Regarding importing liquified natural gas

1. UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
IN THE MATTER OF )
) Docket No. CP12-498
APPLICATION OF )
THE GAS COMPANY, LLC )
FOR AUTHORIZATION UNDER SECTION 3 )
OF THE NATURAL GAS ACT )
)
SIERRA CLUB’S MOTION TO INTERVENE, PROTEST, AND COMMENTS
Nathan Matthews Kathleen Krust
Ellen Medlin Paralegal
Associate Attorneys Sierra Club Environmental Law Program
Sierra Club Environmental Law Program 85 2nd St., Second Floor
85 2nd St., Second Floor San Francisco, CA 94105
San Francisco, CA 94105 (415) 977-5696 (tel)
(415) 977-5646 (tel)
(415) 977-5793 (fax)

2. Table of Contents
I. Sierra Club Should be Granted Intervention ................................................................ 2
II. Information Regarding the Applicant & Service ........................................................... 3
III. FERC’s Legal Obligations ............................................................................................... 5
A. Natural Gas Act .......................................................................................................... 5
1. FERC’s Jurisdiction Under the Natural Gas Act ....................................................... 5
a. Sierra Club Does Not Contest the Company’s Assertion that FERC Has
Jurisdiction ........................................................................................................ 5
b. If FERC Determines That it Lacks Jurisdiction, Then the State of Hawaii Has
Jurisdiction Over the Company’s Proposal ....................................................... 5
2. FERC’s Substantive Obligations Under the Natural Gas Act ................................... 6
B. National Environmental Policy Act ............................................................................ 8
C. Endangered Species Act ........................................................................................... 10
D. National Historic Preservation Act ........................................................................... 11
IV. Effects of the Proposed Project .................................................................................. 12
A. FERC Must Consider the Effects of All Three Phases of the Company’s Proposed
Facilities and May Not Analyze Phase 1 in Isolation ................................................ 12
1. NEPA Requires FERC to Analyze All Three Phases in a Single NEPA Document ... 13
2. Even if FERC Were Not Required to Analyze All Three Phases in a Single NEPA
Document, Comprehensive Review is Prudent Here ........................................... 15
3. FERC Must, at a Bare Minimum, Analyze the Cumulative Impacts of All Three
Facilities................................................................................................................. 16
B. FERC Should Prepare an EIS for the Three-Phase Project ....................................... 16
1. An EIS is Appropriate ............................................................................................ 16
2. Even if FERC Refuses to Prepare An EIS, it Must, at a Minimum, Take Public
Comment on the EA .............................................................................................. 17
C. Direct Impacts of the Proposed Facilities ................................................................ 17
1. Air Emissions ......................................................................................................... 17
2. Water and Aquatic Habitat Impacts ..................................................................... 21
3. Noise, Light, Traffic, and Safety Issues.................................................................. 22
4. Fish and Wildlife.................................................................................................... 22
D. FERC Should Obtain Additional Information Enabling it to Analyze the Proposal’s
Indirect Effects ......................................................................................................... 23
E. The Proposed Project’s Effects on Development of Renewable Energy Resources in
Hawaii ...................................................................................................................... 24
F. Effects of the Proposal on Greenhouse Gas Emissions in Hawaii ........................... 26
G. Effects of The Additional Gas Production that Exports Will Induce ........................ 31
1. Effects Related to Induced Drilling ....................................................................... 31
a. The Company’s Imports of Natural Gas Will Induce Additional Natural Gas
Production....................................................................................................... 32
b. FERC Must Consider Induced Production ....................................................... 32
c. FERC Is Required to Consider Induced Production Notwithstanding Its
Decision Not to Do So in Sabine Pass ............................................................. 34

3. d. Natural Gas Production is a Major Source of Air Pollution ............................ 36
i. Air Pollution Problems from Natural Gas ................................................. 37
ii. EPA’s Air Rules Will Not Fully Address These Air Pollution Problems ...... 45
e. Gas Production Disrupts Landscapes and Habitats ........................................ 45
f. Gas Production Poses Risks to Ground and Surface Water ............................ 48
i. Water Withdrawals ................................................................................... 48
ii. Fracturing .................................................................................................. 49
iii. Waste Management ................................................................................. 53
H. The Existing Record Demonstrates that The Company’s Application Is Contrary to
The Public Interest. .................................................................................................. 56
V. The EIS Must Consider an Adequate Range of Alternatives ....................................... 57
VI. Conclusion ................................................................................................................... 58

4. UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
IN THE MATTER OF )
) Docket No. CP12-498
APPLICATION OF )
THE GAS COMPANY, LLC )
FOR AUTHORIZATION UNDER SECTION 3 )
OF THE NATURAL GAS ACT )
)
SIERRA CLUB’S MOTION TO INTERVENE, PROTEST, AND COMMENTS
The Gas Company, LLC (“the Company”) requests Federal Energy Regulatory
Commission (“FERC”) authorization for the first of three phases of facilities that,
together, would be used, among other things, to receive, store, transport, and regasify
liquefied natural gas (“LNG”) sourced from liquefaction facilities in the continental
United States and transported by ship to Hawaii. The Company’s application focuses on
the first phase of these operations, which would include (1) a fleet of cryogenic
intermodal, or “ISO,” containers that will be transported to Hawaii by cargo ship, (2) the
use of existing storage facilities or secured lots to store the ISO containers after they
arrive in Hawaii, and (3) mobile LNG regasification units that would be used to inject the
gas into the Company’s distribution pipeline or deliver it to end-use customers.
Sierra Club moves to intervene in FERC docket CP12-498 to protect our members’
interests in the local environment, which will be impacted by this and the other phases
of the proposed operations. We also seek to protect our members’ interests in the
broader environment that will be affected by the import of LNG into Hawaii and the
increase in domestic natural gas production that this new market for LNG will induce.
In conjunction with this motion to intervene, Sierra Club offers comment on the need
for FERC to comprehensively examine the local environmental impacts of all three
phases of the proposed LNG import operations – rejecting the applicant’s improper
request to segment review – as well as the operations’ impact on the development of
renewable energy resources in Hawaii. We also reiterate our contention that FERC must
analyze the effects of induced production. Although FERC recently refused to consider
induced production in a similar proceeding regarding Sabine Pass LNG, the Sabine Pass
decisions were wrongly decided and do not bind FERC here.
1

5. I. Sierra Club Should be Granted Intervention
FERC regulations permit intervention if “the movant has or represents an interest which
may be directly affected by the outcome of the proceeding” or “the movant’s
intervention is in the public interest.” FERC R. 214, 18 C.F.R. § 385.214(b)(2). This low
hurdle rightly reflects FERC’s Natural Gas Act responsibilities: FERC is seeking to
determine the public interest on matters that have weighty implications for the country,
and so naturally benefits from hearing views from many perspectives as it weighs LNG
terminal applications. Allowing intervention upon a clear statement of interest ensures
that the record is well built and that all arguments are carefully presented.
Sierra Club easily satisfies both of these alternative standards for intervention. Sierra
Club members live and work throughout the area that will be affected by the Company’s
proposed operations, including in the regions adjacent to the proposed operations and
in regions near the gas fields and liquefaction facilities necessary to supply the plant.
The Club currently has 4,126 members in Hawaii and 598,848 members overall.
Declaration of Yolanda Andersen at ¶ 7.1 Sierra Club’s asserted rights and interests in
this matter include, but are not limited to, its interests in the following:
- The environmental consequences directly attributable to the construction, siting,
and operation of the proposed project, including emissions and other pollution
associated with the gasification process, environmental damage associated with
facility construction and operation in the later phases of the proposed project,
environmental impacts caused by hauling and shipping traffic, and other phases
of operation.
- The environmental and economic consequences of any expansion or change in
natural gas production, especially in shale gas plays, as a result of increased use
of natural gas in Hawaii. The Company anticipates sourcing its LNG from
liquefaction plants in the continental United States, although it does not analyze
the environmental consequences of producing gas to supple the liquefaction
plans. Sierra Club members living in the gas-producing regions that supply gas
for the proposed operations will be affected by the damage to air, land, and
water resources caused by the increased development of natural gas, and the
public health risks caused by these harms.
- The impacts of importing gas into Hawaii through the proposed facilities,
whether individually or in concert with imports from other terminals that may be
proposed in the future. In particular, the Club works to promote the
development of renewable energy and energy efficiency resources in Hawaii and
elsewhere, and to reduce U.S. and global dependence on fossil fuels, including
coal, gas, and oil. Since the import of LNG will impact Hawaii’s energy future,
1
Attached as Exhibit 1.
2

6. including its future ability to transition from fossil fuel energy to renewables,
Sierra Club’s interests are directly implicated by the outcome of this proceeding.
- The public disclosure, in National Environmental Protection Act documents and
other documents, of all environmental, cultural, social, and economic
consequences of the Company’s proposal, and of all alternatives to that
proposal.
In short, Sierra Club’s members have vital economic, aesthetic, spiritual, personal, and
professional interests in the proposed project.
Sierra Club has demonstrated the vitality of these interests in many ways. Sierra Club
runs national advocacy and organizing campaigns dedicated to reducing American
dependence on fossil fuels, including natural gas, and to protecting public health. These
campaigns, including its Beyond Coal campaign and its Beyond Natural Gas campaign,
are dedicated towards promoting a swift transition away from fossil fuels and to
reducing the impacts of any remaining natural gas extraction. The Club’s Hawaii
Chapter also works to transition Hawaii away from fossil fuel dependence and toward
greater reliance on energy efficiency and renewable energy.
Accordingly, Sierra Club satisfies both of Rule 214’s alternative standards, and FERC
must grant intervention here. See Sabine Pass Liquefaction, LLC, 139 FERC ¶ 61,039 P 15
(Apr. 16, 2012) (granting Sierra Club’s motion to intervene based on similar interests).2
II. Information Regarding the Applicant & Service
Pursuant to 18 C.F.R. § 385.203(b)(1)-(2), Sierra Club states that the exact name of the
movant is the Sierra Club, and the movant’s principal place of business is 85 2nd St.,
Second Floor, San Francisco, CA, 94105.
Pursuant to 18 C.F.R. § 385.203(b)(3), Sierra Club identifies the following persons for
service of correspondence and communications regarding this application:
2
If any other party opposes this motion, Sierra Club respectfully requests leave to reply.
Cf. 10 C.F.R. §§ 590.302, 590.310 (providing for procedural motions in natural gas
import/export proceedings before DOE).
3

7. Nathan Matthews
Ellen Medlin Kathleen Krust3
Associate Attorneys Paralegal
Sierra Club Environmental Law Program Sierra Club Environmental Law Program
85 2nd St., Second Floor 85 2nd St., Second Floor
San Francisco, CA 94105 San Francisco, CA 94105
(415) 977-5695 (tel) (415) 977-5696 (tel); (415) 977-5793 (fax)
3
The Sierra Club respectfully requests that the Commission add all three of the
individuals listed to the service list, notwithstanding 18 C.F.R. § 385.203(b)(3), which
limits service to two individuals.
4

8. III. FERC’s Legal Obligations
FERC has significant substantive and procedural obligations to fulfill before it can act on
the Company’s proposal. We discuss the scope of some of those obligations created by
the Natural Gas Act, the National Environmental Policy Act, the Endangered Species Act,
and the National Historic Preservation Act, here, before discussing the impacts of the
proposal.
A. Natural Gas Act
1. FERC’s Jurisdiction Under the Natural Gas Act
a. Sierra Club Does Not Contest the Company’s Assertion that FERC Has
Jurisdiction
Sierra Club does not contest the Company’s assertion that FERC has jurisdiction over the
Company’s application under the Natural Gas Act, which gives FERC “authority to
approve or deny an application for the siting, construction, expansion, or operation of
an LNG terminal,” 15 U.S.C. § 717b(e)(1), and defines “LNG terminal” to include
“natural gas facilities . . . used to receive, unload, load, store, transport, gasify, liquefy,
or process natural gas that is . . . transported in interstate commerce by waterborne
vessel.” Id. § 717a(11).
b. If FERC Determines That it Lacks Jurisdiction, Then the State of Hawaii Has
Jurisdiction Over the Company’s Proposal
Although the Club does not contest FERC’s jurisdiction, we do not agree with the
Company that, if FERC concludes it lacks jurisdiction over the Company’s application,
that conclusion “would result in a regulatory gap with respect to [the Company’s]
activities, as neither the Commission nor the state would have jurisdiction.” App. at 33.
As explained below, if FERC lacks jurisdiction, then state and local authorities, including
the Hawaii Public Utilities Commission, have jurisdiction over the Company’s proposal.
The Company’s “regulatory gap” argument is based on section 3(e) of the Natural Gas
Act, which gives FERC “exclusive authority to approve or deny an application for the
siting, construction, expansion, or operation of an LNG terminal.” 15 U.S.C. §
717b(e)(1) (emphasis added). The Company argues that, even if some exception
prevents FERC from exercising authority over the Company’s application, section 3(e)
nonetheless precludes any other entity – such as the state – from exercising jurisdiction.
App. at 33. In particular, the Company points to the so-called “Hinshaw exception,”
which states that the Natural Gas Act “shall not apply to any person engaged in or
legally authorized to engage in the transportation in interstate commerce or the sale in
interstate commerce for resale, of natural gas received by such person from another
5

9. person within or at the boundary of a State if all the natural gas so received is ultimately
consumed within such State, or to any facilities used by such person for such
transportation or sale, provided that the rates and service of such person and facilities
be subject to regulation by a State commission.” 15 U.S.C. § 717(c). According to the
Company, “if the Hinshaw exemption were deemed to apply to the siting, construction,
expansion and operation of an LNG terminal, the relevant state would have no
jurisdiction.” App. at 33.
The Company’s argument makes little sense, for two reasons. First, the Hinshaw
exception could not possibly leave the proposed project in a total regulatory vacuum
because it only applies to projects “subject to regulation by a State commission.” 15
U.S.C. § 717(c). Here, then, the exception could only apply if the project were under the
jurisdiction of the Hawaii Public Utilities Commission.
Second, and more broadly, section 3(e) merely clarifies that, where FERC has authority
over an LNG terminal, its authority is exclusive. This provision, which was added
through the Energy Policy Act of 2005, was not meant to abrogate Congress’s
longstanding policy, expressed in the Hinshaw exception, of “leav[ing]” to the states
jurisdiction over “companies engaged in the distribution of natural gas exclusively in the
States.” Gen’l Motors Corp. v. Tracy, 519 U.S. 278, 293 (1997). If FERC concludes that it
has no authority over the Company’s application – because it determines that the
Hinshaw exception applies, or for any other reason – then the application falls under the
ordinary jurisdiction of the state of Hawaii, including local authorities and the Hawaii
Public Utilities Commission.
2. FERC’s Substantive Obligations Under the Natural Gas Act
Section 3(a) of the Natural Gas Act requires FERC to determine whether the siting,
construction, and operation of the Company’s proposed terminal facilities are
“consistent with the public interest.” 15 U.S.C. § 717b(a), DOE Delegation Order No. 00-
044.00A at 1.21(A) (effective May 16, 2006). Courts, FERC, and DOE/FE, which makes
analogous “public interest” determinations for facilities that import or export natural
gas outside the U.S., have all interpreted the “public interest” at issue in these
provisions as including environmental impacts.
Both the Supreme Court and the D.C. Circuit Court of Appeals have held that the Natural
Gas Act’s public interest provisions encompass environmental concerns. While the
public interest inquiry is rooted in the Natural Gas Act’s “fundamental purpose [of]
assur[ing] the public a reliable supply of gas at reasonable prices,” United Gas Pipe Line
Co v. McCombs, 442 U.S. 529, 536 (1979), the Natural Gas Act also grants FERC
“authority to consider conservation, environmental, and antitrust questions.” NAACP v.
Fed. Power Comm’n, 425 U.S. 662, 670 n.4 (citing 15 U.S.C. § 717b as an example of a
public interest provision); n.6 (explaining that the “public interest” referred to in § 717b
includes environmental considerations) (1976). In interpreting an analogous public
6

10. interest provision applicable to hydroelectric power and dams, the Court has explained
that the public interest determination “can be made only after an exploration of all
issues relevant to the ‘public interest,’ including future power demand and supply,
alternate sources of power, the public interest in preserving reaches of wild rivers and
wilderness areas, the preservation of anadromous fish for commercial and recreational
purposes, and the protection of wildlife.” Udall v. Fed. Power Comm'n, 387 U.S. 428, 450
(1967) (interpreting § 7(b) of the Federal Water Power Act of 1920, as amended by the
Federal Power Act, 49 Stat. 842, 16 U.S.C. § 800(b)). Other courts have applied this Udall
holding to the Natural Gas Act. See, e.g., N. Natural Gas Co. v. Fed. Power Comm'n, 399
F.2d 953, 973 (D.C. Cir. 1968) (interpreting section 7 of the Natural Gas Act). 4
FERC has acknowledged that environmental issues weigh into FERC’s public interest
calculus. In FERC’s recent order approving siting, construction, and operation of LNG
export facilities in Sabine Pass, Louisiana, FERC considered potential environmental
impacts of the terminal as part of its public interest assessment. Sabine Pass
Liquefaction, LLC, 139 FERC ¶ 61,039, PP 29-30 (Apr. 14, 2012).5
DOE – which, again, makes public interest determinations analogous to FERC’s – has
reached the same conclusion. Deputy Assistant Secretary Smith recently testified that
“[a] wide range of criteria are considered as part of DOE’s public interest review
process, including . . . U.S. energy security . . . [i]mpact on the U.S. economy . . .
[e]nvironmental considerations . . . [and] [o]ther issues raised by commenters and/or
interveners deemed relevant to the proceeding.” The Department of Energy’s Role in
Liquified Natural Gas Export Applications: Hearing Before the S. Comm. on Energy and
Natural Resources, 112th Cong. 4 (2011) (testimony of Christopher Smith, Deputy
Assistant Secretary of Oil and Gas).6 DOE rules require export applicants to provide
information documenting “[t]he potential environmental impact of the project.” 10
C.F.R. § 590.202(b)(7). In a previous LNG export proceeding, DOE determined that the
public interest inquiry looks to “domestic need” as well as “other considerations,”
including the environment. Phillips Alaska Natural Gas Corporation and Marathon Oil
Company, 2 FE ¶ 70,317, DOE FE Order No. 1473, *22 (April 2, 1999); accord Opinion
and Order Conditionally Granting Long-Term Authorization to Export [LNG] from Sabine
Pass LNG Terminal to Non-Free Trade Agreement Nations (“Sabine Pass”), DOE/FE Order
2961 at 29 (May 20, 2011) (acknowledging that the public interest inquiry extends
beyond effects on domestic natural gas supplies). Finally, DOE has applied its “policy
4
Further support for the inclusion of environmental factors in the public interest
analysis is provided by NEPA, which declares that all federal agencies must seek to
protect the environment and avoid “undesirable and unintended consequences.” 42
U.S.C. § 4331(b)(3).
5
Sierra Club contends that other aspects of this order were wrongly decided, as was
FERC’s subsequent denial of Sierra Club’s petition for rehearing, as we explain below.
6
Attached as Exhibit 2.
7

11. guidelines” regarding the public interest to focus review “on the domestic need for the
natural gas proposed to be exports; whether the proposed exports pose a threat to the
security of natural gas supplies, and any other issue determined to be appropriate.”
Sabine Pass at 29 (citing 49 Fed. Reg. 6,684 (Feb. 22, 1984)) (emphasis added).7
Accordingly, there is consensus among the pertinent authorities that public interest
inquiries mandated by the Natural Gas Act, including those undertaken by FERC, must
take into account the environmental effects of the action under consideration.
B. National Environmental Policy Act
NEPA requires federal agencies to consider and disclose the “environmental impacts” of
proposed agency actions. 42 U.S.C. § 4332(C)(i). This requirement is implemented
through a set of procedures that “insure [sic] that environmental information is
available to public officials and citizens before decisions are made and before actions are
taken.” 40 C.F.R. § 1500.1(b) (emphases added). Agencies must “carefully consider [ ]
detailed information concerning significant environmental impacts” and NEPA
“guarantees that the relevant information will be made available” to the public. Dep’t
of Transp. v. Public Citizen, 541 U.S. 752, 768 (2004) (quoting Robertson v. Methow
Valley Citizens Council, 490 U.S. 332, 349 (1989)). The Council on Environmental Quality
(“CEQ”) directs agencies to “integrate the NEPA process with other planning at the
earliest possible time to insure that planning and decisions reflect environmental
values.” 40 C.F.R. § 1501.2.
Here, as discussed in part IV.B below, FERC must prepare a full environmental impact
statement (“EIS”), either in addition to or in place of the environmental assessment
(“EA”) FERC has already announced an intention to prepare.8 NEPA requires an EIS
where a proposed major federal action would “significantly affect[] the quality of the
human environment.” 42 U.S.C. § 4332(C). The significance of effects is determined by
both the context and intensity of the proposed action. 40 C.F.R. § 1508.27. If there is a
“substantial question” as to the severity of impacts, an EIS must be prepared. See
Klamath Siskiyou Wildlands Center v. Boody, 468 F.3d 549, 561-62 (9th Cir. 2006)
(holding that the “substantial question” test sets a “low standard” for plaintiffs to meet).
If it is not clear that a proposal will “significantly” affect the environment, the agency
may prepare an EA to determine whether an EIS is necessary. 40 C.F.R. § 1508.9. FERC
regulations provide that an EIS is “normally” required for “[a]uthorization under sections
7
DOE/FE’s policy guidelines provide only persuasive authority in FERC proceedings. Even
before DOE/FE, these guidelines are merely guidelines: they “cannot create a norm
binding the promulgating agency.” Panhandle Producers & Royalty Owners Ass’n v.
Econ. Reg. Admin., 822 F.2d 1105, 1110-11 (D.C. Cir. 1987).
8
Notice of Application, The Gas Company, LLC, 77 Fed. Reg. 60,972 (Oct. 5, 2012).
8

12. 3 or 7 of the Natural Gas Act and DOE Delegation Order No. 0204–112.” 18 C.F.R. §
380.6.
Here, as discussed in more detail in parts IV.A and IV.B below, FERC is obligated to
consider all three phases of the Company’s proposed LNG terminal together, and must
prepare a single EIS to fulfill this obligation. Because the three-phased proposal calls for
construction and operation of new LNG import facilities and supporting facilities, there
is at the very minimum a “substantial question” as to whether the project will
significantly affect the environment. In other proceedings where proposed LNG export
facilities would be constructed substantially outside existing terminal sites, FERC has
determined that an EIS is appropriate.9
An EIS must describe:
i. the environmental impact of the proposed action,
ii. any adverse environmental effects which cannot be
avoided should the proposal be implemented,
iii. alternatives to the proposed action,
iv. the relationship between local short-term uses of
man’s environment and the maintenance and
enhancement of long-term productivity, and
v. any irreversible and irretrievable commitments of
resources which would be involved in the proposed
action should it be implemented.
42 U.S.C. § 4332(C). The alternatives analysis “is the heart of the environmental impact
statement.” 40 C.F.R. § 1502.14. FERC must take care not to define the project purpose
so narrowly as to prevent the consideration of a reasonable range of alternatives to
actions under consideration by FERC. See, e.g., Simmons v. U.S. Army Corps of Eng’rs,
120 F.3d 664, 666 (7th Cir. 1997). If FERC did otherwise, it would lack “a clear basis for
choice among options by the decisionmaker and the public.” See 40 C.F.R. § 1502.14.
9
Notice of Intent to Prepare an Environmental Impact Statement for the Planned Jordan
Cove Liquefaction and Pacific Connector Pipeline Projects, FERC Dockets PF12-7 and
PF12-17 (Aug. 2, 2012) (EIS for proposed greenfield facility), Freeport LNG Development,
L.P., Freeport LNG Expansion, L.P., FLNG Liquefaction LLC; Supplemental Notice of Intent
To Prepare an Environmental Impact Statement for the Planned Liquefaction Project, 77
Fed. Reg. 43589 (July 25, 2012) (EIS where addition of liquefaction and export facilities
to existing import terminal will involve, among other things, disturbance of 610.7 acres
and permanent occupation of 215.1 acres).
9

13. An EIS must also describe the direct and indirect effects, and cumulative impacts of, a
proposed action. 40 C.F.R §§ 1502.16, 1508.7, 1508.8; N. Plains Resource Council v.
Surface Transp. Bd., 668 F.3d 1067, 1072-73 (9th Cir. 2011). These terms are distinct
from one another: Direct effects are “caused by the action and occur at the same time
and place.” 40 C.F.R. § 1508.8(a). Indirect effects are also “caused by the action” but:
are later in time or farther removed in distance, but are
still reasonably foreseeable. Indirect effects may include
growth inducing effects and other effects related to
induced changes in the pattern of land use, population
density or growth rate, and related effect on air and water
and other natural systems, including ecosystems.
40 C.F.R. § 1508.8(b). Cumulative impacts, finally, are not causally related to the action.
Instead, they are:
the impact on the environment which results from the
incremental impact of the action when added to other
past, present, and reasonably foreseeable future actions
regardless of what agency (Federal or non-Federal) or
person undertakes such other actions. Cumulative impacts
can result from individually minor but collectively
significant actions taking place over a period of time.
40 C.F.R. § 1508.7. The EIS must give each of these categories of effect fair emphasis.
Agencies may also prepare “programmatic” EISs, which address “a group of concerted
actions to implement a specific policy or plan; [or] systematic and connected agency
decisions allocating agency resources to implement a specific statutory program or
executive directive.” 40 C.F.R. § 1508.17(b)(3); see also 10 C.F.R. § 1021.330 (DOE
regulations discussing this possibility). As we have discussed elsewhere, such an EIS is
appropriate here.
C. Endangered Species Act
The Endangered Species Act (ESA) directs that all agencies “shall seek to conserve
endangered species.” 16 U.S.C. § 1531(c)(1). Consistent with this mandate, FERC must
ensure that, if it approves the Company’s proposed project, the approval “is not likely to
jeopardize the continued existence of any endangered species . . . or result in the
destruction or adverse modification of [critical] habitat of such species.” 16 U.S.C. §
1536(a)(2). “Each Federal agency shall review its actions at the earliest possible time to
determine whether any action may affect listed species or critical habitat.” 50 C.F.R. §
402.14(a); see also 16 U.S.C. § 1536(a)(2).
10

14. FERC must first conduct a biological assessment, including the “results of an on-site
inspection of the area affected,” “[t]he views of recognized experts on the species at
issue,” a review of relevant literature, “[a]n analysis of the effects of the action on the
species and habitat, including consideration of cumulative effects, and the results of any
related studies,” and “[a]n analysis of alternate actions considered by the Federal
agency for the proposed action.” See 50 C.F.R. § 402.12(f). If that assessment
determines that impacts are possible, FERC must enter into formal consultation with the
Fish and Wildlife Service and the National Marine and Fisheries Service, as appropriate,
to avoid jeopardizing any endangered species or adversely modifying its habitat as a
consequences of its approval of The Company’s proposal. 16 U.S.C. § 1536(a), (b).
As we discuss in part IV.B below, available information indicates a possibility of such
effects here. The proposed project is likely to adversely affect fish and wildlife by
directly disturbing terrestrial and aquatic habitat. Moreover, FERC’s ESA review must
consider not just the effects of the project at the proposed site, but the effects of
increased gas production across the full region the plant affects.
D. National Historic Preservation Act
FERC must also fulfill its obligations under the National Historic Preservation Act
(“NHPA”) to “take into account the effect of the undertaking on any district, site,
building, structure, or object that is included in or eligible for inclusion in the National
Register.” 16 U.S.C. § 470f; see also Pit River Tribe v. U.S. Forest Serv., 469 F.3d 768, 787
(9th Cir. 2006) (discussing the requirements of the NHPA). As the NHPA explains, “the
preservation of this irreplaceable heritage is in the public interest,” 16 U.S.C. §
470(b)(4).
FERC must, therefore, initiate the NHPA section 106 consultation and analysis process in
order to “identify historic properties potentially affected by the undertaking, assess its
effects and seek ways to avoid, minimize or mitigate any adverse effects on historic
properties.” 36 C.F.R. § 800.1(a). NHPA regulations make clear that the scope of a
proper analysis is defined by the project’s area of potential effects, see 36 C.F.R. § 800.4,
which in turn is defined as “the geographic area . . . within which an undertaking may
directly or indirectly cause alterations in the character or use of historic properties,” 36
C.F.R. § 800.16(d). This area is “influenced by the scale and nature of an undertaking,”
Id. The area of potential effects should sweep quite broadly here because, as in the ESA
and NEPA contexts, the reach of the Company’s proposal extends to the entire area in
which it will increase gas production. Thus, to approve The Company’s proposal, FERC
must first understand and mitigate its impacts on any historic properties which it may
affect.
The regulations governing this process provide that “[c]ertain individuals and
organizations with a demonstrated interest in the undertaking may participate as
11

15. consulting parties” either “due to the nature of their legal or economic relation to the
undertaking or affected properties, or their concern with the undertaking’s effects on
historic properties.” 36 C.F.R. § 800.2(c)(5). Sierra Club meets that test, because the
Club and its members are interested in preserving intact historic landscapes, for their
ecological and social value, and reside through the regions affected by the Company’s
proposal. Its members have worked for years to protect and preserve the rich human
and natural fabric of these regions, and would be harmed by any damage to those
resources. Sierra Club must therefore be given consulting party status under the NHPA
for this application.
IV. Effects of the Proposed Project
Although, as explained above, the Natural Gas Act’s public interest inquiry requires
discussion of environmental impacts, a fully informed discussion cannot take place until
the NEPA process has identified those impacts. Conversely, the Natural Gas Act’s
incorporation of a broad scope of environmental concerns into the public interest
determination facing FERC means the NEPA analysis must be similarly broad. “Because
‘NEPA places upon an agency the obligation to consider every significant aspect of the
environmental impact of a proposed action,’ the considerations made relevant by the
substantive statute driving the proposed action must be addressed in NEPA analysis.”
Oregon Natural Desert Ass’n v. Bureau of Land Mgmt., 625 F.3d 1092, 1109 (9th Cir.
2010) (quoting Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S.
519, 553 (1978)).
Sierra Club anticipates submitting further comments during the NEPA process, when
more information regarding the proposal, and FERC’s assessment of it, is available.10 At
this stage, however, Sierra Club provides comments regarding the scope of the
forthcoming NEPA review and a discussion of the already apparent adverse
environmental effects. We first discuss FERC’s obligation to analyze the impacts of all
three phases of the Company’s proposed terminal together, rather than segmenting its
analysis into three phases in the manner contemplated by the Company’s application.
We then discuss both impacts directly attributable to the proposed project and impacts
associated with the natural gas that will be imported and the additional natural gas
production those imports would induce.
A. FERC Must Consider the Effects of All Three Phases of the Company’s Proposed
Facilities and May Not Analyze Phase 1 in Isolation
10
As we discuss elsewhere, FERC must prepare an EIS, and not merely an EA, for this
project.
12

16. FERC must consider the effects of all three phases of the Company’s proposed facilities
together, and is not permitted to segment phase 1 from the other phases, as proposed
by the Company. This obligation stems from three basic NEPA principles. First, FERC’s
approval of the three-phased LNG terminal project constitutes a single federal action
whose impacts must be analyzed in a single, comprehensive NEPA document. Second,
even if FERC were not required to prepare a single NEPA document for all three
proposed project phases, that approach is plainly prudent given that the three phases
are integrally connected. Third, even if FERC refuses to prepare a single NEPA document
for all three phases, it must at a bare minimum analyze the cumulative impacts of the
three project phases.
1. NEPA Requires FERC to Analyze All Three Phases in a Single NEPA Document
First, NEPA requires FERC to analyze all three phases of the Company’s proposal
together, in a single NEPA document. NEPA regulations clearly state that “[p]roposals or
parts of proposals which are related to each other closely enough to be, in effect, a
single course of action shall be evaluated in a single impact statement.” 40 C.F.R. §
1502.4(a). 11 The regulations that clarify the appropriate scope of NEPA review also
provide guidance on which actions should be considered together in a single document.
“Connected actions” are “closely related and therefore should be discussed in the same
impact statement.” 40 C.F.R. § 1508.25(a)(1). Connected actions include those that are
“independent parts of a larger action and depend on the larger action for their
justification.” Id. § 1508.25(a)(1)(iii).
Here, the Company’s own description shows that the three phases of the proposal are
closely related, and are therefore “connected actions” that must be discussed together.
Id. § 1508.25(a)(1). The Company repeatedly emphasizes that its application concerns
“the first of three phases of facilities” that will operate “together,” as part of “a
comprehensive, multi-phased strategic plan.” App. at 1, 17; RR at 2. According to the
Company, “the Phase 1 Facilities are an integral part of the Company’s longer-term,
comprehensive LNG supply and distribution strategy, and will be a subset of the facilities
that will comprise the ultimate LNG terminal in Hawaii upon completion of Phases 2 and
3.” App. at 22 (emphasis added). These descriptions of the phases’ close relationship
show that they amount to “a single course of action” that must be analyzed in a single
NEPA document. See Fla. Wildlife Fed’n v. U.S. Army Corps of Eng’rs, 401 F. Supp. 2d
1298, 1312, 1318 (S.D. Fla. 2005) (requiring comprehensive analysis where the project
“was conceptualized as an integrated whole, progressing in phases” and the agency
“conceded that it was aware of plans for future development; that it will have
11
NEPA’s prohibitions on segmentation in the EIS context apply equally to
environmental assessments. See, e.g., Sierra Club v. Marsh, 769 F.2d 868, 881-82 (1st
Cir. 1985) (analyzing segmentation in the context of an EA).
13

17. jurisdiction over the next phases of development; and that it anticipates applications for
those phases”).
Moreover, phase 1 “depend[s] on [a] larger action” – the three-phase terminal proposal
– for its justification. 40 C.F.R. § 1508.25(a)(1)(iii). The Phase 1 facilities are intended to
lay the groundwork for a much larger-scale rollout of natural gas facilities in Hawaii.
Phase 1 will “introduce[e] LNG into the State” and “permit first responders and other
agencies in the State to become familiar with LNG prior to the installation of permanent
storage and vaporization facilities in Phases 2 and 3.” App. at 6. Where, as here, later
phases constitute a selling point or objective of an earlier phase, all phases must be
discussed together in a single document. Sierra Club v. Marsh, 769 F.2d 868, 878-79 (1st
Cir. 1985) (Breyer, J.).
The three phases of the proposal are not only connected actions, but they are also
“cumulative actions” that must be analyzed together under NEPA regulations.
“Cumulative actions, which when viewed with other proposed actions have cumulatively
significant impacts” should, like connected actions, “be discussed in the same impact
statement.” 40 C.F.R. § 1508.25(a)(2). As described more fully below, the three phases
of the project are likely to cause substantial direct harms to the local community and
local wildlife; they also will cause substantial harms associated with the upstream
drilling and liquefaction needed to supply the proposed terminal. Taken together, these
cumulatively significant impacts demonstrate that the three phases of the project are
“cumulative actions” that must be analyzed together. See Thomas v. Peterson, 753 F.2d
754, 759 (9th Cir. 1985) (proposed road, and timber sales the road was designed to
facilitate, were cumulative actions for which comprehensive analysis was required).
FERC and the Company may not escape comprehensive review by arguing that, because
phase 1 may alleviate a potential shortage during an upcoming pipeline inspection,
phase 1 therefore has independent utility from later project phases, allowing it to be
analyzed separately. See Hammond v. Norton, 370 F. Supp. 2d 226, 247 (D.D.C. 2005)
(analyzing whether the NEPA review for two pipeline projects could properly be
segmented based on whether the projects had “independent utility”; i.e., “whether one
project will serve a significant purpose even if a second related project is not built”
(internal quotation marks omitted)). The Company surely has an alternate plan in place
for dealing with the routine inspection that must be completed in the coming months,
App. at 37. It cannot manufacture independent utility by insisting that LNG is suddenly
needed before the inspection takes place. “[M]anipulation of a project design to
conform to a concept of independent utility, particularly with the intention that a
permit be expedited, undermines the underlying purposes of NEPA” and will not cure a
segmentation problem. Fla. Wildlife Fed’n, 401 F. Supp. 2d at 1323.
Nor does the Supreme Court’s decision in Kleppe v. Sierra Club, 427 U.S. 390 (1976),
relieve FERC of its duty to prepare a comprehensive NEPA document for this three-
phase proposal. The Court held in Kleppe that, while NEPA “may require a
14

18. comprehensive impact statement in certain situations where several proposed actions
are pending at the same time,” an agency is not required to prepare such an EIS absent
a concrete “proposed action.” 427 U.S. at 401, 409. In Kleppe, the Department of
Interior and other federal agencies had prepared an EIS for a national mining program,
and the challengers argued that an additional, separate EIS for regional mining in the
Northern Great Plains should be prepared. Id. at 397-99. The Court rejected this
contention on the basis that there was “no proposal for a regional plan or program of
development.” Id. at 404. Here, by contrast, the Company has proposed an integrated,
three-phase LNG terminal project. Unlike in Kleppe, comprehensive review would be
tethered to a concrete project and would be neither unduly speculative nor impractical.
Moreover, even if Kleppe were not distinguishable here, comprehensive review would
still be required under later cases interpreting Kleppe. These cases have clarified that
Kleppe does not give agencies carte blanche to segment review of integrally connected
actions. The Fifth Circuit has held that Kleppe “leaves room for a court to prohibit
segmentation or require a comprehensive . . . [impact statement] for two projects, even
when one is not yet proposed, if an agency has egregiously or arbitrarily violated the
underlying purpose of NEPA.” Envtl. Defense Fund, Inc. v. Marsh, 651 F.2d 983, 999 n.
19 (5th Cir. 1981). The Ninth Circuit has also downplayed the significance of whether a
string of anticipated actions are formal “proposals,” at least where it “ma[kes] good
sense to analyze [them] as a whole.” Churchill Cnty. v. Norton, 276 F.3d 1060, 1078-79
(9th Cir. 2001). Under Marsh and Churchill County, FERC may not “arbitrarily segment[]”
phase 1 from subsequent project phases, and must instead prepare a comprehensive
NEPA analysis. Marsh, 651 F.3d at 999 n.19.
2. Even if FERC Were Not Required to Analyze All Three Phases in a Single NEPA
Document, Comprehensive Review is Prudent Here
Even if FERC were not required to analyze all three phases of the Company’s proposal
together, that is plainly the most prudent course. As mentioned, the Company
repeatedly insists that the three phases are integrally connected and share common
goals. App. at 2 (listing project goals), 4 (“The Phase 1 Facilities are the initial phase of,
and an integral component of, the Company’s longer-term, comprehensive LNG supply
and distribution strategy.”). Without comprehensive review, FERC will be unable to
make an informed decision at the outset about whether this strategy is in the public
interest. Indeed, as the Hawaii Department of Transportation points out in its
comments, the Company is proposing to proceed without any meaningful review of
local impacts. Acceding to this request could lead to significant complications later. For
example, if substantial local impacts later prompt FERC to disapprove or require
modifications to later phases of the project, the Company may have expended
significant resources for no useful purpose. Analyzing all impacts of the three-phase
project now will give FERC a full picture of the project’s impacts, avoiding wasteful early
resource expenditures and informing the public, including the local community, of the
Company’s longer-term plans.
15

19. 3. FERC Must, at a Bare Minimum, Analyze the Cumulative Impacts of All Three
Facilities
Even if FERC were not obligated, both by the law and by common sense, to prepare a
comprehensive NEPA document for all three phases of the proposed project, it must at
a bare minimum analyze the cumulative impacts of all three facilities. As mentioned
above, NEPA requires analysis of “the impact on the environment which results from the
incremental impact of the action when added to other past, present, and reasonably
foreseeable future actions.” 40 C.F.R. § 1508.7. Agencies must conduct a “useful
analysis of the cumulative impacts of past, present and future projects” in addition to
the proposal currently under consideration. City of Carmel-by-the-Sea v. U.S. Dep’t of
Transp., 123 F.3d 1142, 1160 (9th Cir. 1997). “Very broad and general statements
devoid of specific, reasoned conclusions” are not adequate; agencies must evaluate the
specific environmental impacts that are likely to follow as a result of the present action
and future ones. Churchill Cnty., 276 F.3d at 1080; see also Native Ecosystems Council v.
Dombeck, 304 F.3d 886, 894 (9th Cir. 2002).
Here, the future phases of the Company’s proposal are obviously “reasonably
foreseeable,” as they are described, in the Company’s application, as later portions of an
integrally related strategy. 40 C.F.R. § 1508.7. Further, taken together, the proposed
facilities would have a range of environmental impacts that will be far more significant
than those described in the application. FERC is required to consider the impacts of
these eminently foreseeable future phases together with those associated with the first
phase, so that the agency may clearly understand the impacts of embarking upon this
multi-phased project. Id.
B. FERC Should Prepare an EIS for the Three-Phase Project
1. An EIS is Appropriate
As mentioned in part III.B above, FERC must prepare a full EIS for this three-phase
proposal, either in addition to or in place of the EA that FERC has already announced an
intention to prepare.12 NEPA requires an EIS where a proposed major federal action
would “significantly affect[] the quality of the human environment.” 42 U.S.C. § 4332(C).
The significance of effects is determined by both the context and intensity of the
proposed action. 40 C.F.R. § 1508.27. If there is a “substantial question” as to the
severity of impacts, an EIS must be prepared. See Klamath Siskiyou, 468 F.3d at 561-62.
These direct impacts of the three-phased proposal are described in more detail in the
sections that follow. Although, in many instances, FERC will be required to request
additional information from the Company to adequately analyze the overall impacts of
12
Notice of Application, The Gas Company, LLC, 77 Fed. Reg. 60,972 (Oct. 5, 2012).
16

20. this three-phase project, it is plain that there is a substantial question as to whether the
project will have significant impacts.
2. Even if FERC Refuses to Prepare An EIS, it Must, at a Minimum, Take Public
Comment on the EA
Even if FERC refuses to prepare an EIS for the proposed project, it must at the very least
ensure opportunities for significant public input on any environmental assessment,
including allowing the public the opportunity to comment on the draft EA before it is
finalized.13 We echo the Hawaii Department of Transportation’s concerns that the
existing notices for the proposed project might otherwise “have limited public outreach
capability locally,” and echo the Department’s request that FERC “make sure that
adequate efforts [are] made . . . to solicit public comments.”14
C. Direct Impacts of the Proposed Facilities
The proposed facilities – including the transportation, storage, and regasification
equipment used during the phase 1 operations and the permanent storage tanks,
terminal construction, and associated infrastructure necessary for phases 2 and 3 – will
have a range of adverse direct environmental effects. Few of these impacts are
discussed in the application and environmental report submitted by the Company, but
FERC is required to analyze them to comply with its NEPA obligations. These impacts
include (but are not limited to) air pollution, disruption of aquatic habitat, increased
noise and light pollution, and impacts on fish and wildlife related to the preceding
impacts. Each of these impacts is contrary to the public interest and must be considered
in FERC’s analysis.
1. Air Emissions
The Company’s resource report states that no air quality issues are expected to result
from the operation of the phase 1 facilities, due to the type of equipment that will be
used, and, perhaps, to phase 1’s small scale. RR at 4. This analysis, however, breaks up
the larger, three-phase project into smaller components in precisely the manner NEPA
forbids. Churchill, 276 F.3d at 1076. FERC is required to engage in a fuller analysis,
13
The public may “have less opportunity to comment on an EA than on an EIS.” Sierra
Club v. Marsh, 769 F.3d at 875. Whereas draft EIS’s must be circulated for public
comment, 40 C.F.R. § 1503.1, the regulations require the agency to “involve . . . the
public, to the extent practicable,” in preparing environmental assessments, id. §
1501.4(b).
14
Comment of Hawaii Department of Transportation re: Gas Company, LLC Request for
Authorization to Operate Liquified Natural Gas Facilities, FERC Docket CP12-498 (“DOT
Comments”) at 2.
17

21. considering air pollution that can be expected from the larger-scale phase 2 and 3
operations as well.
As revealed in the environmental review documents for LNG import terminal proposals
that FERC has previously considered, LNG import terminals and associated infrastructure
can emit harmful quantities of a variety of air pollutants. For example, FERC’s EIS for the
Jordan Cove import terminal proposal that the agency considered several years ago
estimated approximately 41 tons per year (tpy) of particulate matter (PM), 177 tpy of
sulfur dioxide (SO2), 250 tpy or less of nitrogen oxides (NOx), 136 tpy of carbon
monoxide (CO), and 17 tpy of volatile organic chemicals (VOC).15 Significant additional
quantities of many of these pollutants – including an additional 169 tpy of NOx – were
expected from mobile sources associated with the project, id., and additional emissions
were expected from construction, id. at 4.11-17. In addition, the Jordan Cove EIS
predicted about 70,000 tons of carbon dioxide, a greenhouse gas, during construction,
and an additional 630,000 tons during annual operations. Id. at 4.11-30 to 31.
The Company’s application does not address emissions of these pollutants (in either the
operation and construction phases) or discuss their harmful effects. The application
thus underemphasizes their impact on the public interest.
Sierra Club expects to provide further comment on the Company’s emissions during the
NEPA public comment period. At this stage, we emphasize that the air emissions that
can be expected from the Company’s proposed three-phase terminal project can cause
extensive harmful impacts to human health and the environment. We briefly describe
these impacts below.
CO
CO can reduce oxygen delivery to the body's organs and tissues.16 CO can be
particularly harmful to persons with various types of heart disease, who already have a
reduced capacity for pumping oxygenated blood to the heart. “For these people, short-
term CO exposure further affects their body’s already compromised ability to respond
to the increased oxygen demands of exercise or exertion.”17
VOC and NOx
VOC and NOx emissions harm the environment by increasing the formation of ground-
level ozone (smog). Smog pollution harms the respiratory system and has been linked
to premature death, heart failure, chronic respiratory damage, and premature aging of
15
Jordan Cove Import Terminal EIS § 4.11 at 4.11-19, attached as Exhibit 3.
16
http://www.epa.gov/air/carbonmonoxide/health.html, attached as Exhibit 4.
17
Id.
18

22. the lungs.18 Smog may also exacerbate existing respiratory illnesses, such as asthma and
emphysema, or cause chest pain, coughing, throat irritation and congestion. Children,
the elderly, and people with existing respiratory conditions are the most at risk from
ozone pollution.19
Significant ozone pollution also damages plants and ecosystems.20 In addition, ozone
contributes substantially to global climate change over the short term. According to a
recent study by the United Nations Environment Program (UNEP), ozone is now the
third most significant contributor to human-caused climate change, behind carbon
dioxide and methane.21
GHGs
LNG terminals, such as the Jordan Cove import terminal proposal mentioned above, can
emit significant quantities of greenhouse gases. Although the Company’s proposed
facilities are smaller in scale than Jordan Cove, the Jordan Cove application provides a
sense of the order of magnitude of potential greenhouse gas emissions that FERC must
analyze. These greenhouse gas emissions will increase global warming, harming both
the local and global environments.
The impacts of climate change caused by greenhouse gases include “increased air and
ocean temperatures, changes in precipitation patterns, melting and thawing of global
glaciers and ice, increasingly severe weather events, such as hurricanes of greater
intensity and sea level rise.” A warming climate will also lead to loss of coastal land in
densely populated areas, shrinking snowpack in western states, increased wildfires, and
reduced crop yields. More frequent heat waves as a result of global warming have
18
EPA, Proposed New Source Performance Standards and Amendments to the National
Emissions Standards for Hazardous Air Pollutants for the Oil and Natural Gas Industry:
Regulatory Impact Analysis, 4-25 (July 2011), available at
http://www.epa.gov/ttnecas1/regdata/RIAs/oilnaturalgasfinalria.pdf and attached as
Exhibit 5 (hereinafter O&G NSPS RIA); Jerrett et al., Long-Term Ozone Exposure and
Mortality, New England Journal of Medicine (Mar. 12, 2009), available at
http://www.nejm.org/doi/full/10.1056/NEJMoa0803894#t=articleTop, attached as
Exhibit 6.
19
See EPA, Ground-Level Ozone, Health Effects, available at
http://www.epa.gov/glo/health.html attached as Exhibit 7; EPA, Nitrogen Dioxide,
Health, available at http://www.epa.gov/air/nitrogenoxides/health.html, attached as
Exhibit 8.
20
O&G NSPS RIA at 4-26.
21
Id. See also United Nations Environment Programme and World Meteorological
Organization, (2011): Integrated Assessment of Black Carbon and Tropospheric Ozone:
Summary for Decision Makers (hereinafter “UNEP Report,” available at http://
www.unep.org/dewa/Portals/67/pdf/Black_Carbon.pdf), at 7, attached as Exhibit 9.
19

23. already affected public health, leading to premature deaths. And threats to public
health are only expected to increase as global warming intensifies. For example, a
warming climate will lead to increased incidence of respiratory and infectious disease,
greater air and water pollution, increased malnutrition, and greater casualties from fire,
storms, and floods. Vulnerable populations—such as children, the elderly, and those
with existing health problems—are the most at risk from these threats.
Sulfur Dioxide
Sulfur dioxide causes respiratory problems, including increased asthma symptoms.
Short-term exposure to sulfur dioxide has been linked to increased emergency room
visits and hospital admissions. Sulfur dioxide also reacts in the atmosphere to form
particulate matter (PM), an air pollutant which causes a great deal of harm to human
health.22 PM is discussed separately below.
Particulate Matter
PM consists of tiny particles of a range of sizes suspended in air. Small particles pose
the greatest health risk. These small particles include “inhalable coarse particles,” which
are smaller than 10 micrometers in diameter (PM10), and “fine particles” which are less
than 2.5 micrometers in diameter (PM2.5). PM10 is primarily formed from crushing,
grinding or abrasion of surfaces; PM2.5 is primarily formed by incomplete combustion of
fuels or through secondary formation in the atmosphere.23
PM causes a wide variety of health and environmental impacts. PM has been linked to
respiratory and cardiovascular problems, including coughing, painful breathing,
aggravated asthma attacks, chronic bronchitis, decreased lung function, heart attacks,
and premature death. Sensitive populations, include the elderly, children, and people
with existing heart or lung problems, are most at risk from PM pollution.24 PM also
reduces visibility,25 and may damage important cultural resources.26 Black carbon, a
22
EPA, Sulfur Dioxide, Health, available at
http://www.epa.gov/air/sulfurdioxide/health.html, attached as Exhibit 10.
23
See EPA, Particulate Matter, Health, available at
http://www.epa.gov/pm/health.html, attached as Exhibit 11; BLM, West Tavaputs
Plateau Natural Gas Full Field Development Plan Final Environmental Impact Statement
(“West Tavaputs FEIS”), at 3-19 (July 2010), available at
http://www.blm.gov/ut/st/en/fo/price/energy/Oil_Gas/wtp_final_eis.html.
24
O&G NSPS RIA at 4-19; EPA, Particulate Matter, Health
25
EPA “Visibility – Basic Information” http://www.epa.gov/visibility/what.html, attached
as Exhibit 12.
26
See EPA, Particulate Matter, Health; West Tavaputs EIS, at 3-19; O&G NSPS RIA at 4-
24.
20

24. component of PM emitted by combustion sources such as flares and older diesel
engines, also warms the climate and thus contributes to climate change.27
Hydrogen Sulfide
Hydrogen sulfide is an air pollutant with toxic properties that smells like rotten eggs and
can lead to neurological impairment or death. Long-term exposure to hydrogen sulfide
is linked to respiratory infections, eye, nose, and throat irritation, breathlessness,
nausea, dizziness, confusion, and headaches.28 Hydrogen sulfide emissions may be
harmful even at low concentrations.29
2. Water and Aquatic Habitat Impacts
The Company reports no water or aquatic habitat impacts, again due to its failure to
disclose or analyze impacts associated with the second and third phases of the proposed
terminal. RR at 3. As explained, FERC is required to analyze all impacts that can be
expected as a result of the three-phase terminal proposal, including harm to local water
quality as a result of increased stormwater pollution and increased shipping traffic. We
briefly describe some of these impacts below.
Stormwater runoff from the proposed terminal can be expected to impair water quality.
As the National Marine Fisheries Service has asserted in connection with another LNG
terminal application, stormwater runoff associated with an LNG terminal can contain
“heavy metals, petroleum products and brake chemicals and compounds that are
deleterious to fish and fish habitat.”30
In addition, ship traffic inherent in LNG import activities can be expected to impair water
quality in Honolulu Harbor. As FERC explained in a prior EIS, LNG ship traffic causes
“resuspension of bottom sediments and resulting increases in turbidity.” 31 Separate
27
UNEP Report at 6; IPCC (2007) at Section 2.4.4.3.
28
EPA, Office of Air Quality Planning and Standards, Report to Congress on Hydrogen
Sulfide Air Emissions Associated with the Extraction of Oil and Natural Gas (EPA-453/R-
93-045), at ii (Oct. 1993) (hereinafter “EPA Hydrogen Sulfide Report”), attached as
Exhibit 13.
29
See James Collins & David Lewis, Report to CARB, Hydrogen Sulfide: Evaluation of
Current California Air Quality Standards with Respect to Protections of Children (Sept. 1,
2000), available at http://oehha.ca.gov/air/pdf/oehhah2s.pdf, attached as Exhibit 14.
30
Comment of National Marine Fisheries Service on Final Environmental Impact
Statement for the Jordan Cove Energy Liquefied Natural Gas Terminal and Pacific
Connector Gas Pipeline Project, FERC Docket CP07-441, at 2 (June 5, 2009) (hereinafter
“NMFS Comment on CP07-441”), attached as Exhibit 15. Further information is
provided in the final EIS prepared for that docket at section 4-3.43.
31
Jordan Cove CP07-441 EIS § 4.3.2.3, attached as Exhibit 16.
21

25. from effects on water quality, the frequent passage of LNG shipping traffic through the
bay, coupled with the large exclusion zones that may be maintained around these ships
for safety, will significantly disrupt other human users of the bay, including fishermen
and recreational boaters.
3. Noise, Light, Traffic, and Safety Issues
Construction and operation of the proposed project will cause significant increases in
local noise and light pollution, which will adversely impact nearby residents and wildlife.
The application fails to discuss such impacts in any detail, noting only the noise pollution
expected from LNG moving through above-ground piping connecting the containers to
be used in phase 1 to the regasification units used to inject them into the distribution
system. RR at 4. The Sierra Club reiterates the concerns, expressed by the Hawaii
Department of Transportation, that the proposed project will negatively impact the
businesses in the Domestic Commercial Fishing Village, which is adjacent to the
proposed operations in Honolulu Harbor.32 FERC is required to seriously analyze such
impacts under NEPA.
The Club also shares the Department’s concern that the proposed project may impact
the safety of nearby residents and motorists on the nearby highway, and echoes its
request that safety considerations be fully analyzed and safety measures fully discussed
and disclosed.33
Finally, the Club echoes the Department’s concern that the traffic impacts of the
proposed project be fully discussed and analyzed. The Company plans to use trucks to
haul LNG containers to various points on the Company’s distribution network, but fails
to provide any analysis of the impacts of this additional truck traffic. RR at 2. FERC is
required to discuss these impacts, and must also analyze cumulative traffic impacts
caused by all three phases of the Company’s proposal.
4. Fish and Wildlife
The proposed project is likely to adversely affect fish and wildlife by directly disturbing
terrestrial and aquatic habitat. Again, the Company has not made any attempt to
catalogue such impacts because its application’s discussion of impacts is improperly
limited to the impacts of phase 1. RR at 3. Considered together with phases 2 and 3,
the proposed operations – which will ultimately include a storage capacity of up to 10
millions gallons from permanent land-based storage facilities and potentially floating
32
DOT Comments at 1.
33
Id.
22

26. storage regasification units – will have substantial impacts on fish and wildlife. App. at
23.
Honolulu County, where the proposed project will be located, is home to the
endangered Hawaiian hoary bat, as well as 12 endangered and threatened bird species,
four endangered and threatened reptile species, and dozens of endangered plant
species.34 The presence of so many endangered species in the county raises the
significant possibility of species impacts, which FERC is required to consider carefully.
The County may also shelter other species of conservation interest. Honolulu Harbor,
which will be a delivery site for LNG during phase 1 and is likely to remain so during later
phases of the project, App. at 19, shelters spinner dolphins and, during the winter
months, humpback whales.35 Whales and dolphins can easily suffer injury or death as a
result of a ship collision, and the areas of greatest concern relative to ship strikes are
located near the harbor entrance.36 FERC is required to seriously assess the impacts of
the proposed LNG imports and the anticipated LNG terminal infrastructure on whales,
dolphins, and other local wildlife.
D. FERC Should Obtain Additional Information Enabling it to Analyze the Proposal’s
Indirect Effects
At present, the application fails to provide FERC with basic information regarding the
amount and likely source of the LNG to be used by the Gas Company. The Company
insists that all of the LNG it will use will come from the continental United States, App.
at 18, 21, 27, and mentions that it will come from liquefaction facilities such as those in
the northeast or Midwest, App. at 29. But the application does not even identify which
liquefaction facilities will supply the proposed operations. The application vaguely
mentions two companies that operate liquefaction facilities, Air Liquide and Praxair,
although it does not state where the facilities are located or where the operators obtain
their natural gas supplies. App. at 30. It also provides only a vague sense of how much
LNG the completed terminal facilities are expected to process and use, stating only that
the facilities will provide fuel for 75% of customer requirements, plus 400 MW of gas-
fired generation. App. at 23. Information about the extent and provenance of the LNG
34
U.S. Fish and Wildlife Service, Species by County Report, Honolulu County, available at
http://ecos.fws.gov/tess_public/countySearch!speciesByCountyReport.action?fips=1500
3, and attached as Exhibit 17.
35
Marc O. Lammers et al., The Occurrence and Distribution of Marine Mammals Along
Oahu’s Ewa/Honolulu Coast, Marine Mammal Research Program/Hawaii Institute of
Marine Biology Technical Report 20001, 3 (2000), available at
http://www.oceanwidescience.org/PDF/Navatek%20Final%20Report.PDF, and attached
as Exhibit 18.
36
Id. at 17.
23

27. that will be used by the proposed project would assist FERC in analyzing the project’s
impacts on Hawaii’s energy future, and could also assist the agency in analyzing the
extensive impacts of the drilling likely to be induced as a result of the Company’s
proposal. FERC should obtain this information to assist it in analyzing the proposal’s
impacts.
E. The Proposed Project’s Effects on Development of Renewable Energy Resources in
Hawaii
The proposed project will also have a variety of indirect effects. Chief among these is its
impact on the development of renewable energy resources in Hawaii. The Company
argues, without any real support, that the phase 1 facilities further the goals of the
Hawaii Clean Energy Initiative. The Company offers scant evidence for this contention,
however. FERC must not accept the Company’s arguments at face value and must
instead take a close look at the impact of LNG import on development of renewable
energy in the state.
Hawaii has made it a public policy priority to develop clean, renewable energy in the
state. As the Company’s application mentions, the Hawaii Clean Energy Initiative aims
“to achieve 70% clean energy by 2030 with 30% from efficiency measures, and 40%
coming from locally generated renewable sources.”37 As the Company recognizes,
however, the goals of the Clean Energy Initiative are not legally binding, although the
state’s legally binding renewable portfolio standard (RPS) has taken the first step
towards achieving the ambitious goals of the initiative. App. at 13 n.18.
Further, despite adoption of the RPS, there is still potential for delay or missteps in
achieving Hawaii’s renewable energy goals. The RPS allows utilities to avoid penalties
associated with a failure to meet RPS goals if they can demonstrate their “[i]nability to
acquire sufficient renewable energy due to lapsing of tax credits related to renewable
energy development” or even simply their “[i]nability to acquire sufficient cost-effective
renewable energy.” Haw. Rev. Stat. § 269-92(d). Hawaii still has significant progress left
to make before it achieves its renewable energy goals, and, as these exceptions
demonstrate, it is not certain that all of the goals will ultimately be achieved.
Accordingly, FERC must be attentive to the potential for the Company’s proposal to
impede or delay Hawaii’s achievement of its renewable energy objectives, keeping in
mind that Hawaii has already decided that swift deployment of renewable energy is in
the public interest. In particular, FERC must closely examine the company’s argument
that importing a new fossil fuel will assist Hawaii in transitioning to renewable energy.
Below, we examine each of the Company’s contentions in turn.
37
Hawaii Clean Energy Initiative, http://www.hawaiicleanenergyinitiative.org/.
24

28. First, the Company argues that LNG import will advance Hawaii’s clean energy goals
because “[u]tilizing a lower cost energy source such as natural gas would significantly
reduce the cost per kilowatt hour of electricity.” App. at 35. Even the Company’s claim
that natural gas will have a consistently low cost may be too facile; at a seminar
presented by the Company itself in August 2012, “an LNG industry consultant explained
that because of transport issues, wholesale LNG prices can vary by more than 25
times.”38 Given this variation, it is not clear that LNG will be consistently cheap for
Hawaii. Moreover, even assuming Hawaii can consistently access affordable LNG, it is
unclear how infrastructure facilitating the use of fossil fuel energy will assist Hawaii in
developing renewable energy resources. In fact, investors’ incentives to invest in
innovative renewable energy technologies may diminish if opportunities to invest in
more “familiar” fossil fuel technologies become available. App. at 6.
Indeed, the International Energy Agency expects that, in the United States alone, the
natural gas boom will result in a 10% reduction in renewables relative to a baseline
world without increased gas use and trade.39 In other words, as senior International
Energy Agency officials recently warned, “[r]enewable energy may be the victim of
cheap gas prices.”40 Researchers at the Renewable and Sustainable Energy Institute
agree: “Wind,” they observe, “had [before the fracking boom] been capable of
competing with natural gas generation on a cost basis, thanks to advances in technology
and a federal production tax credit. Installation of new renewable energy facilities has
now all but dried up, unable to compete on a grid now flooded with a low-cost, high-
energy fuel that can provide power on demand.”41 Pulitzer-prize winning oil and gas
historian Daniel Yergin agrees that “[a]bundant, relatively low-priced supplies now make
natural gas a highly competitive alternative to both nuclear and wind power.”42
38
Jeff Mikulina, LNG: Smart Public Policy Or Bridge To Nowhere?, Honolulu Civil Beat,
Oct. 8, 2012, available at http://www.civilbeat.com/posts/2012/10/08/17317-lng-smart-
public-policy-or-bridge-to-nowhere/, and attached as Exhibit 19.
39
International Energy Agency, Golden Rules for a Golden Age of Gas, Ch. 2 p. 80 (2012),
attached as Exhibit 20 and available at http://www.iea.org/publications/
freepublications/publication/WEO2012_GoldenRulesReport.pdf.
40
Fiona Harvey, 'Golden age of gas' threatens renewable energy, IEA warns, The
Guardian, May 29, 2012, available at
http://www.guardian.co.uk/environment/2012/may/29/gas-boom-renewables-agency-
warns, and attached as Exhibit 21.
41
Kevin Doran & Adam Reed, Natural Gas and Its Role
In the U.S. Energy Endgame, Yale Environment 360, Aug. 12, 2012, available at
http://e360.yale.edu/feature/natural_gas_role_in_us_energy_endgame/2561/, and
attached as Exhibit 22.
42
Daniel Yergin, Stepping on the Gas, The Wall St. Journal, Apr. 2, 2011, available at
http://resourceroyaltyllc.com/EducationalInformation/Articals/DanielYerginWSJ020420
11.pdf, and attached as Exhibit 23.
25

29. Bringing LNG into Hawaii accordingly introduces the potential for investment dollars
that might once have gone towards renewables development to be diverted to LNG
investments. In fact, investment in renewables may not even be possible – let alone
attractive – if the Company’s limited resources have been expended on new LNG
infrastructure.
The Company also states that “natural gas-fired electric generation could be used to
support the State’s renewable resources,” suggesting, perhaps, that substituting
Hawaii’s aging power plants with newer natural gas combined-cycle technologies would
reduce the cost of electricity and lower emissions. App. at 36. But Hawaii’s goal is not
to replace fossil fuel generation with more efficient fossil fuel generation – its goal is to
make fossil fuel generation unnecessary (or less necessary) by reducing demand for
power through energy efficiency or introducing renewables. See Haw. Rev. Stat. § 269-
91 (excluding “fossil-fueled qualifying facilities that sell electricity to electric utility
companies” from the set of combined heat and power systems that count towards
energy efficiency targets in the state’s renewable portfolio standard). The goal of
demand reduction is not advanced by the Company’s proposal.
Further, LNG imports, and even new combined-cycle natural gas plants, are not
necessary to development of renewable energy resources in Hawaii; indeed, they could
be detrimental to renewables’ development, for the reasons explained. Combined-cycle
power plants like those mentioned in the Company’s application, App. at 36, can be a
flexible complement to renewables, but they are not necessary for renewables
development. Hawaii can achieve the same reliability by taking advantage of smart
storage technologies, in addition to firm renewable energy sources. Moreover, even a
decision by Hawaii to upgrade its fossil fuel plants to better complement renewable
energy technologies does not depend on LNG import; the state could potentially
upgrade its existing power plants without introducing a new fossil fuel that has the
potential to divert dollars from renewable energy investments.
Finally, the Company points to a letter from Governor Abercrombie expressing support
for natural gas development in Hawaii. App. at 35; Ex. I. The letter suggests that “the
portion of power generation that would continue to use imported petroleum oil during
the transition to renewable energy could instead be converted to a potentially cheaper
and cleaner fuel such as liquefied natural gas.” App. at Ex. 1. The letter does not
grapple, however, with the potential for the introduction of natural gas to impede
investment in renewables and demand-side energy efficiency. FERC must give these
important questions close and careful attention before concluding that LNG import is in
the public interest.
F. Effects of the Proposal on Greenhouse Gas Emissions in Hawaii
Because the proposal could disrupt development of renewable energy technologies in
Hawaii, the proposal’s impacts on greenhouse gas emissions must be closely examined.
26

30. Even if the proposal enables Hawaii to switch away from a relatively carbon-intensive
fossil fuel like the petroleum-based synthetic natural gas the Company currently uses, its
utility in decreasing overall greenhouse gas emissions is questionable if it ultimately
discourages investment in renewable energy resources.
Moreover, even if the proposed project somehow had no impact on renewable energy
development, FERC would still be obligated to carefully analyze whether switching to
LNG will truly provide significant greenhouse gas emissions reductions, even if the LNG
is replacing synthetic natural gas (SNG) prepared from naphtha-based feedstock.43 App.
at 2. Throughout the application, the Company suggests that importing LNG into Hawaii
can provide an environmental benefit by helping Hawaii switch away from petroleum-
based fuel. See, e.g., App. at 17. But the available evidence demonstrates substantial
uncertainty as to the greenhouse gas reductions available through use of LNG.
First, on a global level, the IEA has concluded that high levels of gas production and
trade will produce “only a small net shift” in global greenhouse gas emissions, with
atmospheric CO2 levels stabilizing at over 650 ppm and global warming in excess of 3.5
degrees Celsius, “well above the widely accepted 2°C target.”44
Second, when LNG is imported into a new market to substitute for fuel oil or coal, the
available evidence indicates that this substitution is likely to cause little, if any,
reduction in global greenhouse gas emissions. As explained below, the production of
natural gas itself causes substantial greenhouse gas emissions. Additional energy is then
consumed in the transportation of the gas, with attendant greenhouse gas emissions.
Finally, as contemplated in the Company’s application, LNG must be regasified at the
import terminal, again consuming fuel and causing additional emissions. These
operations drastically increase the lifecycle greenhouse gas emissions of LNG, adding
between 24.7 and 27.5 tons of CO2e per MMBtu.45
43
As illustrated by Figure 1, below, SNG can be extraordinarily greenhouse gas intensive.
For the reasons explained in this section, however, FERC must not uncritically assume
that LNG is a significantly less GHG-intensive source, given the extensive greenhouse
gases emitted during production, liquefaction, transportation, and regasification.
44
IEA, Golden Rules at 80.
45
Paulina Jaramillo, W. Michael Griffin, H. Scott Matthews, Comparative Life-Cycle Air
Emissions of Coal, Domestic Natural Gas, LNG, and SNG for Electricity Generation, 41
Environ. Sci. Technol. 6,290 (2007) (Jaramillo 2007), available at
http://www.ce.cmu.edu/~gdrg/readings/2007/09/13/Jaramillo_ComparativeLCACoalNG
.pdf, and attached as Exhibit 24. The supporting information for this article is available
at http://pubs.acs.org/doi/suppl/10.1021/es063031o/suppl_file/
es063031osi20070516_042542.pdf, and attached as Exhibit 25 (“Jaramillo Supporting
Information”). An earlier, related report with some additional information is Paulina
Jaramillo, W. Michael Griffin, H. Scott Matthews, Comparative Life Cycle Carbon
27

31. Due to emissions from liquefaction, transportation and gasification, LNG generates
significantly more greenhouse gas emissions than domestic natural gas. For
perspective, natural gas combustion emits roughly 120 pounds of CO2e per MMBtu. See,
e.g., Jaramillo Supporting Info at 9. Using the above conservative figures, the process of
liquefying, transporting, and regasifying LNG accordingly emits 19% to 23% of the CO2e
emitted by natural gas combustion itself—a substantial increase. In their 2007 study,
Jaramillo et al. concluded that this increase could bring LNG’s lifecycle greenhouse gas
emissions into parity with coal:
Figure 1: Life-Cycle Emissions of LNG, Natural Gas, and Coal in Electricity Generation46
Jaramillo’s analysis may even underestimate the emissions associated with LNG. It does
not reflect recent studies that have raised estimates for emissions associated with
natural gas production. Recent studies have concluded that these emissions are
substantial. Because these studies post-date the Jaramillo studies regarding export
emissions, they cast still further doubt on any climate advantage to LNG. In particular,
the Jaramillo studies were conducted prior to shale gas boom. As explained further
below, shale gas production’s methane emissions are drastically higher than those of
conventional gas production. Moreover, in April 2011 (well after the Jaramillo studies
were published), EPA released improved methodologies for estimating fugitive methane
emissions from all natural gas systems (unconventional and otherwise), which lead to
Emissions of LNG Versus Coal and Gas for Electricity Generation (2005), available at
http://www.ce.cmu.edu/~gdrg/readings/2005/10/12/Jaramillo_LifeCycleCarbonEmissio
nsFromLNG.pdf, and attached as Exhibit 26.
46
From Jaramillo 2007 at 6,295. “SNG,” in the figure, refers to synthetic natural gas
made from coal.
28

32. higher estimates. EPA, Inventory of U.S. Greenhouse Gas Emissions And Sinks: 1990 –
2009, U.S. EPA, EPA 430-R-11-005.47
These recent studies estimate that aggregate domestic natural gas production releases
at least 44 pounds of CO2e per MMBtu. A report from the Worldwatch Institute and
Deutsche Bank summarizes much of the recent work.48 Specifically, the Worldwatch
Report synthesizes three other reports that used “bottom-up” methodologies to
estimate natural gas production emissions, prepared by Dr. Robert Howarth et al., of
Cornell,49 Mohan Jiang et al. of Carnegie-Mellon,50 and Timothy Skone of NETL.51 The
Worldwatch Report separately derived a “top-down” estimate, which produced a result
similar to the NETL estimate. Worldwatch Report at 9. These various assessments are
summarized in the following chart:
47
Attached as Exhibit 27. The executive summary to this document is Exhibit 28.
48
Mark Fulton et al., Comparing Life-Cycle Greenhouse Gas Emissions from Natural Gas
and Coal (Aug. 25, 2011) (“Worldwatch Report”), attached as Exhibit 29.
49
Robert W. Howarth et al., Methane and the greenhouse-gas footprint of natural gas
from shale formations, Climactic Change (Mar. 2011), attached as Exhibit 30.
50
Mohan Jiang et al., Life cycle greenhouse gas emissions of Marcellus shale gas,
Environ. Res. Letters 6 (Aug. 2011), attached as Exhibit 31.
51
Timothy J. Skone, Life Cycle Greenhouse Gas Analysis of Natural Gas Extraction and
Delivery in the United States, Presentation to Cornell (May 12, 2011), attached as Exhibit
32. NETL has also put out a fuller version of this analysis. See also Timothy J. Skone, Life
Cycle Greenhouse Gas Inventory of Natural Gas Extraction, Delivery and Electricity
Production (Oct. 24, 2011), attached as Exhibit 33.
29

33. Figure 2: Comparison of Recent Life-Cycle Assessments52
As this figure demonstrates, although the 2011 studies differ, they all estimate
production greenhouse gas emissions (combined methane and “upstream CO2”) in a
similar range. Synthesizing these studies, the Worldwatch Report estimated normalized
life-cycle GHG emissions from domestic natural gas production (i.e., excluding
liquefaction, transport, and gasification of LNG) at approximately 20.1 kilograms, or over
44 pounds, of CO2e/MMBtu. Worldwatch Report at 15 Ex. 8. Moreover, some studies
estimate that production emissions are significantly higher.
Jaramillo used production emission estimates that are much lower than those produced
by the more recent studies, and using the recent and higher figures appears to erode
what little climate advantage Jaramillo found LNG to have over coal. Jaramillo used
estimates of 15.3 to 20.1 pounds CO2e/ MMBtu, i.e., estimates that were at least 24
pounds lower than the 2011 studies’. Jaramillo Supporting Information at 8. Jamarillo
estimated total life-cycle emissions for LNG at 149.6 to 192.3 lbs CO2e/MMBtu. Id.
Simply increasing these life-cycle estimates by 24 lbs CO2e represents a 12% to 16%
52
Worldwatch Report at 3.
30

34. increase in total emissions. This increase substantially erodes any climate advantage
LNG-fired electricity generation may have over coal-fired generation. As these studies
demonstrate, the long-term benefits of switching to LNG are extremely complex and
must be carefully examined.
Further, rough estimates demonstrate that, although it is possible that replacing
petroleum-based fuel with LNG may ultimately produce some greenhouse gas benefits,
this too is an extremely complicated question that FERC should examine closely. The
lifecycle greenhouse gas emissions data generated by California for purposes of its new
Low Carbon Fuels Standard (which covers transportation fuels) show greenhouse gas
emissions from petroleum products that may be roughly comparable to fuel oil to be in
the range of 95g CO2e per megajoule, or about 752 lb CO2e/mWh.53 A comparison to
Figure 1 reveals that this 752 lb CO2e/mWh figure is actually lower than Jaramillo 2007’s
estimate of lifecycle emissions of LNG combusted using the current U.S. fleet of power
plants, suggesting, at least at first blush, that replacing fuel oil with LNG provides no
greenhouse gas benefit. The estimate derived from the California database may well
understate emissions from the fuel used in Hawaii, of course. An accurate estimate
would more closely mirror the Company’s operations, using naphtha as the base fuel
and accounting for additional greenhouse gas emissions associated with converting the
fuel into synthetic natural gas. App. at 8-9. Such an estimate also would account for the
fuel efficiency of the power plants in which the fuel is ultimately combusted. But
although these back-of-the-envelope calculations are highly imperfect, they do illustrate
that the greenhouse gas benefits that the Company’s proposal will provide are highly
uncertain and must be examined in detail. FERC must not accept the Company’s
assertions that LNG is a “cleaner” alternative at face value.
G. Effects of The Additional Gas Production that Exports Will Induce
The proposed project also will induce additional natural gas production, likely from
shale gas plays in which hydraulic fracturing is used. This induced production is likely to
result in significant environmental harms. Although FERC recently declined to consider
such impacts in the Sabine Pass proceeding, FERC Docket CP11-72, those orders are
factually distinguishable and do not bind FERC here.
FERC must consider these effects in its own NGA public interest analysis. These effects
also must be examined during the NEPA process.
1. Effects Related to Induced Drilling
53
Cal. Air Resources Bd., LCFS Lookup Tables as of December 2009, Table 6. Carbon
Intensity Lookup Table for Gasoline and Fuels that Substitute for Gasoline, available at
http://www.arb.ca.gov/fuels/lcfs/121409lcfs_lutables.pdf, and attached as Exhibit 34.
31

35. Although the Company’s application will not likely impact domestic natural gas
production to the same degree as the many LNG export applications currently before
the Commission, it is nonetheless certain to induce additional production, albeit on a
smaller scale.
As we explain below, this increased production will have significant adverse
environmental effects that are undoubtedly “indirect effects” which NEPA and the NGA
require FERC to consider. Although FERC declined to consider these effects in its Sabine
Pass orders, FERC should not follow Sabine Pass here. Accordingly, FERC must evaluate
the environmental impacts of the additional natural gas production that will be induced
by operation of the proposed project.
a. The Company’s Imports of Natural Gas Will Induce Additional
Natural Gas Production
Increased consumption of LNG through export from the continental United States to
Hawaii will induce further gas production, primarily from shale gas. The Energy
Information Administration (“EIA”) recently studied LNG export at the behest of DOE/FE,
and concluded that across all modeled export scenarios, “[n]atural gas markets in the
United States [would] balance in response to increased natural gas exports largely
through increased natural gas production.” EIA, Effect of Increased Natural Gas Exports
on Domestic Energy Markets (“EIA Study”), p.6 (Jan. 2012).54 Although the EIA study
focused on export of natural gas outside the United States, its reasoning also applies to
exports from the continental United States, where most U.S. gas production occurs, to
Hawaii.
It is likely that the majority of this induced production will come from shale gas sources.
EIA concluded that “On average, across all cases and export scenarios, the shares of the
increase in total domestic production coming from shale gas, tight gas, [and] coalbed
sources are 72 percent, 13 percent, [and] 8 percent,” respectively. EIA Study at 11.
Shale gas production (as well as coalbed and tight sands production) requires the
controversial practice of hydraulic fracturing, or fracking. See DOE, Secretary of Energy’s
Advisory Board, Shale Gas Production Subcommittee First 90-Day Report (Aug. 18, 2011)
at 8.55 The extensive impacts of fracking are discussed in detail below. First, however,
we explain FERC’s obligation to consider the effects of fracking and the other impacts
associated with induced production.
b. FERC Must Consider Induced Production
54
Attached as Exhibit 35.
55
Attached as Exhibit 36. The Board’s Second 90-Day Report is attached as Exhibit 37.
32

36. Natural gas production—from both conventional and unconventional sources—is a
significant air pollution source, can disrupt ecosystems and watersheds, leads to
industrialization of entire landscapes, and presents challenging waste disposal issues.
These impacts were recently highlighted by a Subcommittee of the DOE’s Secretary of
Energy’s Advisory Board, which identified “a real risk of serious environmental
consequences” resulting from continued expansion of shale gas production. DOE,
Secretary of Energy’s Advisory Board, Shale Gas Production Subcommittee Second 90-
Day Report (Nov. 18, 2011) at 10.56 These risks are discussed in greater detail below.
Although some states and federal agencies are taking steps to limit these harms, these
efforts are uncertain and, even if fully implemented, will not eliminate the dangers.
Environmental impacts of this increased production, including “growth inducing
effects,” are thus manifestly “reasonably foreseeable” indirect effects of the Company’s
proposal. Environmental effects of therefore production must be included in the NEPA
analysis. See 40 C.F.R. § 1508.8. These effects will be added to the effects of gas
production (and other environmental burdens from other industries) already present in
the gas plays which the Company affects, and will add to the production induced by
international export proposals. FERC must, in an EIS, fully describe all of these effects
and develop alternatives which would avoid them, including the alternative of denying
the Company’s application, limiting the LNG used by the Company, or imposing
environmental controls on gas produced for shipment to Hawaii.
The requirement to consider indirect impacts such as induced drilling is clear on the face
of the statute and its implementing regulations and has been repeatedly reinforced by
the courts. As the Ninth Circuit Court of Appeals recently explained, “Because ‘NEPA
places upon an agency the obligation to consider every significant aspect of the
environmental impact of a proposed action,’ the considerations made relevant by the
substantive statute driving the proposed action must be addressed in NEPA analysis.”
Oregon Natural Desert Ass’n, 625 F.3d at 1109 (quoting Vt. Yankee Nuclear Power Corp.,
435 U.S. at 553). Here, the “substantive statute” requires FERC and DOE/FE to
determine whether or not gas exports are in the “public interest,” a term which the
Supreme Court has repeatedly held includes consideration of environmental impacts in
his context. NAACP, 425 U.S.at 670 n.4; Udall, 387 U.S. at 450. Thus, just as the
agencies must consider upstream environmental impacts in their Natural Gas Act
determinations, so, too, FERC (and DOE/FE) must analyze and disclose these impacts in
the NEPA analysis that will support these final determinations.
Infrastructure projects, like the Company’s proposal, that enable resource extraction
activities to expand upstream naturally must fully analyze those impacts in the NEPA
framework. In Northern Plains Resource Council v. Surface Transportation Board, 668
F.3d 1067, 1081-82 (9th Cir. 2011), for instance, the Court considered a railway line that
56
Attached as Exhibit 37.
33