Economic Impact of LNG- Comments from George Exum

Proposed Economic Impact Rule:

This rule has been labeled as a pass/fail situation.  I hope that the situation is one in which the applicant would be required to have the financial resources to cover the costs of the economic impact on the businesses and population of affected communities for the operation and transport of LNG.  These costs would cover impacts during construction and for future economic consequences caused by the operation of the facility.  The future costs would be difficult to quantify so they would be covered by a bond or equivalent.  The amount of this bond should be based on worst-case scenario and not the rosy future that Northern Star paints.  I feel that the rule regarding economic impact should address the ability of the applicant to address current economic impact, future economic impact, and liability economic impact in the hopefully never happening event of a LNG catastrophe.

Questions and Concerns regarding Economic Impact

Who will pay for the costs of security during vessel transit from entering the mouth of the Columbia River until docking at Bradwood Landing? I realize that the USCG will be responsible for protecting the vessel during transit. There are also shore based security requirements.  The vessels will transit the waters of two states and three counties.  The ships will transit in close proximity to many homes and businesses in Astoria, Skamokawa, and Puget Island. Transiting past Astoria the ships will pass close to the Columbia River Maritime Museum, many restaurants, shops and businesses. Adjacent to the river in Skamokawa is Skamokawa Vista Park where numerous visitors are able to camp near the river's edge. Then there is Puget Island where the residents have to deal with both the tanker traffic and the closeness of the unloading terminal.  What is the economic impact on the businesses and residences near the site and transit route?  Recently, I had dinner at Baked Alaska, an excellent Astoria restaurant.  While eating, an outbound ship passed the restaurant.  It was in the outbound shipping lane, thus over on the other side, but this ship was still less than 600 feet from where I sat having dinner.  Who pays for the costs of land based security in these areas?  What is the economic impact on businesses if they have to curtail some of their services due to heightened security?

What will be the economic impact on fisheries and the river transit of other commercial vessels?  The Columbia River is very tide dependent commercially. Cargo ships and tugs and barges as well as migratory fish species travel with the tides.  Ship and tugs tend to travel upriver with the incoming tide; this is also the time of fish movement during fish migrations.  Vessels transiting outbound tend to depart with the outgoing tide. This makes good economic sense, as the vessel will use less fuel with the assist of the tide. How will LNG ship transits affect all other commercial vessels who need river access?  What is the economic impact for "lack of access" to the river to fisherman and other commercial users?  What is the economic impact to upriver ports if their commercial vessels have to wait for LNG tankers and their security zones?  With the high vessel, crew, and charter costs of merchant ships, even a few hours delay is costly.  What is the economic impact to the upriver ports if their shipping companies are inconvenienced by LNG traffic and decide to move their operations to another port?  What is the economic impact to fisherman if they are unable to fish during the best fishing tides because of LNG tanker movement? At a number of public meetings, representatives of Northern Star have indicated that their operation will have only minimal affect on fisheries and other vessel traffic.  How can they make this assertion?  Are they writing the safety and security zone regulations for FERC and USCG? What is the impact during heightened security alerts? Please address the economic impact realistically using the safety and security zones that are being used in Boston and other working US on shore sites and also address who will cover these impacts?

Security costs are obviously a big question to both the citizens and local and county governments.  Increased fire protection, alarm systems for residences and businesses on both sides of the river, police protection both during construction and operation; all these services are costly.  Who will pay for these increased services?  Northern Star has said that they want to be a good community member and assist the communities in these services.  The last company that I heard expressing similar ideas was Enron and we all know what they gave the nation.  I feel that the LNG facility should shoulder the economic impact for any additional security, police, fire, and emergency preparedness that is required for vessel transit and facility operation. Local emergency medical services are designed for the rural area and existing population base.  Hospital services are 25 to 30 miles away on either side of the river.  How would medical services be provided in the event of an LNG accident? What would be the cost to have immediate emergency services? Who would bear the cost to have emergency preparedness to be able to handle such a situation?  An all-volunteer force covers existing fire fighting and EMT services.  If it is necessary to have full time personnel available, will Northern Star cover these costs?

There will also be increased non-security costs to the counties and both states.  Some areas of increased costs would be county public works and road departments, with increased population, at least during construction, the assessor and auditor departments. On the State level, inspections would be required by a multitude of departments and agencies.  On the Washington side, the Department of Ecology has Marine Transportation Safety Inspectors that visit and inspect all vessels that transit the Columbia River. All these services cost taxpayer dollars.

What is the economic impact on commercial fishing, recreational fishing, and recreational boating?  Again this is what is the economic impact due to "lack of access" to the river.  The effect on the commercial fishery might be quantified by any reduction of the catch of salmon.  Quantifying the economic impact on lower river communities due to the reduced fishery and the disruption of their culture and heritage will be more difficult. The Lower Columbia River is becoming a tourist destination.  They come for the natural beauty and the recreational opportunities.  Sport fishing is one of the big reasons.  How will LNG ship traffic affect this pastime?  Will they be able to fish in Clifton Channel adjacent to the LNG terminal?  This is a prime Spring Chinook fishing area.  Kayaking and canoeing is an expanding business on the lower Columbia. Will recreational boaters and fisherman want to come here and look at huge shore side LNG tanks and at tankers with restrictions around them? I don't think so.  What is the economic impact on local businesses and county economic development that has put all their effort to make this area a destination to come and enjoy in a natural setting?

Nowhere in the Oregon rules do I see any mention regarding liability.  I feel this issue should be addressed in the economic impact rule. In the importation of LNG, there are possibly three or four corporate interests involved: the corporate purchaser of the LNG from a foreign source, the owner operator of the LNG tanker (this could be 2 different corporations as the vessel could be chartered), the import terminal owner and operator, and the owner operator of the pipeline.  How is liability determined?  In your rule, liability should addressed concerning how property owners, businesses, and the population would be recompensed in the event of an accident.
Another area of concern regarding liability is the increased insurance costs to residences and businesses near the LNG terminal and along the route of the tanker transit. At the end of this year the Terrorism Risk Insurance Act will expire and terrorism coverage will be transferred from the government to private insurance companies.  Residences and businesses will get increased insurance premiums for an operation they might not want. This is also an economic impact.

These are some of my areas of concern regarding economic impact.  I didn't even touch on property values near an LNG plant.  There are probably many other small and large economic impacts that will rear up if this project becomes a reality. Hopefully you and your planning partners will be able to identify and quantify them and include them in the economic impact rule.

It seems to me that this project melts down into an equation like this: the people of the Lower Columbia River get a degradation of the natural beauty of their area, lack of access to the river they love and work and play on, increased safety and security concerns, increased costs for living, and loss of value of their property.  The owners and operators of the LNG terminal get millions of dollars. The state and county governments get increased costs for services.

What is the Economic Impact?