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Court Rejects Delaware's Challenge of Crown Landing Order

A federal appeals court in Washington, DC, Friday rejected the state of Delaware's challenge to a FERC order approving BP Crown Landing LLC's liquefied natural gas (LNG) terminal proposed for New Jersey, saying the state "lacks standing because it has not suffered an injury-in-fact."

Delaware's Department of Natural Resources and Environmental Control argued that the Federal Energy Regulatory Commission exceeded its authority in the 2006 order by conditionally approving the $700 million LNG terminal on the New Jersey side of the Delaware River which divides the states before giving the state a chance to block it under the Coastal Zone Management Act (CZMA) and Clean Air Act (CAA).

Delaware claimed that "it was entitled under both statutes to block the project before FERC even proceeded to consider the matter. In other words, FERC lacked statutory authority to issue a conditional order, even if that condition preserved Delaware's right to veto the project," the court said.

Both the Commission and Crown Landing challenged Delaware's standing, arguing that the "state [lacked] an injury-in-fact because FERC's order is explicitly conditional on state approval under the CZMA and CAA." The state already rejected the project under its CZMA authority, which received the "imprimatur" of the Supreme Court.

"We are unable to see how FERC's allegedly illegal procedure causes Delaware any injury in light of FERC's acknowledgment of Delaware's power to block the project," the three-judge panel said.

Delaware said it was not adequately protected because Crown Landing could appeal the state's denial of permits to the secretary of the Department of Commerce. But "FERC's counsel dispelled any doubt on this score by unequivocally assuring us at oral argument that any modification of the Commission's position -- including to recognize an intervention by the secretary -- would require a new order," the judges said.

In the alternative Delaware argued that the case was moot since Crown Landing has "announced publicly that it is 'stopping work on the project,'" and the Commission order should be vacated by the court. "But this statement implicitly concedes the obvious: that Delaware's substantive interest is the preventing of the construction of the project. Its alleged procedural injury has no bearing on that interest because under FERC's order the project cannot be resurrected without Delaware's approval," the court said.

In November Crown Landing informed FERC that it "[had] not abandoned the project and has in fact committed to make the rental payment required to extend its lease of the property on which the LNG terminal is proposed to be located" in Logan Township, NJ. The company indicated that it planned to reconfigure the project and may begin the pre-filing process at FERC by January 2010. It said an in-service deadline of Oct. 31, 2013 would be "reasonable and appropriate" for the project [CP04-411].

The U.S. Supreme Court nearly a year ago threw a wrench into Crown Landing's original plans when it ruled that Delaware had the authority to block the construction of an off-loading pier that would serve the LNG terminal (see Daily GPI, April 1, 2008). Delaware opposed the construction of the pier, and it gained the power to halt the entire LNG project through the decision.

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.

In August 2005 New Jersey petitioned the high court to settle an 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 Daily GPI, Aug. 4, 2005).

New Jersey's action was fueled by Delaware's assertion of regulatory jurisdiction over the construction of the proposed pier. By claiming it had jurisdiction over a portion of New Jersey's side of the river, Delaware denied a permit to Crown Landing for the construction of the proposed pier (see Daily GPI, Feb. 4, 2005). It said the proposed pier, which 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. BP's plans called for an import terminal with sendout capability of 1.2 Bcf/d.

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