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Maryland AG Challenges Commerce's Sparrows Point LNG Decision

Maryland Attorney General Douglas F. Gansler Friday filed a suit in federal district court challenging the Department of Commerce's decision overriding the state's efforts to block AES Sparrows Point LLC's proposed 1.5 Bcf/d liquefied natural gas (LNG) import terminal and pipeline east of the Port of Baltimore.

Maryland is asking the U.S. District Court of Maryland in Baltimore to reverse the decision issued by former Commerce Secretary Carlos Gutierrez and to send the issue back to Obama Commerce Secretary Gary Locke with instructions to abide by the Coastal Zone Management Act (CZMA).

The state contends that the proposed Sparrows Point terminal would threaten its coastal areas, making the project inconsistent with policies under the CZMA. In its June 2008 decision, Commerce determined that the national interest served by the Baltimore facility would outweigh 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 agency said (see Daily GPI, June 27, 2008).

AES Sparrows Point appealed to Commerce after the Maryland Department of the Environment in 2007 denied the terminal developer's request for a finding that the project is consistent with the state's coastal management program (see Daily GPI, July 18, 2007).

"The construction of an LNG terminal in Maryland could negatively affect both the environment and the families who live and work in the surrounding communities," Gansler said. "The new Commerce secretary should thoroughly review this project and recognize the significant adverse impact this project would have on the Chesapeake Bay and the citizens of Maryland."

The Sparrows Point project has been the subject of legal fights for years, with one issue going as far as the Supreme Court. Last October the high court upheld a federal appeals court ruling that struck down a Baltimore County zoning ordinance banning construction of the Sparrows Point LNG terminal (see Daily GPI, Oct. 8, 2008).

In addition to the court filing, Maryland has asked the Federal Energy Regulatory Commission to rehear its January decision approving the terminal near Baltimore and associated Mid-Atlantic Express Pipeline (see Daily GPI, Jan. 16). Conceding that the decision was not a "popular" one, FERC imposed 169 conditions on the controversial project.

AES Sparrows Point filed with FERC in January 2007 for the terminal to be built on the 80-acre site of an old Bethlehem Steel plant on a peninsula jutting out into Chesapeake Bay (see Daily GPI, Jan. 9, 2007). Sparrows Point 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 the 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.

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