Interpretation Response #PI-09-0001 ([Bracewell & Giuliani LLP] [George H. Williams, Jr.])

Below is the interpretation response detail and a list of regulations sections applicable to this response.

Interpretation Response Details

Response Publish Date: 07/14/2009

Company Name: Bracewell & Giuliani LLP

Individual Name: George H. Williams, Jr.

Country: US

View the Interpretation Document

Response text:

July 14, 2009

George H. Williams, Jr.
Attorney for Calais LNG Project Company LLC
Bracewell & Giuliani LLP
2000 K Street NW, Suite 500
Washington, DC 20006-1872

Ref. No.: PI-09-0001

Dear Mr. Williams:

In a letter to the Pipeline and Hazardous Materials Safety Administration (PHMSA) dated December 12,2008, you requested an interpretation of the Federal pipeline safety regulations in 49 CFR Part 193 as those requirements relate to the activities of Calais LNG Project Company LLC (Calais LNG). Specifically, you requested a written interpretation of §§ 193.2007 and 193.2057 as set forth below:

Calais LNG proposes to construct, own and operate an LNG facility, including an LNG storage and vaporization facility, as well as associated pipeline. The terminal site will be located about six miles southeast of Calais in eastern Maine. Under the current construction plan, the terminal facilities will include two 160,000 m3 insulated tanks with thermal exclusion zones within property owned by Calais LNG. In addition, Calais plans to build a third 160,000 m3 tank at a later unspecified date to accommodate future market conditions. This third tank, however, would have a thermal exclusion zone that overlaps onto property adjacent to the Calais LNG property known as Devil's Head.

The Devil's Head property is owned by the City of Calais and is subject to.a conservation easement governing use of the land. The conservation easement provides that the property will be managed by the City of Calais for natural resource conservation, open space preservation, low impact, dispersed public recreation, scenic viewing, shore access, outdoor education, and forestry demonstration. The easement further provides that public access to the land may be limited or controlled for public safety and that the land shall be forever used, operated and maintained in conformity with the easement.

In your letter, you request an interpretation as to whether:

A. The City of Calais is a government agency under the definition of "exclusion zone" within § 193.2007; and

B. The City of Calais legally controls all activities on the Devil's Head property, as long as the LNG facility is in operation, in accordance with the thermal exclusion zone requirements of § 193.2057.

Pursuant to 49 U.S.C. 60101 et seq., PHMSA prescribes and enforces standards and regulations that apply to the LNG facilities used in the transportation of gas by pipeline. The regulations in 49 CFR Part 193 govern siting, design, installation, and construction of new and some significantly altered LNG facilities. Section 193.2057 of those regulations states that "[e]ach LNG container and LNG transfer system must have a thermal exclusion zone in accordance with section 2.2.3.2 ofNFPA 59A (incorporated by reference, see § 193.2013)" with certain exceptions not relevant to this discussion. An "exclusion zone" is defined in § 193.2007 to mean "an area surrounding an LNG facility in which an operator or government agency legally controls all activities in accordance with § 193.2057 [for thermal exclusion zones] and § 193.2059 [for dispersion exclusion zones] for as long as the facility is in operation."

In accordance with 49 CFR § 190.11, PHMSA provides the following written interpretation and guidance concerning these regulations:

Answer to A: Yes, PHMSA considers the City of Calais to be a government agency under the definition of "exclusion zone" within § 193.2007.

Answer to B: Yes, PHMSA finds the City of Calais may control activities on the Devil' sHead property in accordance with § 193.2057, but we recognize that the City's authority to legally control all activities on the land is ultimately a matter of State law. Calais LNG is responsible for ensuring compliance with the thermal exclusion zone requirements for its LNG facility and the company is not alleviated from those obligations by virtue of the fact that the City of Calais, and not the operator, controls the activities of Devil's Head. Were certain facts to change in the future, such as a change in ownership of Devil's Head or to usage of the land, Calais LNG would still be responsible for ensuring its facility remains in compliance with 49 CFR Part 193.

I hope that this information is helpful to you. If I can be of further assistance, please contact me at (202) 366-4046.

Sincerely,

John A. Gale Director, Office of Regulations

Regulation Sections