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FERC Defends Cove Point Approval in Appeals Court

Defending its 2014 approval of Dominion Cove Point LNG Liquefaction Project’s export terminal in the U.S. Court of Appeals for the District of Columbia Circuit this week, FERC roundly dismissed a claim from several conservation groups that its environmental assessment did not properly consider how the project could lead to increases in unconventional natural gas drilling.

Dominion filed with the Federal Energy Regulatory Commission in 2013 to modify and operate its existing Cove Point, MD, import facility as a liquefied natural gas (LNG) export terminal. FERC approved the application in September 2014 (see Daily GPI, Sept. 30, 2014). In May 2015 the Commission denied rehearing and stay requests from multiple environmental groups, including those that later appealed the decision in circuit court, referred to in Tuesday’s brief collectively as EarthReports (see Daily GPI, May 5, 2015).

FERC noted that the Department of Energy (DOE), Department of Transportation and the U.S. Coast Guard were involved in reviewing the Cove Point project. DOE approved Cove Point for exports around the same time FERC denied the rehearing requests (see Daily GPI, May 7, 2015).

DOE conducted a separate environmental review that featured studies on both the environmental impacts of gas production and the climate impacts of LNG exports, FERC said.

The DOE’s reports “meaningfully inform EarthReports and the public regarding the environmental impacts of natural gas production and downstream consumption of LNG,” FERC said. “In light of the two department reports alone, the relief EarthReports seeks with respect to its primary claims -- indirect impacts of induced natural gas production and lifecycle greenhouse gas emissions impacts -- would serve no purpose other than to generate unnecessary paperwork.”

FERC further defended its environmental review as detailed and comprehensive given its “statutory responsibilities” under the National Environmental Policy Act (NEPA).

“NEPA does not require the Commission to consider all potential impacts no matter how attenuated or speculative,” FERC said. “Future natural gas development production activities, in the Commission’s informed judgment, are not a causally related effect of the construction and operation of this particular liquefaction facility. Moreover, the impacts of any such production activities are not reasonably foreseeable -- certainly not from the handful of press releases and news articles EarthReports cites.”

The Commission said it considered greenhouse gas emissions from the project, “both quantitatively and qualitatively,” but “no appropriate methodology was available to determine the significance of their impacts on a regional or global scale.”

Last summer, a three-judge panel of the District of Columbia appeals court refused to halt construction at Cove Point by granting the challengers’ stay request, citing a lack of “strongly compelling” reasons to do so (see Daily GPI, June 18, 2015).

Dominion spokesman Karl Neddenien told NGI Wednesday that the company is “confident” FERC’s approval of the Cove Point project “will be upheld in the U.S. Court of Appeals. The FERC recently denied other appeals to stop the project. Approval also has consistently been upheld in the courts as well as by federal and state regulators, so we expect a similar outcome.” Neddenien said the project is 47% complete and on track for an in-service date sometime in late 2017.

Tuesday’s brief also responds to objections to FERC’s Cove Point approval filed by BP plc unit BP Energy Co. BP, party to an import shipping contract at Cove Point. It had submitted a separate rehearing request -- also denied by FERC in the May 2015 order -- alleging undue discrimination after Dominion allowed a unit of Statoil SA, another Cove Point shipper, to relinquish its terminal service without doing the same for BP.

In denying BP’s rehearing request last year, FERC concluded that the two shippers “were not similarly situated for the purposes of relinquishing terminal service because Statoil was an expansion customer receiving non-open access service” whereas BP was “receiving open access terminal service.”

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