WASHINGTON, DC, Apr. 5 -- A US House bill that would set limits on ownership, operation, and management of assets deemed part of the critical US infrastructure would create difficulties for domestic pipelines, the Interstate Natural Gas Association of America said Apr. 5.
HR 4881, introduced Mar. 8 by Rep. Duncan Hunter (R-Calif.) and 14 cosponsors, also would discourage capital investment in pipelines and other transmission systems by Canadians and other international trading partners, INGAA Pres. Donald F. Santa Jr. added in a letter to House Speaker J. Dennis Hastert (R-Ill.).
The National Defense Critical Infrastructure Protection Act of 2006 would require a corporation owning, operating, or managing an asset considered part of the critical US infrastructure to meet several requirements.
These would include being organized under US laws; having US citizens as chairman, chief executive, and a majority of directors; and having most voting and nonvoting shares held by US citizens.
The bill would require such a corporation to have at least 20% of its board made up of independent directors, whose appointments would be approved by the US secretary of defense in consultation with the US secretary of homeland security.
The corporation's board also would be required to have a government security committee whose members would be approved by the defense secretary in consultation with the homeland security secretary.
The corporation also would have to agree to allow the defense secretary, with the homeland security secretary, to annually inspect the company's procedures for handling classified information if the bill became law.
Santa warned that while "national defense critical infrastructure" is vaguely defined in HR 4881, "nothing would preclude the secretary of defense from interpreting it to [mean] both natural gas pipelines and liquefied natural gas (LNG) terminals."
Fails to differentiate
The bill's restrictions and controls also would apply equally to any foreign nation and its citizens, he continued. "Investment from Canada, Great Britain, or France would be treated the same as would investment from Iran or North Korea," he said.
"INGAA is concerned that such a blanket policy would invite international trading partners to respond in like kind, and the net result would only harm our national economy in the long run," Santa wrote Hastert.
The INGAA official noted that the North American Free Trade Agreement encouraged Canada and the US to create an integrated gas market. French, Canadian, and other international investors also have committed capital to US gas infrastructure projects, he said.
"This free flow of capital and goods, which creates jobs and lowers our trade deficit, is exactly what the United States has advocated around the world for 50 years. HR 4881 would take US trade and investment policy in another direction," Santa said.
He pointed out that HR 4881 could create problems for construction of a proposed gas pipeline from Alaska's North Slope to the Lower 48.
"More than half the mileage of such a pipeline would be located in Canada, and it would be reasonable to assume that Canadian companies would expect to have an opportunity to participate on equal terms in the ownership of that project," Santa said.
Foreign energy companies also own and operate LNG terminals in the US and can be expected to seek the ability to compete on equal terms in constructing additional import facilities, he said.
Santa said a better alternative to HR 4881 "would be to exercise or, should Congress find it necessary to legislate in this arena, improve the review process of the Committee for Foreign Investment in the United States."
The process should differentiate between investments from US allies and traditional trading partners "and those investments from countries that present real security threats."
Contact Nick Snow at [email protected].