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Supreme Court Says Delaware Can Block LNG Project

The U.S. Supreme Court last Monday ruled that the state of Delaware has the authority to block the construction of an off-loading pier that would serve a liquefied natural gas (LNG) terminal being proposed by BP's Crown Landing LLC along the Delaware River in Logan Township, NJ. Despite the setback, BP indicated that it intends to move forward with the LNG project.

"In refusing to permit construction of the proposed Crown Landing LNG unloading terminal, Delaware acted within the scope of its governing authority to prohibit unreasonable uses of the river and soil within the twelve-mile circuit," the high court said. The LNG facility, as proposed, would be located on the New Jersey shoreline of the Delaware River within the so-called "twelve-mile circle," where Delaware's border extends to the low-water mark on the New Jersey shore.

Associate Justice Antonin Scalia, who was joined by Associate Justice Samuel Alito, issued a dissent, saying he found the majority's decision "difficult to accept."

Despite the unfavorable court decision, BP Crown Landing said it plans to move ahead with the LNG project. The company is interested in "keeping the the facility in the same general area," but it is exploring "different configurations given the restrictions created by the court," said BP spokesman Tom Mueller.

He declined to disclose many details, except to say Crown Landing "is looking for options to keep [the LNG project] on the Delaware River." The 410-mile river constitutes part of the boundary between Pennsylvania and New York, the entire boundary between New Jersey and Pennsylvania, and most of the boundary between Delaware and New Jersey.

The Supreme Court generally agreed with a special master's report issued in April 2007, which concluded that "Delaware, as the sovereign, retains...jurisdiction to exercise its full complement of police powers to regulate...improvements extending from New Jersey's shore" into the Delaware River. But New Jersey's authority to exercise jurisdiction over improvements is "limited" by a 1905 compact between the two states, the special master said (see NGI, April 23, 2007).

In August 2005 New Jersey petitioned the high court to settle the ongoing boundary dispute with the state of Delaware that was reignited when Crown Landing proposed building the off-loading pier along the Delaware River (see NGI, Aug. 8, 2005).

New Jersey's action was fueled by Delaware's assertion of regulatory jurisdiction over the construction of the proposed pier, which it opposes. By claiming it had jurisdiction over a portion of New Jersey's side of the river, Delaware in February 2005 denied a permit to Crown Landing for the construction of the proposed pier (see NGI, Feb. 7, 2005). It said the proposed LNG off-loading pier that would extend into the Delaware River was prohibited by Delaware's coastal zone laws.

The pier would be used to transfer LNG from tankers in the Delaware River to storage and regasification facilities in New Jersey. The proposed import terminal would have a sendout capability of 1.2 Bcf/d and is targeted for service in 2009.

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