LNG suit getting noticed

Stifled firm challenges Balto. County strategy

January 30, 2008|By Laura Barnhardt | Laura Barnhardt,sun reporter

When an energy company and Baltimore County government square off in a federal appeals court today, the arguments might have widespread interest beyond whether a liquefied natural gas terminal should be built on Sparrows Point.

According to some experts, energy companies and local governments nationwide are interested in how successful Baltimore County is at using a federally and state-mandated program designed to protect coastal areas to defeat the controversial LNG project.

"I think folks will be watching to see if this can be used as a template to oppose any type of project," said Bill Cooper, president of the Center for Liquefied Natural Gas, a Washington-based trade association.

The county's modified coastal zone management plan has withstood one court challenge. But lawyers for Baltimore County and AES Corp., the company that wants to build the LNG plant, will present their arguments this morning to a panel of judges at the 4th U.S. Circuit Court of Appeals in Richmond, Va.

Donald Santa, a former member of the Federal Energy Regulatory Commission and president of the Interstate Natural Gas Association of America, agreed that both companies and local governments will be monitoring the outcome of the federal appeal.

"If Baltimore County were to prevail, it would invite local jurisdictions to enact similar statutes," Santa said. "That could frustrate the ability to locate LNG facilities in any locality."

Officials with AES Corp., the global power supply company based in Arlington, Va., are challenging the constitutionality of the county's prohibition of the LNG facility.

AES wants to build a LNG terminal at the former Bethlehem Steel shipyard to receive large tankers carrying imported, super-chilled, liquefied natural gas. Under the plan, the LNG would be returned to its gaseous state at the facility and pumped through an 87-mile pipeline to be built to southern Pennsylvania for distribution.

The proposal is being reviewed by FERC, and the U.S. Army Corps of Engineers is evaluating the company's request to dredge the Patapsco River to accommodate the overseas LNG tankers.

"AES continues to believe in the ongoing process for siting LNG facilities around the country, and in the exceptional value the Sparrows Point LNG facility will bring to Baltimore and the region, to include a host of direct and indirect jobs; a projected half-billion dollars in taxes over the life of the project; and clean, safe and reliable energy that will undoubtedly positively impact energy prices in Baltimore's homes and businesses," Kent Morton, an AES project manager, wrote in a statement.

But county officials and residents opposed to the plan argue that the project won't cut local utility bills and that its potential impacts on the environment and public safety outweigh any benefits.

"What we're saying is that, if there is a failure, the results would be so catastrophic that we are not willing to risk it," said David A.C. Carroll, head of Baltimore County's Department of Environmental Protection and Resource Management and a member of Maryland's Critical Area Commission.

The Baltimore County Council passed an amendment to its Coastal Zone Management plan in February, prohibiting LNG plants and other facilities, such as oil refineries, from being located in environmentally sensitive coastal areas.

In June, the state Critical Area Commission adopted the change, and that same month U.S. District Judge Richard D. Bennett upheld the county law.

AES filed the appeal of Bennett's opinion, saying that the county has overstepped its authority and is attempting to interfere with international and interstate commerce.

"When it turns to the merits, the County cannot identify a single provision of the [Coastal Zone Management Act] that gives states a `right' to enact regulations of the sort at issue here," lawyers for AES wrote in a brief for the 4th U.S. Circuit Court of Appeals.

The county lawyers say the federal government gave the responsibility of protecting coastal land to local governments and that by prohibiting LNG and oil refineries along the water, the county was carrying out its obligations.

Although AES attempts to "marginalize the significance of the CZMA," county attorneys wrote in their brief for the appeals court, the legislation encourages local governments to "foster the welfare of their coastal zones by, among other things, implementing land use controls to restrict incompatible activities and development projects."

Additionally, the company is appealing to the U.S. Department of Commerce a finding by Maryland Department of Environment officials who said the LNG project is inconsistent with federal coastal zone management.

The case could also have implications for other types of industries, Cooper said. "From a broader perspective, the question is: Can a community go back and retroactively prohibit any type of industry" through a coastal zone management plan? he asked.

laura.barnhardt@baltsun.com

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