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September 16, 2013

DEC Issues Proposed Regulations for LNG

On September 11th, the New York State Department of Environmental Conservation (“DEC”) announced the release of draft regulations for permitting liquefied natural gas (“LNG”) facilities.  The proposed rules reflect the growing need for storage with the development of the Marcellus shale in the northeast.  DEC has cited recent interest from businesses and utilities and expects to issue permits most frequently to fuel trucks and facilities that store LNG as a backup heating fuel. The proposed regulations generally apply to any facility used to store LNG in a tank system or other storage device or to convert LNG into natural gas, but not to compressed natural gas, liquefied petroleum gas, or vessels/vehicles fueled by LNG.  LNG facilities covered by the regulations must comply with the permit application process, criteria for siting, closure requirements, spill reporting requirements, and financial assurance, as well as offer training for local fire department personnel.  Permits are valid for five years. It should be noted that the proposed regulations prohibit the intrastate transportation of LNG to permitted LNG facilities unless the route has been certified by the State Department of Transportation.  The Department of Transportation has found that it would be impracticable to establish certified routes for LNG from sources within the State.  Also, the new regulations do not apply to municipalities with a population of one million or more, which have been subject to a moratorium on the siting of LNG facilities since 1978.  The moratorium was recently extended until April 1, 2015. DEC will accept written comments on the draft regulations through November 4th.  Public meetings have been scheduled for October 16th and 30th. The proposed regulations can be found on DEC’s website at http://www.dec.ny.gov/regulations/93069.html.

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