In the wake of last week’s decision by a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit upholding Maryland’s denial of a water quality certification for AES Sparrows Point liquefied natural gas (LNG) import terminal in Baltimore County, a company spokesman said it was considering several option, including petitioning for rehearing by the full court.

“The court’s decision is a disappointment,” but “we are continuing to move forward on our application before the Maryland Department of the Environment,” said Kent Morton, project director.

In its decision last week, the Fourth Circuit in Richmond, VA, rejected AES Sparrows Point LNG’s argument that Maryland waived its right to deny the water quality certification when it filed its denial out of time, and it determined that the agency’s action was not arbitrary and capricious, according to Sutherland’s

“AES believes the Sparrows Point LNG project is good for the region…We continue to be encouraged by FERC’s [the Federal Energy Regulatory Commission’s] decision…that reaffirmed the approval of the project, and we remain confident that we [will] obtain all of the necessary environmental permits and approvals,” Morton said.

On Dec. 17 FERC upheld a prior order authorizing the AES Sparrows Point LNG import terminal in Baltimore County and the associated Mid-Atlantic LLC pipeline project (see Daily GPI, Dec. 18).

The Commission denied late motions to intervene, requests for a supplemental environmental impact statement and requests for stay because the petitioners raised no new specific issues or facts that had not already been addressed in the previous orders or in FERC staff’s environmental analyses.

However, FERC Chairman Jon Wellinghoff continued his objections to the East Coast terminal, saying “an analysis of relevant factors indicates that the Sparrows Point Project is not needed to serve the energy needs of the Mid-Atlantic and South Atlantic regions. Further, I found that the future energy needs of these regions can be better met with alternative resources, such as domestic natural gas infrastructure and renewable and distributed energy resources. Finally, environmental and community concerns had not been fully and fairly evaluated.”

The controversial LNG project has been the target of considerable fighting in and outside the courts, with the case going as far as the U.S. Supreme Court. In October last year the high court let stand a federal appeals court ruling that struck down a Baltimore County zoning ordinance banning construction of the terminal (see Daily GPI, Oct. 8, 2008).

In August 2008 Baltimore County asked the high court to review a Fourth Circuit decision that held that the county’s zoning ordinance barring the construction of the LNG facilities in certain Chesapeake Bay coastal areas was preempted by the Natural Gas Act. The high court denied the county’s petition for reconsideration of the appellate ruling.

The state of Maryland in June 2008 suffered another major blow to its efforts to block the LNG project — this time outside the court system. The Department of Commerce at the time overrode Maryland’s objection to the proposed terminal and pipeline east of the Port of Baltimore (see Daily GPI, June 27, 2008). Based on information submitted during the appeal, Commerce determined that the national interest served by the Baltimore facility outweighed its limited adverse coastal effects.

The Sparrows Point project, which was been the target of intense opposition by state and federal politicians, would have about 1.5 Bcf/d of regasification capacity with a potential for expansion to 2.25 Bcf/d. Regasified LNG would be delivered to regional markets via Mid-Atlantic Express, an 87-mile, 30-inch diameter pipeline that would extend from the terminal to connections with interstate pipelines at Eagle, PA.

The project, including three LNG storage tanks, would be located on 80 acres within the existing Sparrows Point Industrial complex.

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