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High Court Lets Stand Favorable Sparrows Point Ruling

The U.S. Supreme Court last Monday let stand a federal appeals court ruling that struck down a Baltimore County, MD zoning ordinance banning construction of the AES Sparrows Point liquefied natural gas (LNG) terminal near the city of Baltimore.

In August Baltimore County asked the high court to review a decision by the U.S. Court of Appeals for the Fourth Circuit in Richmond, VA, that held a county zoning ordinance barring the construction of the LNG facilities in certain Chesapeake Bay coastal areas was preempted by the Natural Gas Act (NGA). The high court denied the county's petition for review of the May appellate ruling (see NGI, May 27).

The appellate court reversed a June 2007 decision by the U.S. District Court for the District of Maryland that upheld Baltimore County's ordinance. The district court said the ordinance was not preempted by the NGA and was within the delegated authority of the state of Maryland and Baltimore County under the Coastal Zone Management Act (CZMA).

In June 2007 Arlington, VA-based AES Corp. challenged the U.S. District Court's ruling, which had dealt a blow to the energy company's plans to build its Sparrows Point LNG terminal (see NGI, July 9). AES argued at the time that Baltimore County's zoning ordinance violated the Energy Policy Act of 2005's amendments to the NGA, which gave the Federal Energy Regulatory Commission sole jurisdiction over the siting of onshore LNG facilities.

In January 2007 the Baltimore County Council passed the zoning ordinance barring the "establishment or expansion" of LNG facilities in all Chesapeake Bay critical areas. The county council's measure was introduced and voted on within days of AES filing its application at FERC to build the Sparrows Point LNG project on the site of a former steel mill on a peninsula that juts into Chesapeake Bay in the city of Baltimore ( see NGI, Jan. 15, 2007).

Maryland's Critical Areas Commission, which oversees development in the state's coastal areas, approved the county's zoning ordinance. The commission said its action was needed to formally incorporate the new law into the county's coastal plan (see NGI, June 18, 2007).

The state of Maryland in June suffered a 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 AES Sparrows Point LNG terminal and pipeline east of the Port of Baltimore (see NGI, June 30).

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 proposed project would help meet regional energy demand by providing enough natural gas to heat approximately 3.5 million homes per day or to generate electricity for 7.5 million homes per day, and the impact of dredging to fish and aquatic vegetation would not be significant, the department said.

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 proposed Mid-Atlantic Express Pipeline, 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 in Baltimore County. The site was previously owned by Bethlehem Steel and housed a steel manufacturing and shipbuilding facility.

In April FERC issued a favorable draft environmental impact statement on the terminal project (see NGI, April 28). AES is now awaiting a final environmental impact statement, to be followed by a certificate ruling.

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