slide. This is, you know, one sort of 

presentation of what we call the North American petroleum renaissance, and the vertical axis there shows you both our imports, and 

then our imports when we look at it as a North American entity, 

U.S. and Canada together as a percentage GNP. If we can contain 

our regulatory and political risk, if we can allow a relatively, you 

know, stable set of projects to go forward that the market wants 

us to do, by 2020, total non-Canadian water-borne imports into the 

United States are going to be virtually insignificant. AS you can 

see, it will probably be well less than 2⁄10, 3⁄10 of GNP. It is for that 

reason that we, you know, we need to focus on this huge opportunity of high value projects which are for us. We have a large 

number of high value projects for some reason we can’t get permission to proceed. 

[The prepared statement of Mr. Pugliaresi follows:] 

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Summary of Main Points 

Testimony by Lucian Pugliaresi before Subcommittee on Energy and Power 

u.s. Energy Abundance: Regulatory, Market, and Legal Barriers to Export 

June 18,2013 

• Exports of both LNG and Coal can provide a much needed boost to economic growth. 

However, substantial regulatory and political constraints continue to place these 

opportunities at risk. Economic growth over the last decade is at a crisis level ofless than 

2% per year. Many high value-added projects have both capital and markets and only 

lack government permission to proceed. 

• Proposals to use DOE's review process to determine whether U.S. exports of Liquefied 

Natural Gas (LNG) to non-FTA destinations should be permitted are both unnecessary 

and counterproductive. The FERC process already limits the pace at which new facilities 

can be constructed. 

• U.S. natural gas reserve base is vast, continues to benefit from advances in technology, 

all which means the domestic long-term production capacity is more than adequate to 

provide natural gas for domestic and foreign markets. 

• Concerns by some U.S. manufacturers that U.S. exports of LNG should be constrained to 

save natural gas for domestic manufacturing is misplaced. Even the most ambitious plans 

to use natural gas for the entire range of domestic applications are highly unlikely to limit 

the availability of U.S. gas supplies for export markets. U.s. domestic market will 

remain well supplied across a wide range of scenarios. 

• Coal production from the Powder River Basin (PRB) is relatively low cost including 

rail and shipment costs to Asian destinations. Coal production from the PRB can be 

produced and delivered to Asian markets at prices that will merely replace higher cost 

production with relatively small effects on world coal prices. Neither net world coal 

combustion nor GHG emissions will change substantially as a result of an expansion of 

U.S. PRB exports. 

• Productive capital allocation and project planning essential for expanding the economy, 

particularly in very high-cost long-term investments such as exports of LNG require 

expectations that government policies will be supportive of economic growth, and not 

create further impediments. A traditional strength of the U.S. economy is that political 

risk is low and can be contained, but a wide range of policies and regulatory delays are 

undermining these expectations. 
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Testimony 

before 

U.S. House of Representatives Committee on Energy and Commerce 

Subcommittee on Energy and Power 

U.S. Energy Abundance: Regulatory, Market, and Legal 

Barriers to Export 

June 18,2013 

Rayburn House Office Building 

Submitted by: 

Lucian PugJiaresi 

President, Energy Policy Research Foundation, Inc. (EPRINC) 

Washington, D.C. 

www.eprinc.org 

-------------- emit!elucemelVl!fitatem --------------
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Chainnan Whitfield, Ranking Member Rush, and members of the Subcommittee on Energy and 

Power, I want to thank you for this opportunity to testify on u.s. Energy Abundance: Regulatory, 

Market, and Legal Barriers to Export. This is a timely hearing and I welcome the opportunity to testify 

before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on 

Energy and Power. I am president of the Energy Policy Research Foundation, a non-profit organization 

that has published extensive research on developments in U.S. and world energy markets since 1944. 

We have been called on to testify at nearly every session of Congress in the last decade and routinely 

provide briefings on our research for industry, non-profit organizations, federal, state, and local agencies 

and Congressional staff. EPRINC has been a source of expertise for numerous government studies. 

Technological breakthroughs in the production of natural gas are now opening up highly 

valuable opportunities for the national economy, not just for domestic use, but also by transfonning 

some of these growing natural gas supplies into LNG (liquefied natural gas) for sales to markets abroad. 

New opportunities are also opening up for American steam coal exports which have experienced 

declining domestic demand from the growing use of natural gas in the electric power sector. 

Over the last decade the national economy has grown at an average annual rate of less than 2 

percent. We should view this low rate of growth as a crisis. While our rate of economic growth has its 

roots in a range of structural and financial setbacks within the economy, we can also point to regulatory 

and government policies which are delaying or outright prohibiting a large number of high value-added 

investments from proceeding. Exports are one area which can provide a much needed boost to 

economic growth if we can overcome the substantial regulatory and political constraints which place 

these opportunities at risk. My testimony today will focus largely on the opportunity and challenges to 

LNG exports. I will, however, provide some observations on the regulatory constraints to American coal 

exports. 

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Economic Value of Natural Gas Exports 

Research undertaken by National Economic Researcb Associates (NERA) for the U.S. 

Department of Energy concluded that exports of LNG yields large economic benefits to the U.S. 

economy. But where does the high net economic value come from when natural gas is exported? 

Whenever domestic resources used to produce natural gas can be sold for prices above their cost of 

production (including any additional processing costs) to foreigners, the national economy benefits. The 

economic gain occurs because the U.S. can produce a product that will make a claim on foreign 

resources considerably above its cost of production resulting in wealth transfers from other countries to 

the U.S. The surplus value from these transactions shows up in higher returns from construction of plant 

and eqUipment, additional investment in human capital, employment growth and new revenues for 

federal, state, and local governments. As export markets grow, opportunities emerge to expand 

investment to meet foreign demand. Foreign purchasers also benefit as additional supplies of natural gas 

on world markets provide opportunities to substitute away from more costly energy and/or meet higher 

environmental standards. There is also a net economic gain for sales to domestic customers in the U.S., 

but here the value to the U.S. is largely through improved productivity for the domestic economy and 

lower costs for consumers. 

Proposals to Restrict LNG Exports 

Many opponents of natural gas exports have raised concerns that, if permitted without controls, 

North America would return to an era of price and supply volatility. Note that from 2008 to 2012, the 

price of natural gas at Henry Hub fell from over $10 per million cubic feet (mmcf) to less than 

$4/mmcf, providing large savings to consumers and new opportunities for value added processing for 

U.S. manufacturers. In approximately the same time frame, as shown in Figure 1 below, U.S. net 

natural gas imports from Canada fell from over 10 billion cubic feet per day (bc17d) to 4-5 bc17d, a net 

loss of natural gas imports of 5-6 bcf/d to the domestic economy. This reduction in imports was driven 

by the sustained growth in output from domestic production from the technological breakthroughs 

associated with hydraulic fracturing. This rapid expansion in shale gas production occurred because it 

was largely free from highly restrictive government policies. The expansion of shale gas production took 

place ahnost entirely on private land and was not subject to extensive access restrictions and other 

federal regulations common on federal lands or on projects in which federal reviews are extensive. 

---------------- emittelucemetveritalem ---------------
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85447.091

FIGURE 1 

NET IMPORTS FROM CANADA 

Source: North Dakota Pipeline Authority, Bentek. 

Concerns have been raised by certain manufacturing enterprises that natural gas in the fonn of 

LNG should not be exported, or the volumes of natural gas at least should be constrained at some level, 

and these gas supplies should instead be "saved" ttlr domestic manufacturers who could then export a 

more valuable product. Here the claim is that the national economy would be better off in tenns 

employment and the net gain to the economy would be higher if natural gas exports were limited. These 

conclusions are not supported by economic analysis. 

There are two important claims made on behalf of restricting exports, The first is that the U.S. 

could generate more jobs hy allocating natural gas to domestic manufacturers rather than let it be 

exported. The problem with this argument is that capital cannot and unless mandated by the 

government, will not be allocated on the basis of the number of jobs it creates, but instead its ability to 

generate value, i.e" a positive rate of return. 

It is investment in high return projects that provides the foundation for economic expansion and 

job grow1h. Allocating investment strictly on its capacity to provide a short teon increase in 

employment is likely (0 fail. For example, we could mandate a return of our agricultural sector to 17th 

century practices and create full employment, but our standard of living would drop substantially, None 

of this is to say that exports do not contribute to employment growth, Professor Slaughter of the Tuck 

4 
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School of Business has pointed out that exporting companies are on average more profitable, more 

productive, and pay about 10-14 percent more in salaries than companies that just sell in the domestic 

market. 

Another issue raised by some U.S. manufacturers is that diverting natural gas exports to domestic 

use not only provides for more employment, but actually delivers higher added value to the national 

economy through constraints on U.S. LNG exports. A claim is made that natural gas used in 

manufacturing raises the economic benefit 8 times above the value of the natural gas used as exports 

(see http://www.americasenergyadvantage.orglinfo/growing-the-economy). However, official U.S. data 

do not support this view. The U.S. Department of Commerce, Bureau of Economic Analysis (BEA) 

estimates that the average GDP growth multiplier for all manufacturing is approximately 2. This means 

that a $1 increase in manufactured goods production results in a $2 benefit to the overall U.S. economy. 

The BEA estimates the GDP multipliers for oil and gas extraction, chemicals production, and 

plastics and rubber production are 1.7, 2.4, and 2.3, respectively. Some petrochemical manufacturers 

have claimed that the GDP multiplier is only I for LNG exports. This neglects the benefits of GDP 

growth from the LNG export industry which would include additional jobs, tax revenues, and likely 

increased domestic gas production. The increased gas production would have potential benefits to the 

chemicals industry through increased NGL (e.g., ethane) production, a common byproduct of natural gas 

production in many U.S. petroleum plays. 

There is concern among some petrochemical and heavy manufacturing companies that the 

growing demand for natural gas in transportation, power production, and exports, will provide little 

opportunity for expansion of domestic manufacturing. For example, one petrochemical company has 

presented an analysis that concludes that between 2012 and 2035, U.S. demand for natural gas will grow 

by 55 bcf/d resulting from the replacement of one-third of the remaining U.S. coal fleet, one-fourth of 

daily oil imports through natural gas vehicles, and the installation of 14 LNG export terminals. Note that 

this estimate of 2035 natural gas demand is 50 percent higher than forecasts provided by EIA in their 

2012 Annual Energy Outlook (AEO 2012). 

These concerns over "excessive demand growth" in natural gas are driven from a view that all 

announced projects will reach a fmal investment decision (FID). However, it is common for companies 

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to announce a large number of projects, particularly as a hedging strategy when pennits to construct and 

operate facilities are difficult to obtain, but many of these projects will never reach FID. It is worth 

noting the components of this expansionary view (+55 bcfld by 2035) of U.S. natural gas demand 

growth. For example, for the transportation sector, the expectation among some manufacturers that 

natural gas demand will grow by 15 bcfld reaching 17 bcfld in 2035 cannot be supported by either 

official or industry forecasts. EIA's 2012 AEO forecasts 2035 natural gas demand less than 2 bcfld for 

the transportation sector. In addition the robust view of natural gas use in transportation is not supported 

by trend :- the growth rate for natural gas use in vehicles was steepest over the last two years (2009-

2011), and applying this growth rate (9.8 percent per year) out to 2035 would yield an increase of only 2 

bcf/d, not 15 bcfld. 

Another concern often raised is that if the U.S. pennits large scale natural gas exports, prices will 

escalate dramatically and natural gas supplies for the domestic market will be severely limited. 

However, the potential volume of U.S. natural gas resources is substantial and subject to expansion from 

technological advances. Because source rock is so prolific in the U.S., technology is likely to be the 

main driver in the expansion of natural gas production. The U.S. is not reserve limited. 

Given today's technology and prices, EIA estimates U.S. recoverable natural gas to be 2203 TCF 

compared to the 2005 estimate of 1600 TCF, representing a 38 percent increase. Estimates of 

recoverable resource by IHS and in the National Petroleum Council's (NPC) 2011 study exceed 3000 

TCF. Concerns over U.S. gas supply do not recognize that significant additional U.S. natural gas 

resources could still be found in areas that have not been explored. This includes areas of the Arctic and 

extensive offshore areas under federal control, where exploration has not been allowed. Note that the 

Lower-48 offshore areas that have been off-limits are estimated - even without exploration - to have 77 

TCF of recoverable natural gas, according to API. This expansionary view of the U.S. reserve base is 

supported by recent natural gas modeling efforts by Deloitte (Economic impact of LNG exports from the 

United States, Deloitte Center for Energy Solutions). The results show that the North American gas 

market is dynamic. If exports can be anticipated, then producers, midstream players, and consumers can 

act to mitigate the price impact. There is growing realization that the U.S. natural gas production can be 

supported at sustained higher levels with relatively modest price increases, i.e., the supply curve for 

natural gas is relatively flat. 

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We do not have a fIXed amount of natural gas (technology continues to expand production 

potential) and we should not ignore the potential for substantial supply expansions, particularly if 

appropriate government policies are put into place. One of the central lessons of the shale gas revolution 

is the benefit of open systems where ideas move quickly from one to another petroleum province. Here 

the effective response to concerns over rising gas use is to permit more development of U.S. natural gas 

from vast federal lands not open to exploration and development. Much more attention should be given 

to the constraints from the regulatory structure at all levels of government that have constrained not 

only the growth in new petroleum supplies but the entire range of industrial facilities that can 

productively use rising gas supplies. 

Evaluating Political and Regulatory Risk 

The concern over massive LNG exports from the U.S. is misplaced because potential exporters 

face an extensive regulatory program that effectively limits the construction of new LNG export 

facilities. A short list includes: FERC approval (based on an Environmental Impact Statement which 

includes an Endangered Species Act review, and cultural resources assessment); Department of Energy 

approval of the export licenses; EPA and state approval of air permits for traditional air pollutants and 

greenhouse gas emissions; US Army Corps of Engineers approval of possible wetlands permits; and 

EPA and States approval of water quality permits. Even the US Coast Guard plays a role with a water 

suitability assessment. Note as shown in Figure 2 below, the FERC process combined with the long 

lead times to construct an LNG export facility, which can easily exceed $10 billion, already represents 

an effective ( and possibly excessive) process for limiting the pace at which new export fucilities can 

come online. 

The DOE review process for LNG exports should not be an evaluation to determine whether 

exports are in the public interest, as Congress has already established that exports should be viewed as 

such unless a petitioner can demonstrate otherwise. Petitioners can of course argue that they might be 

"harmed" from rising prices, but that outcome is remote given advances in drilling technology and the 

size of the U.S. natural gas reserve base. Furthermore, the deliberative and slow FERC approval process, 

the high costs and risks associated with siting and building an LNG facility, combined with competition 

from foreign suppliers all make rapid build out of U.S. LNG export capacity unlikely. Given these 

----------------.mittelucemetverit.tom ----------------

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existing constraints the DOE process Itlr approving exports is both unnecessary and counterproductive. 

(It took 9 months for DOE to grant approval for exports from Cheniere's Sabine Pass project and two 

years to approve the Freeport request). In an attempt to caretully evaluate petitioners concerns that LNG 

exports do not harln the public interest. the slow approval process may actually harln economic gro\\1h 

by creating opportunities for more costly supplies from competitors to gain access to markets that would 

have been available to U.S. producers. The slow and uncertain regulatory approval process will have 

the unintended consequence of harming the public interest by strengthening the bargaining position of 

alternative LNG suppliers. 

FIGURE 2 

Permitting and Construction Timelines 

for FERC Approval 

Source: FERC, Industry data 

LNG projects require shippers and buyers as well as banks and investors that provide funding for 

constructing the projects, to undertake enormous long-term risks. An LNG facility is expensive, often 

costing $10-$15 billion in direct capital investment just It)f liquefaction and related facilities. LNG 

shipping tankers can cost from $200 million and up. It is not uncommon for an LNG project to spend in 

excess of $100 million just to move through the FERC approval process. As a result, an LNG project 

requires agreements and complex contract structures to address the entire range of project and market 

risks .. 

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The one risk that remains nearly impossible to address is political and regulatory risk and a 

recent report from Bloomberg points out that this risk is rising. According to a report by authors Tony 

Costello and Jorge Uquillas,l U.S. companies' perception of political risk from the U.S. Government for 

large scale energy projects has risen by 45% since 2005. Although we might debate whether this 

perception of risk by U.S. companies is accurate, we face no shortage of high value-added projects 

which continue face enormous delays and rising concerns over whether federal action will either 

prohibit a project from proceeding or provide so much delay and regulatory risk that investors remain on 

the sidelines. 

Coal Exports 

Although on a different and more modest scale, American steam coal exports can also provide 

substantial benefits to the national economy. The world coal market has experienced some recent 

setbacks from the contracting world economy, but expectations remain positive for both rising demand 

and higher prices for steam coal. The U.S. has a large endowment of low-cost, quality coal reserves that 

can be competitively shipped to high value destinations through rail and seaborne transport. According 

to the International Energy Agency, by 2016 coal demand in Asia is likely to increase by well over 150 

million metric tons above 2011 levels. Australia and Indonesia are well placed to capture some of this 

market, but U.S. producers can also capture a substantial volume of this growing market. 

Proposed port construction and expansions in Cherry Point, Long View, and Hoquiam, 

Washington and other ports in Oregon offer the potential to expand total export capacity to well over 

100 million metric tons. Clearly, all of these facilities will not be constructed, but interest in expanding 

and/or rehabilitating U.S. west coast port facilities point to Asia as the high valued destination for U.S. 

coal exports. Environmental groups have raised objections in two categories to port expansions and 

higher volumes of U.S. coal exports. The first is concern over rail traffic, congestion in scenic areas, and 

potentially higher volumes of coal dust. These tend to be state and local concerns which can be 

addressed through a number of remedies, but coal exports are also subject to a broader concern that, if 

I Costello, Tony and Jorge Uquillas, Companies' Perception of Risk from U.S. Government Actions on the 

Rise, Bloomberg Government, June 11,2013. 

---------------- emittelucemetveritalem ----------------

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85447.097

permitted in larger volumes, these exports will undermine eHarts to control GHG emissions. Many 

environmental and other groups have called for greater restrictions on coal exports and federal action to 

limit the necessary permits for port expansions and other requirements to allow these exports cannot be 

ruled out. 

Concern over the potential of U.S. steam coal exports to produce a net increase in emissions of 

GHGs is misplaced because of the nature of the world supply curve for coal production, known as the 

"Merit Order Curve" The Merit Order Curve shows the cash cost of producing and delivering steam 

coal to major Asian markets. As shown in Figure 3 below. coal production from the Powder River Basin 

(PRB) is relatively low cost including rail and shipment costs to Asian destinations. Coal production 

from the PRB can be produced and delivered to Asian markets for approximately $60 per metric ton 

($54 per short ton). However, these shipments will not set the price. The U.S. is an infra-marginal coal 

producer, but the world price is set by the marginal producer which is likely to remain from $90 to $110 

per metrie ton. As a result, U.S. PRB production will merely replace higher cost production with 

relatively small effects on world coal prices. Neither net world coal combustion nor GHG emissions will 

change substantially as a result of an expansion of U.S. PRB exports. 

FIGURE 3 

Merit Order Curve for Export Mine Capacity in 2010/11 

Source: Industry and national country reporting data bases, EPRINC calculations 

10 
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Conclnding Remarks 

Improvements in the U.S. outlook for domestic production of natural gas is a remarkable 

achievement of American technology and innovation and LNG exports can make an important 

contribution to much needed economic growth. Productive capital allocation and project planning 

essential for expanding the economy, particularly in very high-cost long-term investments such as 

exports of LNG require expectations that government policies will be supportive of economic growth, 

and not create further impediments. A traditional strength of the U.S. economy is that political risk is 

low and can be contained, but a wide range of policies and regulatory delays are undermining these 

expectations. Government policy should send strong signals to both producers and the entire range of 

value-added manufacturers that our economy will remain open and that investment in new natural gas 

production will have access to the entire range of domestic and foreign markets. These same signals 

should be sent to exporters of American coal. The benefits of an open market strategy with regulatory 

stability and common sense policies will lift employment, bolster the national economy, and even 

enhance our strategic outlook. 

--------------- emittelw:emetveritatem ---------------

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85447.099

Projected Imports of LNG vs. Actual 

3.00 

2.50 

2.00 

1.50 

1.00 

0.50 

0.00 

~o:;. ",?o,o, '\.r§'~ "'~'? <-yr§>"'-1 '\-,¥ {?~o, 

10 

~ 

~ 

5:::! "",,,,,,,,,,Actual US Net LNG Imports 

~ 

Prices at $3.75/md 

May 2013 
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85447.100

Proposed u.s. Projects Far Exceed Demand Many Will Not Reach FID 

120 

,100 

80 

Sefid 60 

40 

20 

a 

Proposed u.s. Ca-padtyH 

Under Construction. Planned 

& Proposed Non·U.S, 

Worldwide Capacity~>I'* 

Current World capacity'" 

Range in Proj&ted 

workiwide LNG 

Demand; 2020~2025'" 

J. 

*Does not include recent IV added 3bcf/d of FTA applications and 24.8 of Non FTA Applications. 

Sources: Peten Group, ICF, u.s. ~~'--'---~--"""''''''-'-'' 
150 


85447.101

Permitting and Construction Timelines 

for FERC Approval 

Source: FERC, industry submissions 
151 


85447.102

Possible Timing of Four LNG Export F1roiec ± 

7 

6 

5 

2 

o 

2016 2017 2018 2019 

aSabine Pass EXPOlis aCameron Exports 

_Cove Point Exports -Total US Capacity 

Source: Bentek 

2020 

~*J% Freeport Exports 
152 


85447.103

U.S. Coal Exports Would Replace High Cost Suppliers 

Merit Order Curve fDr Export Mine Capacity in 2010/11 
153 


85447.104

Benefits of Embracing the North American Energy Renaissance 

:JS 

Imports of Crude Oil and Petroleum Products 

as a Percent of GNP 

Source: EIA, EPR1NC Calculations 
154 

Mr. WHITFIELD. I thank you very much, and I am going to ask 

unanimous consent that we include with your statement those 

slides, because I don’t think they were formally submitted, so we 

will include those with them as well. 

At this time, Mr. Cooper, you are recognized for 5 minutes. 

STATEMENT OF BILL COOPER 

Mr. COOPER. Thank you, Chairman Whitfield and Ranking Member Rush, Mr. Barton, and other members of the subcommittee. My 

name is Bill Cooper. I am the President for the Center for Liquefied Natural Gas. Thank you for this opportunity to present my 

views on the regulatory barriers to LNG exports. 

The Department of Energy has issued two exceptionally well-reasoned orders in the Sabine Pass and Freeport cases, which Assistant Secretary Smith—I will abbreviate his title—Assistant Secretary Smith referenced in his testimony. Both of those orders adhered to the statute, DOE’s rules and policies, and the rulings DOE 

has previously established in its orders it has issued. Such orders 

provide regulatory certainty to the community of the regulated, and 

I certainly commend them for their good work. 

When DOE makes a decision on an application, it is a good decision. The problem is there is no certainty as to when DOE will 

make a decision, and its effort to establish the order in which it 

will proceed is unlawful. Effective December 5, 2012, DOE published its order of precedence, the queue informing the public as to 

the manner in which it would process the 15 applications pending 

before it and all subsequently filed applications. Preference was 

given to the pending DOE applications that had received approval 

from the Federal Energy Regulatory Commission to use the FERC 

pre-filing process in the order the DOE application was received. 

All other pending and future DOE applications would be processed 

thereafter in the order of filing at DOE. Even with its attempt to 

provide procedural guidance as to the order in which it will consider the applications, DOE did not provide any timelines as to 

when those decisions would be forthcoming. After 15 applicants 

reasonably relied upon the only rules DOE had published, DOE 

changed those rules by predicating when it would consider each application, not based upon when those applications were filed at 

DOE, but based upon when an application filed—an applicant filed 

with another agency, and DOE announced that decision after the 

fact. 

While many may argue about the conditions of the queue, namely when an applicant filed with FERC or whether contracts should 

be in place, that is not the issue. The issue is the establishment 

of the queue in the first place, or if it is accepted that a federal 

agency can amend its rule by agency decree and apply those 

amendments retroactively, there could be no end to the process and 

no regulatory certainty. The result would be an agency repeal of 

the congressionally mandated Administrative Procedures Act. 

DOE’s issuance of its order of precedence for the queue is unlawful 

for the following reasons. 

Number one, the establishment and use of the queue is, in essence, an amendment to the rules promulgated by DOE as set forth 

in Title 10 of the Code of Federal Regulations, part 590, and thereVerDate Nov 24 2008 12:20 Jan 27, 2014 Jkt 037690 PO 00000 Frm 00160 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-57 CHRIS
155 

fore is subject to the same notice and comment requirements as the 

original rules. Notice of the queue was not published in the Federal 

Register with an opportunity for the public to comment. The failure 

to provide such notice and comment renders the queue void. Any 

amendment to an existing rule cannot be applied retroactively, 

thus rendering their queue ineffective as to the 15 pending applications at the time of the queue’s issuance, even if the queue was 

properly issued, which it was not. DOE should acknowledge that 

the queue was not properly issued and should proceed with its determinations of all pending applications based upon its lawfully established rules. With the queue being void, it cannot be applied 

even to the applications filed after the announcement of the queue. 

DOE should proceed with its determinations of all pending applications within a reasonable time from the closing of the time period 

set forth in the Federal Register. The mere passage of time does 

nothing to add to the evidentiary record upon which DOE must 

base its decision. That evidentiary record closed when the public 

comment period closed. Any federal agency should adhere to its 

rules. No matter how noble the intentions of an agency may be, 

placing retroactive duties upon applicants when it is too late for 

those applicants to do anything about it undermines the rule of 

law, the need for regulatory certainty, and the demands of justice. 

Thank you for the opportunity to present my views today. 

[The prepared statement of Mr. Cooper follows:] 

156 


85447.105

Summary of Testimony of Bill Cooper, 

President of the Center for liquefied Natural Gas, 

before the Subcommittee on Energy and Power 

of the U. S. House Committee on Energy and Commerce 

"U.S. Energy Abundance: 

Regulatory, Market, and Legal Barriers to Export" 

June 18, 2013 

Effective December 5, 2012, DOE published its order of precedence (the queue) 

informing the public as to the manner in which it would process the 15 applications pending 

before it and all subsequently filed applications. Preference was given to the pending DOE 

applications that had received approval from the Federal Energy Regulatory Commission 

(FERC) to use the FERC pre-filing process in the order the DOE application was received. All 

other pending and future DOE applications would be processed thereafter in the order the DOE 

application was received. 

DOE's issuance of its order of precedence (the queue) is unlawful based upon the 

following: 

1. The establishment and use of the queue is in essence an amendment to the rules 

promulgated by DOE as set forth in Title 10 Code of Federal Regulations (CFR) Part 590 

and therefore is subject to the same notice and comment requirements as the original rules. 

Notice of the queue was not published in the Federal Register with an opportunity for the 

public to comment. The failure to provide notice and comment renders the queue void. 

2. Any amendment to an existing rule cannot be applied retroactively, thus rendering the 

queue ineffective as to the 15 pending applications at the time of the queue's issuance. 

3. DOE should proceed with its determinations of the pending applications based upon its rules 

set forth in 10 CFR Part 590. 

4. DOE should proceed with its determinations of the pending applications within a reasonable 

time from the closing of the time periods set forth in the Federal Register notices for the 

pending applications. 
157 


85447.106

Testimony of Bill Cooper, President of the Center for Liquefied Natural Gas, 

before the Subcommittee on Energy and Power 

of the U. S. House Committee on Energy and Commerce 

"u.S. Energy Abundance: 

Regulatory, Market, and Legal Barriers to Export" 

June 18, 2013 

Chairman Whitfield, Ranking member Rush, and members of the Subcommittee, 

thank you for the opportunity to present my views on the regulatory barriers to LNG 

exports. 

Introduction 

The Center for Liquefied Natural Gas (CLNG) is a non-profit trade association 

whose mission is to promote fact-based discussions on liquefied natural gas (LNG), 

support public pOlicies that permit LNG exports and imports to be a part of the U.S. 

energy mix, and to ensure the safe, secure, and environmentally responsible 

development and operation of LNG facilities in the United States. 

For the purposes of this testimony, all references to applications refer to 

applications for LNG exports to countries with which the United States does not have a 

free trade agreement. 

The purpose of my testimony is to set forth the regulatory structure established 

by the U.S. Department of Energy (DOE) regarding LNG exports and provide a critique 

of DOE's decisions of general applicability regarding how it has elected to process 

pending LNG export applications. 

1 
158 


85447.107

Synopsis 

Effective December 5, 2012, DOE published its order of precedence (the queue) 

informing the public as to the manner in which it would process the 15 applications 

pending before it and all subsequently filed applications. Preference was given to the 

pending DOE applications that had received approval from the Federal Energy 

Regulatory Commission (FERC) to use the FERC pre-filing process in the order the 

DOE application was received. All other pending and future DOE applications would be 

processed thereafter in the order the DOE application was received. 

DOE's issuance of its order of precedence (the queue) is unlawful based upon 

the following: 

1. The establishment and use of the queue is in essence an amendment to the 

rules promulgated by DOE as set forth in Title 10 Code of Federal Regulations 

(CFR) Part 590 and therefore is subject to the same notice and comment 

requirements as the original rules. Notice of the queue was not published in the 

Federal Register with an opportunity for the public to comment. The failure to 

provide notice and comment renders the queue void. 

2. Any amendment to an existing rule cannot be applied retroactively, thus 

rendering the queue ineffective as to the 15 pending applications at the time of 

the queue's issuance. 

3. DOE should proceed with its determinations of the pending applications based 

upon its rules set forth in 10 CFR Part 590. 

2 
159 


85447.108

4. DOE should proceed with its determinations of the pending applications within a 

reasonable time from the closing of the time periods set forth in the Federal 

Register notices for the pending applications. 

Legal Authority 

The statutory authority governing DOE in its deliberations of the pending export 

applications is Section 3(a) of the Natural Gas Act, which states: 

[N]o person shall export any natural gas from the United States to a foreign 

country or import any natural gas from a foreign country without first having 

secured an order of the [Secretary of Energy] authorizing it to do so. The 

[Secretary] shall issue such order upon application, unless after opportunity for 

hearing, [he] finds that the proposed exportation or importation will not be 

consistent with the public interest. The [Secretary] may by [the Secretary's] order 

grant such application, in whole or part, with such modification and upon such 

terms and conditions as the [Secretary] may find necessary or appropriate. 1 

DOE recognizes the Congressional mandate set forth in Section 3 of the Natural 

Gas Act, which "creates a rebuttable presumption that a proposed export of natural gas 

is in the public interest. DOE/FE2 must grant such an application unless opponents of 

the application overcome that presumption by making an affirmative showing of 

inconsistency with the public interest.·3 However, Congress left it to DOE to promulgate 

rules as to how DOE would address applications for the export of natural gas. DOE 

promulgated such rules as set forth in 10 CFR Part 590. 

Regulatory Process 

Persons seeking to export LNG from the United States are required to file an 

application with DOE pursuant to the rules promulgated by DOE and publicly available 

in 10 CFR Part 590. The CFR is specific as to when an application must be filed (at 

'15 USC 717b(a) 

2 U.S. Department of Energy, Office of Fossil Energy 

'Freeport LNG Expansion, L.P. and FLNG Liquefaction, LLC, FE Docket No. 10-161-LNG (May 17, 

2013), page 6. 

3 
160 


85447.109

least 90 days in advance of the requested action4

) and what an application must 

contain, including the following: 

1. The project's scope, including volumes, dates of commencement and 

completion, and the facility description. 

2. The source and security of the natural gas supply to be exported, with a 

description of the natural gas reserves supporting the project. 

3. All participants to the project must be identified. 

4. The terms of the transaction that affect the marketability of the gas must be 

disclosed. 

5. The potential environmental impact must be described.5 

Factual matters set forth in an application are required to be supported by data or 

documents to the extent practicable. If DOE finds an application incomplete, it may 

require that additional information be submitted to complete the application.6 

Once an application is filed, DOE is required to publish a notice of the application 

in the Federal Register, providing at least 30 days from the date of publication for 

persons to file comments, protests or a motion to intervene or notice of intervention. 7 

"Any person wishing to become a party to the proceeding must file a motion to 

intervene or a notice of intervention, as applicable.8 The filing of comments or a protest 

with respect to the Application will not serve to make the commenter or protestant a 

party to the proceeding."9 In order to have the opportunity to request additional 

4 10 CFR Section 590.201(b) 

510 CFR Section 590.202 

610 CFR Section 590.203 

'10 CFR Section 590.205(a) 

8 State commissions may intervene as a matter of right, thus the proper method is the filing of a notice of 

intervention. Any other person must seek DOE approval to intervene by the filing of a motion to intervene. 

10 CFR Section 590.303. 

9 77 Federal Register 72840 

4 
161 


85447.110

procedures as set forth in the following paragraph, a person must be a party to the 

proceeding. 

If DOE grants a person's motion to intervene, thereby designating that person as 

a party to the proceeding, there are procedural options that are not available to persons 

merely filing comments or protests. Section 590.205(b): "The notice of application shall 

advise the parties of their right to request additional procedures, including the 

opportunity to file written comments and to request that a conference, oral presentation, 

or trial-type hearing be convened. Failure to request additional procedures at this time 

shall be deemed a waiver of any right to additional proceduresn10 if the application is 

approved.11 

Once the time set forth in the Federal Register notice has expired, a party in 

opposition to the application who has not requested any particular "additional 

procedures" cannot do so later. Indeed, "If no party requests additional procedures, a 

final Opinion and Order may be issued based upon the offiCial record, including the 

Application and responses filed by parties pursuant to [the] Notice, in accordance with 

10 CFR 590.316."12 In essence, the decision will then be based upon the documents 

filed in the docket. Consequently, upon the expiration of the time period set forth in the 

notice, no other evidence can be introduced by a party, thus closing the time period to 

present evidence. 

After the expiration of the time period set forth in the Federal Register notice, with 

no requests for "additional procedures", and no evidence introduced to overcome the 

rebuttable presumption, "DOE/FE must grant" the application. With the expiration of the 

10 10 CFR Section 590.205 

11 The time periods may be extended upon good cause shown, but should be construed narrowly. 

12 77 Federal Register 72840 

5 
162 


85447.111

time period set forth in the Federal Register notice, the mere passage of time from that 

date forward does nothing to add to the evidentiary record upon which DOE must base 

its decision. Therefore, with the official record set, DOE should not suspend 

consideration of an application based upon extraneous matters beyond the official 

record. DOE should proceed to a decision after the expiration of the time period set 

forth in the Federal Register. 

The Queue: 

Prior to December 2012, fifteen (15) applications had been filed with DOE for 

authorization to export LNG to non-free trade agreement countries. Effective on 

December 5,2012, DOE announced an order of precedence (the queue) for processing 

non-FT A LNG export applications pending before it. On its website, DOE made the 

following announcement: 

"DOE will begin processing all long-term applicants [sic] to export LNG to 

non-FT A countries in the following order: 

• All pending DOE applications where the applicant has received 

approval (either on or before December 5, 2012) from the Federal 

Energy Regulatory Commission (FERC) to use the FERC pre-filing 

process, in the order the DOE application was received. 

• Pending DOE applications in which the applicant did not receive 

approval (either on or before December 5, 2012) from FERC to 

use the FERC pre-filing process, in the order the DOE application 

was received. 

• Future DOE applications, in the order the DOE applications are 

received.,,13 

A search of the 2012 index for the Federal Register does not reveal that 

prior notice was given regarding the establishment of the queue. 

13 http://energy.gov/fe/downloads/order-precedence-non-fta-Ing-export-applications 

6 
163 


85447.112

Prior to the posting of the queue on DOE's website, DOE officials have 

said on numerous occasions in public forums that not all applications are created 

equally; noting that all that was required to file with DOE was $50 and a fax 

machine. The argument was to the effect that if an applicant pursued a FERC 

certificate, it was evidence that the applicant was willing to commit serious 

money in pursuit of the project, thus providing a way to sort out the serious 

applicants at DOE from those who were not serious about pursuing the 

authorization to export LNG. Evidently, that was the basis for the establishment 

of the queue because no other explanation has been offered. As explained 

below, the problem with that rationale is that it violates the Administrative 

Procedures Act, adds regulatory burdens not contemplated by the rules in 10 

CFR Part 590, and is to be applied retroactively for the 15 applications. 

The 15 applicants as of December 2012 reasonably relied upon the only 

enforceable rules DOE had published, namely those appearing in 10 CFR Part 

590, to inform them as to the legal path forward regarding DOE's consideration of 

their applications. A plain reading of 10 CFR Part 590 clearly shows that upon 

the expiration of the time period set forth in the Federal Register, the application 

process becomes ripe so that DOE could proceed with a decision on the merits 

of the pending applications. 

The promulgated rules of DOE prior to its issuance of the queue establish 

a time line to consider each of the pending applications. Based upon when the 

applicant files a complete application, a notice is published in the Federal 

Register, establishing a time period for comments, protests, and interventions, 

7 
164 


85447.113

the expiration of which (without proper requests for "additional procedures" as set 

forth above) allows DOE to proceed on the official record to make a 

determination. Consequently DOE, by following its rules, will make its decisions 

on a case-by-case basis. DOE's rules do not contemplate the establishment of a 

queue to decide the pending applications because the time of filing of a complete 

application and the time period set forth in the notice filed in the Federal Register 

establishes a queue for DOE on a case-by-case basis. 

Because the promulgated rules set forth in 10 CFR Part 590, by their 

express language, set forth a mechanism for DOE to decide applications on a 

case-by-case basis, any modifications, changes, or amendments must be made 

in the same manner in which those existing rules were made. Those rules were 

promulgated pursuant to the Administrative Procedures Act and its rule-making 

provisions, which require notice and a comment period prior to the enactment of 

the rule's effective date. Consequently, any changes to the rules must be subject 

to a notice and comment period prior to the changes taking effect. 

Since DOE's establishment of the queue required adherence to the notice 

and comment requirements used when the existing rules were promulgated, its 

failure to do so renders the order of precedence (the queue) void. Therefore, 

DOE should proceed with deciding the applications now pending as of this date 

pursuant to its published rules in 10 CFR Part 590. 

An argument might be made that the queue was not an amendment to a 

rule, but merely an internal agency procedure to assist it in executing the rules. 

However, the courts have routinely held that an agency pronouncement 

8 
165 


85447.114

(regardless of whether the agency chooses to call it a rule, procedure, or order of 

precedence) must be published if the knowledge of the pronouncement is 

needed to keep the parties informed of the agency's requirements as a guide for 

their conduct. Quite clearly, anyone or more of the 15 or future applicants might 

have decided to file with FERC earlier if they had known that DOE was 

predicating the manner in which it would decide applications pending before it 

based upon the time of filing at FERC. 

DOE may determine that its current rules need to be modified. To do so 

will require adherence to the notice and comment requirements discussed above, 

but not for the applications now pending. A rule promulgated cannot have a 

retroactive effect unless expressly authorized by Congress. The Natural Gas Act 

does not authorize such retroactive application. Any new rule promulgated by 

DOE will have consequences to events already completed, namely when an 

applicant chooses to file at DOE in the first instance. Therefore, it cannot be 

applied retroactively to any applications pending before DOE at the time of its 

issuance. Such a retroactive application of a new rule would violate 

considerations of fairness, reasonable reliance, and settled expectations of the 

parties involved. 

Regarding the time in which DOE has to render a decision, it should be 

noted that the Natural Gas Act does not provide a time limit for an agency 

decision. However, the Administrative Procedures Act and the cases construing 

it require that an agency conclude matters presented to it within a reasonable 

time, and a court may compel agency action unreasonably delayed. 

9 
166 


85447.115

Conclusion 

An applicant should have the reasonable expectation that upon 

completion of the application, its filing with DOE, payment of the filing fee, and 

the expiration of the comment period as established in the Federal Register 

notice without evidence being introduced to overcome the statutory presumption, 

DOE would require nothing more than the official record to render a decision. In 

other words, an applicant should have the reasonable expectation that DOE 

would follow its promulgated rules and not seek to unlawfully change the rules by 

agency decree. Additionally, since the order of precedence (the queue) was not 

properly issued, it is void, meaning that all pending applications must be 

determined by DOE just as if the queue was never issued. Furthermore, an 

applicant should be able to expect DOE to render its decision within a reasonable 

time after the closing of the time period set forth in the Federal Register notice. 

10 
167 

Mr. WHITFIELD. Mr. Cooper, thank you, and I thank all of you 

for your testimony. 

At this time, I will recognize myself for 5 minutes. 

Recently I had a friend who had attended the World Economic 

Forum in Dalvos, Switzerland, and when he came back he was 

talking about so much of the discussion over there was about the 

energy situation in America and how Europeans and many parts 

of the world were genuinely concerned about the abundance of energy that we have in America. The new oil finds, the new shale gas 

finds, the reserve of coal that we have, and they recognize that 

America is really at a point that we did not expect to be not too 

many years ago that we do have the ability to be energy independent, strong energy security. And when we were preparing for 

this hearing, I was thinking about well, what are the obstacles to 

export? And there are divergent views on this panel, and that is 

why we have panels. That is why we have open discussions. That 

is why we have debate, to get that out there. 

But in my view, the major obstacle to energy exports from this 

country is the Obama Administration. And when he was running 

for President, he really didn’t talk a lot about global or climate 

change issues in most parts of the country. But yet, if the Council 

on Environmental Quality, as a result of President Obama’s action, 

does require consideration of both the increase in greenhouse gases 

and a project’s vulnerability to flooding, drought, or other extreme 

weather that might result from global warming, it is going to 

transform the way any project will be considered or have the opportunity to be built in our country. 

It will be a major bottleneck, and what it illustrates to me is that 

in the energy sector, the most important issue to this Administration is global warming, more important than any job outside of the 

green energy sector. More important than the trade deficit of last 

year, $455 billion—$573 billion, more important than that. More 

important than the opportunity to reduce global poverty and increase the standard of living because of the millions of people in 

the world who do not have electricity. And that is why people are 

coming—companies are coming to America to ask for our energy. 

And yet, this President and his Administration are making a statement that global warming is more important than anything else 

when it comes to energy. And we need to have a national debate 

about it, because I tell you what, the greenhouse—under the Clean 

Air Act, you look at pollutant, anything can be a pollutant. In the 

Massachusetts EPA case, they said that it is up to the EPA to 

make a decision, and they did their endangerment finding and they 

decided they were going to regulate greenhouse gases. So if they 

come out with this regulation where we cannot even build a new 

coal power plant, even though the new plant emissions are much 

lower than the old plants, and then if they go further and start regulating existing plants, then America is going to find itself in a 

very difficult situation, particularly when it comes to being competitive in the global marketplace to attract industry for jobs. 

Now I am all for green energy, and we can talk about all sorts 

of green energy projects that work and all sorts that fail. Right 

across the line in Tennessee, 20 miles from my hometown of Hopkinsville, Hemlock Corporation spent $1.3 billion building a plant 

168 

for component parts of solar panels. They said they were going to 

create 2,500 jobs. They built a $20 million railroad line into that 

plant and they received about $200 million of stimulus funds. 

Three years ago they started construction. In January, they announced they are not even going to open this plant. So the danger, 

from my perspective, is that the government is trying to dictate 

what energy will be used instead of letting the American people 

and the marketplace really decide that issue. 

So this has been a very helpful hearing for me personally. I want 

to thank all of you for testifying. We have many challenges ahead 

of us. 

My time is expired, so I will recognize the gentleman from Illinois, Mr. Rush, for 5 minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman, and you used 

your time to let your feelings be known. I think we understand or 

know how you feel now. But I want to formulate my questions on 

a different kind of path. 

In the first panel, I talked a lot about jobs and the cost of doing 

business, and on the prices that the American people will be confronted with, so I would like to ask each of you, since you are on 

the front line, the question of what will be the net impact on prices, 

on jobs from your perspective if we were to export LNG and coal? 

And notwithstanding the treatise from my friend from Kentucky, 

Hopkinsville, Kentucky, I would like to know do you have any concerns about climate change also, and what other concerns. So I 

would—Mr. McGinn, if you would just start, what would be the net 

impact on prices and jobs for the American people? 

Mr. MCGINN. Well, I think we look at the—clearly there are jobs 

in the production and transport of coal and the shipping of it, but 

we look at the impact on our economic activities in our cities and 

towns along that train route, and we see negative impacts. You 

also have the health impacts, for example, 200 doctors in Bellingham spoke about the impacts of diesel exhaust and coal dust 

on people living near an export facility. We know in particular 

those can hit some of our minority communities harder who live 

closer to those train tracks or closer to the facilities. I mentioned 

the Lummi Indians’ concern who have lived, you know, for centuries on salmon and they are concerned about the effects on salmon. 

So we see all of the positive economic activity in Seattle and our 

region, and the coal trains concern us, and of course we are worried 

about climate change, because what we do is we export the coal 

and it comes back to us in the form of mercury emissions which 

find their way into fish and find their way into all of our bodies. 

It comes back in the form of global warming, which has potentially 

devastating effects on our economy and quality of life, and that is 

why we, again, keep pointing to what we believe are more productive ways to create jobs. 

Mr. QUINN. Thank you, Congressman. Just to follow up on the 

Mayor’s comments, I would say this. I have already documented 

the economic lift from coal exports, 1,300 high wage jobs for every 

million tons we export. I would say if you are concerned about the 

impact on your locality, I respect your opinion since you are a resident, but I would say let’s go to Virginia, to Norfolk, let’s go to BalVerDate Nov 24 2008 12:20 Jan 27, 2014 Jkt 037690 PO 00000 Frm 00174 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-57 CHRIS
169 

timore, let’s go to New Orleans, let’s go down to the Gulf in Houston, Galveston, and I think you will find that those ports exporting 

amounts of coal, they are most welcoming in that economic activity 

and found those ports good neighbors. 

In terms of climate change, let me assure you that if you need 

to write an EIS on what the impact is, it will be as follows. Stopping U.S. coal exports will not make any material change in global 

emissions of CO2. What it will do is it will deny the opportunity 

of billions of people accessing electricity modern energy, as coal has 

over the last 2 decades—— 

Mr. RUSH. I would like to hear from—— 

Mr. QUINN [continuing]. And it will cost millions of jobs in the 

United States. 

Mr. RUSH. Mr. Eisenberg? 

Mr. EISENBERG. Thank you, Congressman. Speaking on both— 

and I am not an economist but I have read almost every study. On 

the issue in terms of just about every study that has been done on 

LNG and coal exports, almost every single one of them comes out 

with a net increase, including the ones that the government has 

put together, a net increase in jobs and minimal, if any, effects on 

price. You know, again, these are studies not done by us but some 

of them have been done by the government. That is almost pretty 

much uniformly what they say. 

On climate, manufacturers are committed to reducing greenhouse gas emissions, to being more efficient, to coming up with the 

technologies that will deal with climate change. It is a serious issue 

and we take it very, very seriously. 

But again, as Mr. Quinn said, is this really—the issue that we 

are talking about today in the context of coal exports is does climate belong in the NEPA review on a Section 10 Rivers and Harbors Act or a Section 404 permit to dredge and fill area for ships, 

and the answer really is no. Legally it is no. And so, it just does 

not belong as part of this. We do think that we are at the table 

for a conversation on climate but it doesn’t belong legally in the 

context of this. 

Mr. BARTON [presiding]. Gentleman’s time is expired. Chair recognizes himself for 5 minutes. 

Mr. Cooper, when we passed the Energy Policy Act back in 2005, 

I believe that you were a staff member of the Majority Staff and 

helped do the staff work on the conference report, is that correct? 

Mr. COOPER. I was a staffer on the Energy Policy Act of 2003. 

Many of those provisions made it into the 2005 Act. I had left the 

Hill at that point in time. 

Mr. BARTON. See, I thought you were here in 2005. You just took 

my question away. 

Mr. COOPER. Maybe I should have been. 

Mr. BARTON. OK, well then I won’t ask the question that I was 

going to ask. I will make a brief statement and then I am going 

to ask a few questions. 

None of these projects are going to be done if they don’t make 

economic sense. Does everybody agree with that? 

Mr. COOPER. Yes. 

170 

Mr. BARTON. I mean, I would—you don’t agree—Mr. Golden, you 

don’t agree with that? Why would somebody put money into a 

project that doesn’t make economic sense? 

Mr. GOLDEN. We have had at least two coal export facilities 

sited, built on the West Coast and abandoned for lack of global 

markets. I think the global markets are extremely volatile. I think 

we are making—— 

Mr. BARTON. But that is a different—— 

Mr. GOLDEN [continuing]. A bet that may or may not turn out. 

Mr. BARTON. But at the time that they were built, there was an 

expectation by their developers that they did make economic sense. 

Do you agree with that? 

Mr. GOLDEN. Sure, it just turned out to be wrong. 

Mr. BARTON. Well, you know, that is the market, you know. A 

lot of people run for Congress with the expectation they will win. 

They come up with a shortage of votes and they don’t meet expectations, so—but if you go from the premise that no matter how 

good the project is, if it doesn’t pass an economic test, one, it is 

probably not going to be built. I will agree with Mr. Golden that 

sometimes rosy colored glasses work, but it certainly is not going 

to sustain itself. 

So that when we look at these LNG facilities and when we look 

at the coal export facilities, we start with the premise that the people that are going to purchase the products overseas think that 

they will help their nations and their people and the expectation 

is that the people that are developing the projects to sell the natural gas or the coal believes it will make sense economically here. 

Now in the interest—in the sense of the coal exports, there is 

really no requirement in federal law for any kind of a public interest test, is that not correct? 

Mr. COOPER. Well, there is nothing, of course, Congressman, 

such as LNG is going through in terms of whether it is in the public interest to export. 

Mr. BARTON. Because—— 

Mr. COOPER. You know, public interest test in the context—in a 

different context for the 404 permits that we have to go through 

to get the—— 

Mr. BARTON. Right, and see, because when the various federal 

laws that govern energy policy were passed, coal has never been 

considered to be something that is in a shortage potential situation—— 

Mr. COOPER. Correct. 

Mr. BARTON [continuing]. So we didn’t—the reason that natural 

gas has some constraints on its export is because for the last 40 

to 50 years, there have been large periods of time where we 

thought that we were going to have natural gas shortages in the 

United States, so we wanted to reserve that product for domestic 

use. We are now in a situation where we have a potential surplus 

and all the indicators are that that surplus is going to grow, but 

even in the case of natural gas, the premise is that it is in the public interest to be exported and you have to prove otherwise. 

So my question is to the panel, this latest Department of Energy 

decision to put a variable of cumulative impact, that is nowhere 

seen in any federal law that I have read. Does anybody point to a 

171 

statute that requires a variable called cumulative impact? Mr. 

Pugliaresi, you are shaking your head. 

Mr. PUGLIARESI. No, I think the critical issue here is these are 

very expensive, capital intensive projects, and buyers and sellers 

are not going to come together if they have a lot of uncertainty in 

how the government is going to behave. This is the problem, and 

it is a worldwide market. We want to capture that extra value, because out of that extra value comes revenues to State, federal, and 

local governments, return on capital construction, and sustainable 

economic growth. The biggest problem we have had in the last 10 

years is that we have lots of high valued projects with enormous 

economic value to the national economy, and we can’t get them— 

we can’t get permission from the government. 

Mr. BARTON. My time is expired, but I plan on sitting down with 

Chairman Whitfield and Mr. Rush and hopefully come up with 

some questions for the record where we send to the Department of 

Energy to have them clarify a little bit more their statutory authority for using cumulative impact and to more properly define exactly 

what that is. 

With that, my time is expired and I want to yield to the gentleman from New York for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

Mayor McGinn, you described a number of ways in which a new 

coal export terminal could affect local communities, and you further 

developed that with the ranker on the committee, Representative 

Rush. What are the city and State doing to examine and quantify 

the potential impact of increased coal train traffic on air quality? 

Is there anything being done in that regard? 

Mr. MCGINN. Yes, there are a couple of things. One is local University of Washington researcher is doing research on both the effects of the coal dust and diesel exhaust along the route. That requires setting up monitoring stations along the length of the route 

to understand the impacts, and he actually ended up crowd 

sourcing the funding for that. He was concerned that he wouldn’t 

be able to get it from traditional sources, but he is doing that work. 

There is the Puget Sound Regional Council, which is our regional 

planning agency for transportation and economic purposes, is looking at a region-wide analysis of four, that would the four counties 

that are comprised around central Puget Sound. So those are two 

of the analyses that are underway right now, and we are also looking at a health impacts analysis as well. 

Mr. TONKO. Thank you. Mr. Eisenberg’s testimony directly challenges the merits of your request for a comprehensive programmatic environmental review of all of the coal terminal proposals, and I believe the witness argues that assessing the environmental impacts of each terminal on its own should be deemed adequate. And we heard from Ms. Moyer from the Army Corps of Engineers with a similar viewpoint in her testimony. Why do you think 

it is important to examine all of the terminal proposals together 

rather than individually? 

Mr. MCGINN. Well, it is embedded within the National Environmental Protection Act and our State Environmental Protection Act 

that you should look before you leap. You should understand the 

impacts of a decision before making it. We have clearly identified 

172 

a wide range of impacts along the entire length of the line. I think 

the question that was raised by Ms. Castor was right on point. 

Shouldn’t some agency of government be evaluating all of the impacts, including, of course, the cumulative impacts that come from 

climate change? So I do not believe the decision of the Army Corps 

of Engineers should be allowed to stand. If we are going to understand the implications of this decision, we need to look at all the 

impacts, and I would say both the governors of Oregon and Washington have made the same request. 

Mr. TONKO. Thank you. 

Mr. Golden, again, the witness Mr. Eisenberg says a life cycle 

analysis of the climate change impacts of exported coal would be 

a mistake. He says that if the climate impacts of coal exports are 

examined, there will be no limit to the analysis of the climate impacts at every step of the supply chain. I am interested in your response to that concern. 

Mr. GOLDEN. Well as I said, I am not here to testify about corn 

or toys, but about coal export. You know, that question is actually 

a very important question in designing a comprehensive climate 

policy. Where do you look at the impacts, where do you assess accountability for those emissions? Unless I mistake the committee’s 

intentions, we are not designing a comprehensive climate policy 

today. I hope I will be called again when you decide to. But in this 

case, the choices before us are simply do we look at the climate impacts of this proposal or not? And given that those impacts are prospectively very large, and I understand that is disputed, but let’s 

argue about that—given that those impacts are irreversible, I simply think it would be irresponsible not to look at them as part of 

the decision making process. 

Mr. TONKO. And in terms of the approach of taking project by 

project assessment of potential climate change, is there a better approach than that, or—— 

Mr. GOLDEN. I think it is very important to look at this comprehensively. You know, some of these local decision makers, you 

have county commissioners and others who are looking at these 

permits in their jurisdictions, and I think we can forgive them for 

saying, you know, some of these things, the real impacts east of the 

mountains in other communities or the climate impacts are a little 

above my pay grade. We ought to—the responsible agencies ought 

to take a comprehensive look at that. I don’t think we can afford 

to close our eyes. If the permit board decides that, you know, within a very narrow legalistic interpretation of its responsibility and 

control it can’t do that, then I think we should find somebody who 

can. 

Mr. TONKO. Seeing that my time is elapsed, I will yield back, Mr. 

Chairman. 

Mr. WHITFIELD. Thank you very much. At this time, I recognize 

the gentleman from West Virginia, Mr. McKinley, for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. 

Mayor, when is your election coming up? Don’t you have something coming up soon? 

Mr. MCGINN. Yes, it is indeed. This August is the primary and 

this November is a general. 

Mr. MCKINLEY. So this makes a good photo op here, doesn’t it? 

173 

Mayor, I have got a couple questions for you, and when I read 

through your testimony, because it seems like maybe you left some 

things out that you had talked about. One is you referenced—and 

maybe I didn’t hear right, because I don’t hear as well as I should, 

but the—on page four you talk about on mining leasing on public 

lands, that there is a, in your words, ‘‘massive subsidy’’ for coal 

companies. I have got a copy of the report and I haven’t found the 

word ‘‘subsidy’’ in there at all. Can you tell me where I would find 

that word ‘‘subsidy’’ that you are referring to? 

Mr. MCGINN. No, and I think this goes back to the issue that the 

chairman was talking about, about let them—— 

Mr. MCKINLEY. Can you just tell me where it is? 

Mr. MCGINN. Well if you will, it goes back to this issue the chairman was talking about about whether the marketplace, you know, 

is letting this go—— 

Mr. MCKINLEY. These are steel bids, are they not, Mayor? They 

don’t have to—they can accept or reject them. There is no check, 

there is no subsidies to these companies and you know that. This 

is just a matter of you didn’t like the bids that were received for 

that. 

But I am more troubled with—— 

Mr. MCGINN. You are testifying now, Congressman, and it is 

your committee. 

Mr. MCKINLEY. No, you are challenging me on the thing and 

Mayor, you are here before us. 

Mr. MCGINN. I understand that, and I appreciate the opportunity. 

Mr. MCKINLEY. On page three, you had a ‘‘more troubling’’ and 

I thought it sent a shiver up my spine, and it should for anyone 

from a coal producing area. When you said on page three that ‘‘we 

should keep our coal in the ground where it belongs.’’ Did you really mean that? 

Mr. MCGINN. Yes, I did. 

Mr. MCKINLEY. That we shouldn’t be mining or using coal in 

America? 

Mr. MCGINN. This gets us the fundamental issue of climate 

change, and this is the difference between corn and toys and the 

other things that were mentioned. The difference here is that we 

have taken huge quantities of fossil fuels from beneath the surface 

of the Earth and put them into the atmosphere with potentially 

devastating effects upon the future of us and future generations as 

well. 

Mr. MCKINLEY. You are entitled to have that opinion about climate change. I am willing to acknowledge that there is climate 

change going on. The question I am still trying to determine as an 

engineer—I am one of two engineers in Congress—is whether or 

not the climate change is caused by man or is it natural and cyclical. We can come to the agreement that it is changing. We know 

that, but you seem to be saying that so many on the other side that 

it is all due to man or burning coal fossil fuels, and that just simply 

does—that is why there is an ongoing debate on it, and you are 

coming from your position. But with all due respect, you coming 

here and trying to lecture us about climate change, Mayor, I would 

strongly suggest you take a look at the crime rate in Seattle, WashVerDate Nov 24 2008 12:20 Jan 27, 2014 Jkt 037690 PO 00000 Frm 00179 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-57 CHRIS
174 

ington, when you have 94 percent of the cities across America have 

a lower crime rate than you have in that city—— 

Mr. MCGINN. Well, that is actually—— 

Mr. MCKINLEY. When you have 3,707 violent crimes in your community and 33,248 last year, was it, I think you ought to take a 

look at that and become more aggressive—— 

Mr. MCGINN. We have one of the lowest crime rates of a large 

city in the country. 

Mr. MCKINLEY [continuing]. About not to burn a hole in America—— 

Mr. MCGINN. We are at a 30-year low for our crime rate, Congressman, and—— 

Mr. MCKINLEY. I yield back my time. 

Mr. MCGINN [continuing]. And we are proud of our police force 

and the work they do fighting crime. 

Mr. WHITFIELD. Gentleman yields back. At this time, I recognize 

the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. 

Mr. Quinn, Virginia ranks 12th in the U.S. in total coal production. Of that total, 43 percent or nearly 11 million short tons of Virginia coal was exported abroad. Now, my district and the other districts in coal have been greatly impacted by a lot of the regulations 

that have come out. If exports are also taken away, what do you 

think is going to happen to the economy in the regions that I represent? Is it going to get better or is it going to get worse? 

Mr. QUINN. Cleary worse, Congressman. Southwest Virginia, and 

frankly, export market is the key market because it has better 

margins and all that coal goes for metallurgical steel making in 

Europe as well as steam, so it is very important. 

Mr. GRIFFITH. I knew that was going to be the answer, but I did 

want to get that question out on the record. The jobs that we have 

been seeing that we lost, almost monthly we have had announcements of people losing those jobs, and I think it was either you or 

Mr. Eisenberg, somebody mentioned that when you add in the benefits, you are almost at $100,000 a year, and most people don’t realize coal miners today make somewhere around $75,000 a year, 

and then you add in benefits, who knows how high that goes. And 

so these are good paying jobs. 

I would also point to you and ask you, Mr. Pugliaresi, that you 

mentioned something about the impacts on local, State, and the 

Federal Government, and one of my counties, the income that they 

receive from taxes in the county, not assistance they get from the 

Federal Government or from the State government, there are estimates that as much as 70 percent of that money comes from the 

coal severance tax that Virginia has. So when we cut back on coal 

exports, we are actually cutting money to the schools in a number 

of the counties in my district and I think you are aware of that, 

is that correct? 

Mr. PUGLIARESI. Yes, and I think we are sort of missing the 

point. We always—I think what we are talking about, we always 

talk about we need more jobs, and of course we need more jobs. But 

we could return our economy to 17th century agriculture and we 

could all go to work tomorrow, but we will be very poor. We have 

these fossil fuels whose value in the marketplace is substantially 

175 

above their cost of production, and all that value could come to us. 

And it doesn’t just come to the owners, it comes to State, local, and 

federal governments. It comes to economic growth and sustainable 

growth. 

Mr. GRIFFITH. And to our children and grandchildren. 

Mr. PUGLIARESI. That value, we should not give it up cavalierly. 

Mr. GRIFFITH. I don’t disagree with that at all, and in fact, politically we would be better off as well, because as somebody mentioned—and I have heard so much good testimony today, but somebody mentioned that the other nations of the world are aggressively pursuing the markets, Australia, Canada. If we don’t pursue 

this market, they will get those markets and wouldn’t we be in a 

better position when we have a disagreement, perhaps, with our 

colleagues in China if they are relying on using our coal resources 

to generate their manufacturing? 

Mr. PUGLIARESI. I think that if you look in the place—for example, natural gas. Prime Minister Abe visited us, visited President 

Obama recently. There was no announcement made. I thought that 

was unfortunate because these exports are also elements of soft 

power for us. 

Mr. GRIFFITH. No question about that. 

Mr. PUGLIARESI. When our allies look at us and say we are a 

supplier of LNG, we are a supplier of petroleum products, of 

coal—— 

Mr. GRIFFITH. I am going to get your speculation here. I speculate, and I wonder if you do, too, that part of the reason that we 

are suddenly talking about a trade agreement with the Europeans 

might actually be because of our large supply of natural gas. Do 

you think that might be one of the things they are discussing over 

in Ireland as we speak? 

Mr. PUGLIARESI. I am sure it is an element. 

Mr. GRIFFITH. I am sure it is an element as well. 

Mr. Cooper, a study by the National Economic Research Associates Group states that natural gas price increases at the time LNG 

exports could begin range from zero to .33 NCF per 1,000 cubic 

feet. I always just call it the unit that we use to measure how 

much it costs. Given these figures and the fact that we haven’t 

tapped into all of our natural gas resources, like those off the 

shore—off the coast of Virginia and other East Coast States, do you 

think if we export natural gas that it is going to have any major 

impact on the cost of natural gas in this country? 

Mr. COOPER. No. Every credible report that has been conducted 

that has examined the price impacts due to LNG exports have said 

it would be minimal, if at all. 

Mr. GRIFFITH. And so the bottom line as I am hearing the testimony today is that we actually strengthen ourselves in the world, 

we create more wealth in the United States if we are allowed to 

export our natural resources of which we have an abundant supply 

that will last us for quite some time, and I am concerned that when 

the time comes and we have to deal with whatever issues are facing the country, if we are a poorer Nation, it makes it a lot harder 

for us to deal with those issues. If we are a richer Nation, we have 

got the resources to deal with whatever issues may confront us. 

And last but not least, I will give my plug-in again for this project 

176 

with chemical looping with hardly any pollution at all, because I 

think this could actually be an answer to problems that all of us 

are concerned about, and find a resolution for our Nation and move 

us forward. 

I thank you and yield back. 

Mr. WHITFIELD. Thank you, Mr. Griffith. Do you have anything 

else? 

Mr. RUSH. No, I don’t have any other questions, but Mr. Chairman, I just didn’t realize—I mean, this is a new day for this subcommittee when you have come upon the intersection between coal 

and crime. I never thought we would see this day here in this committee. Never cease to amaze me in this committee—this subcommittee. 

Mr. WHITFIELD. That is why this committee is so interesting. 

Mr. Cooper, if you wouldn’t mind just providing the committee 

your thoughts on the criteria that DOE should use in deciding 

what order to proceed on these pending applications. You talked a 

little bit about that in your testimony. Would you mind just giving 

us your views on that? 

Mr. COOPER. Yes, sir. The existing Code of Federal Regulations 

which contain the promulgated rules by the Department of Energy 

essentially set forth the contents of the applications that are required, which involve where the gas is coming from, how abundant 

the natural gas supply is, the commercial terms of the arrangements. And the public interest standard, while Congress set it, did 

not put a lot of criteria, actually no criteria on it, and that has been 

developed over the years. We don’t particularly have any issues 

with the fact that the agency can develop that public interest 

standard as it adjudicates the cases over time. We think that the 

role of Congress to set policy and the role of any regulatory agency 

to flesh out that policy on a case-by-case basis is sound. Even the 

cumulative impacts that was discussed previously do not particularly concern us if they are handled within the promulgated rules 

and the structures that DOE has in place, and not to change that 

after the applicants have already filed to where they can’t respond. 

What I mean by that is when we look at—when DOE looks at cumulative impacts, if it looks at the existing facilities compared to 

the existing supply picture, we think that that will justify the 

issuance of these applications for LNG exports. The question is the 

timing. 

Mr. WHITFIELD. OK, thank you, Mr. Cooper. 

I want to thank you all again. I know some of you came very long 

distances, and we appreciate your making the trek across the country or from wherever. We appreciate your testimony and look forward to working with all of you as we move forward. 

And with that, the hearing is adjourned and the record will remain open for 10 days for any additional materials. Thank you. 

[Whereupon, at 1:21 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

177 


85447.116

14 June 2012 

Mr. Benjamin Schmidt 

Air Quality Specialist 

Missoula City-County Health Dept 

301 West Alder Street 

Missoula, MT 59802 

Subject: Analysis of Dust Samples 

Re: McCrone Associates Project MA53061 

Dear Mr. Schmidt: 

We have completed our analysis of the above referenced samples. This analysis was 

performed under authorization of your purchase order number AIR45. The following report 

summarizes our methodology and the results. 

SAMPLE RECEIPT 

On 16 April 2012, McCrone Associates received by via UPS. The items were identified in the 

Sample Submission Form as follows: 

A. Tape Sample, 200 Block Rail Road Street, 65'F, Swirling 8 mph wind 

B. Cloth sample, 314 N 1st St West 

C. Tape sample, 314 N 1st St. West 

D. Cloth Sample, Bike/Ped Bridge on North side of railroad track 

You requested that the four samples be analyzed for coal dust particulates. You request that 

the approximate % of material that is coal dust be determined. 

ANALYSIS 

Sample A consisted of dust collected on a tap lift. The tape lift was received attached to a 

glass slide and examined as received. The particles were collected on frosted tape making 

examination of the particles difficult. A portion of the tape was removed and placed on a 

separate microscope slide with the adhesive side up for additional analysis. With the 

particles embedded in the adhesive of the tape it was not possible to confirm steel/steel 

corrosion particles with a magnet. 

Page 1 of2 
178 


85447.117

Mr. Benjamin Schmidt 

MA53061 

DISCLAIMER - PREUMINAA,Y PArA me'dl$setliinafion of preliminary (!~ is intended $Olely to meet spet;tflC time conStraints of our 

customers.. The Infonnation tncludei:i in lhis tklcument 1$ excilISlvety preliminary in WIllent and may not 

be ?Omp!ete( h~not been ~rreviewed~nd may be $Obj~to revlSlOnby McCroqe AssOOate$, Inc, It isl'lOl lntended to be, nOfsoouki it be interpreted as, alinalreportolourfindings. A MaO(! complete 

fmal repOrtwlllfollowVia~ronlc ~,,!"s, V:S. po'Sta!servlre Of othen;ourierservK:e. Dffisemmation, 

intemretationandforrePlOduction,l3X¢eP!lnwhoie,afestrlctlvprohlbiied, 

Sample B consisted of a cloth wipe supporting a pinkish black particle load. A portion of the 

dust was removed from the wipe and transferred to a microscope slide for analysis. 

Sample C consisted of dust collected on a tap lift. The particle load on the tape was very 

sparse. Many of the particles appear to be metal/metal corrosion, pinkish colored paint flakes 

some mineral grains, coal dust particles. The particles were distributed in clumps on the tape 

making a determination of the percentage of the different particle types difficult. The particles 

were collected on frosted tape making examination of the particles difficult. A portion of the 

tape was removed and placed on a separate microscope slide with the adhesive side up for 

additional analysis. With the particles embedded in the adhesive of the tape it was not 

possible to confirm steel/steel corrosion particles with a magnet. 

Sample 0 consisted of a cloth wipe supporting a greenish black particle load. A portion of the 

dust was removed from the wipe and transferred to a microscope slide for analysis. 

Each sample was analyzed using a combination examination by stereomicroscope and 

polarized light microscopy (PLM) to determine the relative percentages of the different 

particle types. With polarized light microscopy (PLM) particles are identified by observing: 

transparency or opacity, texture (internal and surface), color (by transmitted and reflected 

light), pleochroism, size, shape, presence or absence and degree of birefringence, refractive 

indices relative to the mountant, cleavage, fracture, sign of elongation (if applicable), 

hardness, tendency to dissolve, magnetic susceptibility, and other features depending on the 

actual particle being observed. These observations coupled with experience generally 

enable the identification of more than 95% of the particles in a given dust sample. The 

relative quantity of each component in the dust is estimated by arriving at a volume 

percentage for each component by inspection of numerous fields of view. These estimates 

have an average precision of approximately .:!:1 0%. The results our analyses are summarized 

in Table 1. 

This testing was conducted in a Good Manufacturing Practices compliant laboratory. 

Thank you for consulting McCrone Associates. Your samples will be retained for 30 days 

after the date on the final report and then discarded unless you direct otherwise. If you have 

any questions regarding this report, please contact me. 

Sincerely, 

Mark A. Bukantis 

Research Microscopist 

MAB: 

Ref: MA53061; P.O. AIR45 

Page 2 of2 
179 


85447.118

Mr. Benjamin Schmidt 

MA53061 

DISClAIMER· PRELIMINARY DATA The dissemination of preflmlllaty dat~1s mtend~ solely to ~t specifIC ~ constraints of our 

customers. The [nfonnation inCluded in ttlfs document is -exclusively preUmm8ly in content and may not 

be complete, has not been peerrevie:wed and may be .~~:to revis~ by McCron.e:Assoc[ates, Inc 

ltls not intended to be, oor shouktit be'interpreted as, a final~:af oUffind~. A fun and qomplete 

final reportwlUrolfow lila electronic means. U.S. postal saMoa or OihetiXlliOOr service. Dissemination, 

interpretation ahdfor moroductlon, exCept lnwhOJe, are slricttv.proh1blted 

Page30f2 
180 


85447.119

TABLE 1 

Summary of Particle Analysis by PLM 

'. .'.',,"". ~ I. ", ~el~ti~e ~bll!!ij~!lc:e " .'$a!ll~le.NllIlI~e~ , .. ¢oAlppnent , .. , ....... (Es.timate{l"lo oy, 1I~ .. i!l1~t" 

Sample A · Miscellaneous mineral grains 40-50 

Tape Sample · Coal dust 1-5 

200 Block Rail Road · Metal/metal corrosion 30-40 

Street, 65°F, Swirling · Pinkish paint flakes 5-10 

8 mph wind · Miscellaneous plant material 5-10 

· Pinkish-red paint flakes 10-20 

· Miscellaneous mineral grains 60-70 Sample B 

· Steel/steel corrosion 5-10 Cloth sample 

· Welding spheres 1 - 2 314 N 1" SI. West Miscellaneous plant material 2-5 · 

· Tire rubber 2-5 

· Coal dust 1-5 

· Coal dust 

Sample C Particles are too sparse to 

· Miscellaneous mineral grains accurately estimate the Tape sample 

· Pinkish paint flakes concentration of different 314 N 1" SI. West 

· Steel/steel corrosion particle types 

· Miscellaneous plant material 

· Green paint flakes 30-40 Sample 0 

· Colorless flakes 2-5 Cloth Sample 

· Miscellaneous plant material 10 Bike/Ped Bridge on 

· Miscellaneous mineral grains 40 North side of railroad Steel/steel corrosion 5-10 · 1-2 track Welding spheres · 

· Coal 1-5 

MA53061 
181 


85447.120

ONE HUNDRED THIRTEENTH CONGRESS 

€Ongrt55 of tbl! iIlltiteb ~t(lb~$ 

Ms. JOIlniter Moyer 

Acting Chief 

Regulatoty Pmgram 

U.S. i\rlnyCorps of Engineers 

441 GStreet; N.W. 

Washington, D.C. 20314 

Dear Ms. Moyer: 

lit l\tprtstntatibtlii 

July 11,2013 

Thank you for appearing I>efQre the Subcommi;;lee on Energy and Power on Tuesday, JIIIIe 18, 20 13, to 

testi:t'y 81th. hearing entitled "U.S. Energy Abundance: Regulatory, Markel, andLegal Barriers to Export." 

Pursuant to the Rules of the Commitlee on Energy and Commerce, the hearing record remains open for 

ten busmess days to pennit Members to submit additional questions for the record, which are attached. The 

format oryonr responses to these que~ should be as folk>ws: (1) the name or the Member whose question 

you are addressing, (2) the complete text of the question you are addressing in hold, and (3) your answer to that 

question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions by the close of business 

on Thursday. July 25, 2013. Your responses should be .-mailed to the Legislative Clerk in Word lonna! at 

NkL~~lrjpmail.lK,";;!Mroy imd mailed to Nick Abrahanl, Legislati\'e Cieri<, Committee on Energy and 

Commeree, 2125 Rayburn House Office Building, Washington, D.C. 20S I S. 

Thank you again for your time and effort preparing and delivering testimony before the Subcommittee. 

Sincerely, 

Ed Wbitfteld 

v6~ 

Chairman 

Subcommittee on F.nergy and Power 

ce: The Honorable Bobby L. Rush, Ranking Member, 

Subcommittee on Energy and Power 

Attachment 
182 


85447.121

Questions for the Record 

Hearing before the Energy and Power Subcommittee 

Committee on Energy and Commerce 

June 18, 2013 

Questions from Chairman Ed Whitfield: 

1. The President's Council on Environmental Quality released draft guidance in 

2010 proposing that federal agencies consider the climate change effects of their 

actions. This is an unprecedented step with far reaching geopolitical implications, 

as it effectively puts the U.S. in the position of evaluating the energy 

consumption choices and environmental policies of our trading partners. 

a. Question: If CEQ's 2010 draft guidance on climate change is finalized, would 

this guidance require the U.S. Army Corps of Engineers to consider the 

international climate change impacts associated with coal consumed in foreign 

countries that was exported from U.S. ports? 

Answer: Should the guidance be finalized as written, and absent any change in law or 

relevant decision in a federal court, the Corps would make a legal determination as to 

whether the guidance provides the requisite authority to the Corps to consider the 

international climate change impacts associated with coal consumed in foreign 

countries that was exported from U.S. ports. The Corps does not currently possess the 

requisite technical expertise to make such an international climate change analysis. 

b. Question: Has the Corps ever considered the international climate change 

effects in the permitting of U.S. export terminals? 

Answer: No. The Corps implements its Regulatory Program based on statutory 

authorities, regulations and existing legal precedent, which charge the Corps to ensure 

that regulated structures and fill in waters of the United States, and the impacts of those 

structures and fills, are addressed in compliance with Section 404 of the Clean Water 

Act and Section 10 of the Rivers and Harbors Act of 1899. 

c. Question: How much longer would it take for the Corps to incorporate a global 

life-cycle environmental analYSiS, including greenhouse gases, into the NEPA 

review? 

Answer: A global life-cycle analysis would be extremely complicated and complex, 

requiring extensive time and resources. Based on existing statute and regulation, the 

Corps does not have the authority to incorporate a global life-cycle analysis as part of 

the evaluation associated with activities that require a Department of the Army permit 

for the discharge of fill material into waters, or for structures/work in navigable 

waterways. Greenhouse gas emissions will be evaluated to the extent that they occur 

within the Corps' control and responsibility in association with construction activities and 

potential increase in vessel traffic associated with any work that may be permitted. 
183 


85447.122

d. Question: What are some of the challenges to performing such a global lifecycle analysis? 

Answer: This type of analysis is beyond the Corps' statutory authorities. Because the 

Corps does not have control or responsibility over the activities associated with the full 

life-cycle of a commodity we are unable to provide details regarding the challenges of 

such an evaluation. 

2. Question: If the Corps is required to complete a globallife-cycle environmental 

analysis as part of its NEPA review for a coal export terminal, would the Corps be 

able to determine the relationship between a single coal export facility and the 

global environment? What are some of the variables you would have to contend 

with in understanding such a relationship? 

Answer: We do not have sufficient information at this time to conclude whether it would 

be possible to connect the effects of extracting, transporting and buming coal from a 

specific mine, through a specific shipping facility, to its ultimate global destination for 

consumption and the potential resulting effects on global climate change. 

3. Question: What is the average timeframe for the Corps to complete an 

environmental impact statement for a proposed marine export terminal? 

Answer: We reviewed readily available information for eight marine facilities located 

along the Atlantic, Gulf and Pacific Coasts in three states over the last 10 years. The 

average time to complete an environmental impact statement (EIS) for such a marine 

export terminal facility was 3 1/2 years. 

4. Question: You testified that the NEPA documents for the three proposed 

projects are "at an early stage." How long do you anticipate the whole NEPA 

process will take for these projects. How about just for the Corps portion of the 

review? Will you commit to an expeditious timeline for completion of the review? 

Answer: For the Gateway Pacific Terminal, the Draft EIS is expected to be published 

for public comment in August 2014, with a final Record of Decision published in 

November 2015. For the Millennium Bulk Terminal, the Draft EIS is expected to be 

published for public comment in June 2015, with a final ROD published in September 

2016. For the Coyote Island Terminal, the current Environmental Assessment is 

underway and expected to be completed by March 2014. I assure you that the Corps is 

carefully evaluating each of these pending proposals and will make decisions as 

efficiently and as expeditiously as possible while complying with all applicable laws and 

regulations. 
184 


85447.123

<tongtt1\i of tbe iltnittb ~tatti 

1L}oltliit of 1\tl'I:t1l:tntj~tibtlii 

COMMITIEE ON ENERGY AND COMMERCE 

July II, 2013 

Mr. JeffC. Wright 

Direttor 

OfficeofE""'1\.Y Projects 

Federal ~ Regulatory Commission 

888 First Street, N.B. 

Washington, D.C. 2()426 

Dear Mr. Wright: 

Thank you for sppeatlng before the Subcommittee on Energy and Power on Tuesday, June IS, 2013, to 

testilY at the hearing entitled "U.S. ~ Abundance: RllguJatory, Mmet, and Legal Barriers to EKport. " 

Pursuant to the Rules of the Committee on Energy and Commerce, the hearing record remains open for ten business days to penni! Members to $Ubmit additional <luestions for thlle record, which are attached. The 

format of your responses to thesI!c questions should be as follows: (1) thI!c name of the Member whose question 

you are addressing, (2} the complete text oflhe question you are addressing in bold, and (3) your answer to that 

question in plain text. 

To facilitate thI!c printing of the hearing record, please respond to these questions by the close of business 

on Thursday, July 25, 2ll13. Your responses should be .,.mailed 10 the Legislative Cleik in Word format at 

Njc/<,Al:!mImmiilmail,nOOlle.m and mailed to Nick Abraham, Legislative Clerk, Committee on Energy and 

Commerce, 2125 RAyburn Hoose Office Building, Washington, D.C. 2ll515. 

Thank you again for your time aad effort preparing and delivering testimony herore the Subcommittee. 

~ Sincerely, 

;; Ed !:u.,~~ Chairman 

Subcommittee on Energy and Power 

cc: The Honorable Bobby L. RAsh, Ranking Meraber, 

Subcommittee on Energy and Power 

Attachment 
185 


85447.124

The Honorable Ed Whitfield 

1. Has EPA tiled comments with FERC on any LNG export facility that was 

critical ofFERC's analysis or asking FERC to take a more expansive global 

life-cycle analysis? 

To date, we have received EPA scoping comments for five projects with pending 

applications before the Commission (Freeport LNG Development LP, Cameron 

LNG, LNG Development Co., LLC (Oregon LNG), Jordan Cove Energy Project, 

LP, and Cove Point LNG) and two projects currently in pre-fIling (Trunkline LNG 

Co. and Excelerate Liquefactions Systems I, LLC). In its comments, EPA has 

generally recommended that the Commission evaluate and disclose the Green 

House Gas emissions and climate change effects resulting from the proposed 

project during all project phases and/or the life-cycle emissions of LNG exports. 

2. What is the position of your office on whether a state has authority under 

the Coastal Zone Management Act to allow a county to effectively veto a 

Section 7 natural gas pipeline application by withholding a local permit? 

The FERC does not administer the Coastal Zone Management Act (CZMA) and, 

therefore, my office has no position on this question. The Commission is aware 

that states manage their delegated authority under the CZMA in different ways and 

that state programs could include provisions which might allow a CZMA proposal 

to be denied due to conflict with local laws. 
186 


85447.125

ONE HUNDRED THiRTEENTH CONC>RESS 

HENflY A, WAXMAN, CALIFORNIA 

RANKING MEMB€R 

(ongress of tbe Wniteb {StattS 

1!)OUJt of l&tllrnltl:1tatibtl> 

COMMITTEE ON ENERGY AND COMMERCE 

Mr. Christopher A. Smith 

2125 Il"Vl3URN 

WASHINGTON, 

July J I, ZQI3 

Principal DepUly Assistant Secretary and 

Acting Assistant Secretaly fur Fossil Bnergy 

U.s. Department of&ergy 

1000 Independenee Avenue, S. W. 

Washington, D.C. Z046Q 

Dear Mr. Smith: 

Thank you for appearing before the Subcommittee on Bnergy and Power on Tuesday, June 18, 2013, to 

testilY at the hearing entitled, "U.s. Energy Abundance: Regulatory, Marlcet,. and Legal Barriers to Export.~ 

Pursuant to the Rules of the Committee on Energy and Commerce, the bearing record remains open for 

ten business days to penni! Members to submit additional questions for the record. which are attached. The 

format of Y9ur responses to these questions should be as follows: (1) the name of the Member whose question 

you are addressing, (2) the complete text of the question you are addressing in bold, and (3) your answer to that 

question in plain text. 

To facilitate the printing of the hearing record, please respond to these questions py the close of business 

on Thursday, July 25. 2013. Your responses should be e-mailed to the legislative Clerk in Word format at 

.NiRl!:~l!hJl!!!lijlnl'liI~.M ami mailed to Nick Ab...ru.m, Legislative Clerk, Committee on Energy and 

Commerce, 2125 Rayburn House Office Building, Washington. D.C. 20515. 

Thank you again for your time and effort preparlngand deliveringtostimony before the Subcommittee. 

Sincerely. 

~Ed!:C.f-P Chairman 

Subeommittee on Energy lIDd Power 

cc: The Honorable Bobl»' L. Rusb •. Ranking Member, 

SUPcommlttee on Energy and power 

Attachment 
187 


85447.126

The Honorable Ed Whitfield 

Chairman 

Department of Energy 

Washington, DC 20585 

August 27, 2013 

Subcommittee on Energy and Power 

Committee on Energy and Commerce 

U.S. House of Representatives 

Washington, DC 20515 

Dear Mr. Chairman: 

On June 18, 2013, Christopher Smith, Acting Assistant Secretary for Fossil Energy, 

testified regarding the "U.S. Energy Abundance: Regulatory, Market, and Legal Barriers to 

Export." 

Enclosed are the answers to four questions that were submitted by Representative Joe 

Barton to c<?mplete the hearing record. 

If we can be of further assistance, please have your staff contact our Congressional 

Hearing Coordinator, Lillian Owen at (202) 586-2031. 

Enclosure 

Deputy Assistant Secretary 

for Congressional Affairs 

Congressional and IntergoWrmnental AffiUrs 

00: The Honorable Bobby L. Rush, Ranking Member 

* PrInted with soy Ink on recycled paper 
188 


85447.127

QUESTION FROM REPRESENTATIVE BARTON 

Q 1. Is DOE statutorily obligated to consider the cumulative impact of liquefied natural gas export 

authorizations? Please provide the legal argument defending your position. 

AI. DOE is requlred by statute to review whether a proposed authorization for the export of liquefied 

natural gas (LNG) is consistent with the "public interest." See IS U.S.C. § 717b(a) ("[DOE] shall 

issue such order upon application, unless, ... it finds that the proposed exportation ... will not be 

consistent with the public interest. 'J. 

DOE's review of LNG export applications focuses on: (i) the domestic need for the natural gas 

proposed to be exported, (ii) whether the proposed exports pose a threat to the security of 

domestic natural gas supplies, (iii) whether the proposed export arrangement is consistent with 

DOE's policy of promoting market competition, and (iv) any other factor bearing on the public 

interest. These factors include economic impacts, international impacts, security of natural gas 

supply, and environmental impacts. 

As one such factor, DOE considers the cumulative impact of each successive LNG export 

authorization on domestic natural gas supply and demand fundamentals. See, e.g., Freeport LNG 

Expanston, L.P. and FLNG Ltque/action, LLC, DOEIFE Order No. 3282, Order Conditionally 

Granting Long-Term Multi-Contract Authorization to Export Liquefied Natural Gas. by Vessel 

From the Freeport LNG Terminal on QuIntana Island, Texas, to Non-Free Trade Agreement 

Nations, at 5-7, 112-113 (May 17, 2013). DOE's review of this factor enables the agency to 

assess the impact of all LNG export authorizations to date on the security and availability of 

domestic natural gas supplies. DOE believes that this analysis is a key determinant of the public 

interest. 
189 


85447.128

QUESTION FROM REPRESENTATIVE BARTON 

Q2. Please define "cumulative impact" as referred to in the Freeport LNG Order (DOEIFE Order No. 

·3282). 

A2. "Cumulative impact" refers to the additional impact(s) on the public interest associated with each 

successive authorization to export liquefied natural gas, focusing on the effect of the export on 

domestic natural gas supply and demand fundamentals. 
190 


85447.129

QUESTION FROM REPRESENTATIVE BARTON 

Q3. Please list the factors that DOE will consider in the cumulative impact analysis. 

A3. DOElFE's review of LNG export applications focuses on: (i) the domestic need for the 

natural gas proposed to be exported, (ii) whether the proposed exports pose a threat to the 

security of domestic natural gas supplies, (iii) whether the proposed export arrangement is 

consistent with DOElFE's policy of promoting market competition, and (iv) any other factor 

bearing on the public interest These factors include economic impacts, international 

impacts, security of natural gas supply, and environmental impacts. 

As one such factor, DOE considers the cumulative impact of each successive LNG export 

authorization on domestic natural gas supply and demand fundamentals. See, e.g., Freeport 

LNG Expansion, L.P. and FLNG Liquefaction, LLC, DOEIFE Order No. 3282, Order 

Conditionally Granting Long-Term Multi-Contract Authorization to Export Liquefied 

Natural Gas by Vessel From the Freeport LNG Terminal on Quintana Island, Texas, to NonFree Trade Agreement Nations, at 5-7,112-113 (May 17,2013). DOE's review of this 

factor enables the agency to assess the impact of all LNG export authorizations to date on 

the security and availability of domestic natural gas supplies. DOE believes that this 

analysis is a key determinant of the public interest. 
191 


85447.130

QUESTION FROM REPRESENTATIVE BARTON 

Q4. Please describe how DOE would evaluate economic, international and environmental 

considerations in each of the following scenarios. Please include any additional criteria 

DOE would consider. Your comments will aid in the illustration of DOE policy regarding 

review of the public interest standard. 

a. Company A applies for authorization to export LNG to a non-FTA country seeking to "prevent 

gas supply interruptions by reducing its dependence on geopolitically unstable regions. 

b. Company B applies for authorization to export LNG to a non-FTA country seeking to diversify 

its gas supply routes in order to negotiate a lower price from" auother supplier. c. Company C applies" for authorization to export LNG to a non-FT A country seeking to diversify 

its energy portfolio in order to meet environmental goals. 

d. Company D applies for authorization to export LNG to a non-FTA country seeking to supply a 

new natural gas power plant that will provide villages with reliable and affordable electricity for 

the first time. 

A4. Section 3(a) of the Natural Gas Act (IS U.S.C. § 717b(a» sets forth the standard for review 

of LNG export applications to non-free trade agreement countries. This provision creates a 

rebuttable presumption that a proposed export of natural gas is in the public interest. 

DOEIFE must grant such an application unless opponents of the application overcome that 

presumption by making an affirmative showing of inconsistency with the public interest. In 

making a public interest evaluation, DOE will consider a number of criteria. DOE identifies 

the criteria considered as part of DOE's public interest review process in each Federal 

Register Notice of Application, which domestic need for the gas proposed for export, 

adequacy of domestic natural gas supply, as well as economic, international and 

environmental considerations, among others. Because each unique application has many 

criteria that the Department may consider, it is not possible to isolate the impact, and how 

the Department would consider, the hypothetical sceriarios posed here. 
192 


85447.131

Mr. Mike McGinn 

Mayor 

City of Seli!tle 

P.O .. Box 94749 

Seattle, WA 98124 

Dear Mr, McGinn: 

(:onift55 of tbe tinittb .tatn 

J,tIlUltt Ilf ~l'tll'I'~'l'lItilhhl~l'i 

COMMITTEE ON ENERGY AND COMMERCE 

July 11,2013 

Thank you fN lIppeiIring befure the Suboommittee ou Energy and P<>~r on Tuesday, June 18, 2013, to testilY at 

the hearing entitled "U.S. Enei'gy Abundance: Regulatory, Market, and Legal Barriers!" Export." 

PursUllllt ttl the Rules of the Committee on Energy and Commerce. the hearing record remains open for ten 

business days to penni! Members ttl submit additional questions fOr the record, which are atlllclled. The fonna! of your 

responses ttl these questions should be 8lf fOllows: (1) the name of the Member whose question you are addressing, (2) the 

complete text of the question you are addressing in hold, and (3) your answer to thaI question in plain text. 

To facilitate the printing of the bearing record, please respond to theae questions by the close of business on 

Thursday, July 25, 2013. Your ..... ponses should be e-mailed ttl the Legislative CIm< in Word fomnn at 

~,!'!i!!!lll!!!I!,,'ii\mail.ho_.go'!. and mailed to Nick Abraham, Legislative Clerk, Committee on Energy and Commerce, 

2125 Rayburn House Office Building, Washington, D.C. 20515, 

Thank you again for your time and effort preparing and delivering testimony before the Subconunittee. 

Sincerely, 

~FA£~~ Chairman 

Subcommittee on Energy and p<>wer 

ce: The Hon~e Bobby L. Rush, Ranking Member, 

Subcommittee on Energy and Power 

Attachment 
193 

Æ 


85447.132

The Honorable David B. McKinley 

Mr. Mayor, I appreciated our exchange with regards to exports and coal impacts. Most 

recently the governors from Oregon and Washington State recently sent letters 

demanding a full life cycle carbon analysis of exports in advance of the export approval 

related to products. One of your region's major exports Is airplanes, I'm wondering have 

the Governors of Oregon or Washington conducted a life cycle analysis of the carbon 

impact of the planes that are being exported? Do you support an effort to require such 

an analysis, particularly a cumulative analYSis of the impact of those plane exports on 

carbon levels worldwide? 

Representative McKinley, thank you for this thought provoking question. To my knowledge the 

governors of Oregon and Washington have not conducted an analysis of the carbon impacts of 

airplane export. 

However, the Boeing Company, a major airplane manufacturer that operates a number of large 

production facilities in the State of Washington, reports on its environmental performance 

annually. Their 2013 Environment Report shows that Boeing is a world leader in reducing 

overall carbon emissions in both building and operational performance of their airplanes: 

http://www.boeina.comlaboutus/environmentlenvironment report 13/2 2 performance targets. 

html. 

Boeing considers environmental performance measures throughout a product's life cycle, 

starting with design and manufacturing and extending through in-service use and end-of-service 

recycling and disposal. Most of an aircraft's lifetime carbon emissions occur in service, so 

Boeing is focusing on building more fuel-efficient airplanes, promoting the development of 

sustainable aviation biofuels, and improving the efficiency of the global air traffic system. 

Boeing is also working with the aerospace industry to reach the goal of recycling 90 percent of 

retired airplanes by 2016. Since 2007, Boeing has reduced carbon emissions by 9% and is 

targeting zero-carbon growth over the next 5 years, even with business expansion. Boeing is 

also a participant in the City of Seattle's High Performance Building Pilot along with Microsoft 

and the Department of Energy. The goal ofthe program is to reduce energy consumption in 

commercial buildings by up to 20% using IT and cloud capabilities. 

Here in the City of Seattle, our municipal-owned electric utility, Seattle City Light, has been 

carbon neutral for 8 years, choosing to operate primarily with renewable energy sources 

including hydro-electric, solar and wind energy. City Light divested from WaShington's only coal 

fueled power plant a number of years ago, replacing capacity with energy conservation 

measures and renewable energy. 

I'm proud that the City of Seattle and companies like Boeing have stepped up to the plate to 

better understand their carbon footprint, and to take important steps forward in working to 

reduce those impacts. 

Finally, I wanted to take this opportunity to follow up on another issue you brought up during the 

hearing, specifically crime rates in the City of Seattle. In the hearing, you asserted that "ninetyfour percent of the cities across America have a lower crime rate than you have in that city." In 

fact, according to 2011 data from the Federal Bureau of Investigation Uniform Crime Report, 

Seattle ranks 18th out of the 25 largest cities in the country for violent crime rates and only 28% 

of cities have a lower crime rate than Seattle.