AES case returns to court in 4th U.S. Circuit Court of Appeals in

Daily Record, The (Baltimore), Jan 30, 2008 by Danielle Ulman

The battle over a proposed liquefied natural gas terminal at Sparrows Point will continue in court Wednesday when the project's planners appeal a ruling on a law that bans the facility from coastal areas.

The AES Corp., a Virginia-based energy developer, is scheduled to appear in the 4th U.S. Circuit Court of Appeals in Richmond to try to overturn a federal judge's June decision to uphold the Baltimore County law.

The law, passed by the County Council in February 2007 and upheld by U.S. District Court Judge Richard D. Bennett in Baltimore, adds LNG facilities to a group of developments prohibited from being built within 1,000 feet of the Chesapeake Bay's tidal waters and wetlands.

AES continues to argue that only the Federal Energy Regulatory Commission has the authority to determine the location of LNG terminals, and that the county ordinance pre-empts federal law.

In court documents, AES writes that the court's decision to uphold the county's law was based on the invalid idea that the Coastal Zone Management Act gives the state the right "to ban LNG terminals and to enforce that ban independent of the consistency- review process the CZMA establishes."

A state can review federally permitted projects, like an LNG facility, once its Coastal Management Plan has been approved by the National Oceanic and Atmospheric Administration to ensure consistency with its plan.

According to AES, the law only provides funding, not regulatory power. The company argues that the Baltimore County amendment changed the state's coastal plan.

Nonetheless, Baltimore County officials are confident that the law will be upheld.

"We expect to win on appeal," said Baltimore County spokesman Don Mohler.

"In this particular issue, AES doesn't believe that the state's Critical Area Commission should protect one of its most treasured resources, the Chesapeake Bay," he said. "Obviously, we disagree."

A previous county effort to ban the project from being built within five miles of homes was struck down by Bennett because it undermined FERC's authority to determine placement of LNG facilities.

But Bennett upheld the second zoning law, noting that counties can create their own coastal development laws under the Coastal Zone Management Act, as long as they are approved by a state commission.

The Critical Area Commission, which oversees restrictions on coastal development, approved the county ordinance just before Bennett's ruling.

FERC is reviewing the company's application to build the facility and will issue an environmental impact statement, although the agency has "no timeline" for its completion, said Tamara Young- Allen, its spokeswoman.

Even if FERC approves the LNG terminal, AES still needs permits under the federal Clean Air Act, Clean Water Act and Coastal Zone Management Act in order to get project clearance, along with approval from the U.S. Coast Guard.

The Maryland Department of the Environment has already decided the proposed facility is at odds with state environmental laws under its Coastal Management Program. AES has appealed that decision to the U.S. Department of Commerce.

In general, if the secretary of commerce does not override a state's refusal for certification, it is not likely that a company can move forward with its project, said David Kaiser, senior policy analyst in NOAA's Office of Ocean and Coastal Resource Management, who could not comment on this specific case.

AES has also filed suit against the Critical Area Commission, for the "illegal, arbitrary and capricious" methods it used to approve the Baltimore County law barring LNG terminals from the coastline.

Kent Morton, AES project director, said while proposed LNG facilities often cause community dissent, he believes building a plant would help Maryland's energy shortage problems.

"We wouldn't keep pressing this if we didn't think it was a good project," Morton said. "We are part of the solution."