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Court Buoys Oregon LNG Hopes; State Bill Opposed

Backers for the first of three proposed liquefied natural gas (LNG) terminals in Oregon to get a conditioned FERC approval, Bradwood Landing, are keeping a close eye on a Delaware LNG decision in March by the U.S. Court of Appeals for the District of Columbia Circuit that rejected a challenge to a similar conditioned approval of the Crown Landing LLC LNG project. Whether it is having any effect on Oregon officials is not clear.

Separately, last Thursday a business-labor group pushing for more energy infrastructure in the Pacific Northwest warned state lawmakers to reject a new Oregon state legislative bill proposed that could block LNG development in the state.

Energy Action Northwest told a state the state legislature it is fighting for "responsible energy policy." The coalition submitted its statement from Executive Director Edward Finklea to the state House Sustainability and Economic Development Committee, criticizing HB 2015 because the group claims it would "create unnecessary hurdles" for the development of the terminal. In Oregon there are now three active proposals for building such a facility and related natural gas pipeline infrastructure.

Meanwhile, a Portland, OR-based spokesperson for Bradwood's corporate parent, NorthernStar Natural Gas Corp., has been touting the DC Circuit ruling and circulating legal summaries of it that point out the appellate court has found the legal challenges somewhat unnecessary because it is clear the states have a veto over the approval of the Federal Energy Regulatory Commission (FERC).

A unit of BP received a conditioned FERC approval to build the Crown Landing LNG facilities along the Delaware River, and the state challenged the action, alleging that FERC had exceeded its legal authority by taking its action "before" requirements of the Coastal Zone Management Act (CZMA) had been satisfied. The court concluded Delaware had suffered no injury as a result and so lacked standing, according to an analysis by the Washington, DC law firm VanNess Feldman.

"The court was not persuaded by Delaware's argument that its rights were not protected adequately by FERC's conditional order because Crown Landing could appeal any state objection to the CZMA consistency certification denial directly to the U.S. Secretary of Commerce," VanNess Feldman said. "Because the [FERC] order was conditioned on Delaware's approval, it would be unaffected by any subsequent action overriding Delaware's objection by the Secretary of Commerce. Such intervention by the Commerce Secretary would require a new order by FERC."

The legal analysis said part of the implications of the court's decision is that future challenges to FERC's practice of issuing conditioned decisions could be limited. VanNess Feldman said it "effectively precludes attacks on FERC's pragmatic approach to the timing of multiple permits required to construct energy infrastructure projects under its jurisdiction."

At the state legislative level, the energy coalition's Finklea contends that Oregon already has a substantial role in the LNG permitting process that is exercised by the Department of Environmental Quality and through Coastal Zone Management permits. And he said HB 2015 would put the Oregon Department of Energy in the position of attempting to usurp the role of the federal government in certifying LNG terminals.

"The proposed bill would set the state of Oregon on a long and litigious path that would likely result in the courts ruling that federal law preempts the new state requirements," Finklea said.

Finklea argued that HB 2015 would delay badly needed energy infrastructure for the Pacific Northwest at a critical time of economic turmoil in which private investment is "sorely needed" in the region and Oregon's unemployment rate has reached an "historic high" of 12.1%.

Two factors in the Crown Landing case may set it apart: the state itself challenged the FERC order and the state had already denied the project under CZMA, the legal analysis said. But the state's ability to ultimately delay or halt any project is left intact.

The only public response so far from Oregon officials came earlier in April in local news reports in the Pacific Northwest in which the state Attorney General Office raised the rhetorical question about whether the Delaware case was a "legitimate test case."

"While there are some similarities, there are also some differences," a spokesperson for the office told the Longview (WA) Daily News. "We feel we've got a strong case. We are certainly not going to end our case based on what another court did in a case with significant dissimilarities."

Oregon considers its court challenge to FERC broader than the Delaware case, involving the National Environmental Policy Act and the Endangered Species Act, said the spokesperson.

The spokesperson said Oregon and other states may have a better chance to argue they face harm because of the broad condemnation authority that the NorthernStar project holds.

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