D.C. Circuit affirms FERC handling of Cove Point LNG export application

The U.S. Court of Appeals for the District of Columbia Circuit has rejected the assertion by environmental groups that the Federal Energy Regulatory Commission (FERC) did an inadequate review of Dominion (NYSE:D) plans to develop the Cove Point liquefied natural gas (LNG) export facility in Maryland.

After hearing oral arguments in the case on April 19, a three-judge panel for the D.C. Circuit issued an opinion July 15 that rejected arguments put forth by EarthReports d/b/a Patuxent, as well as Riverkeeper and other petitioners.

The environmental groups had challenged FERC’s conditional authorization of the conversion of the Cove Point LNG facility from an import maritime terminal to a mixed-use, import-and=export terminal. The petitioners contend that FERC failed to consider several environmental impacts that the Cove Point conversion project might have, and thus failed to satisfy its obligations under the National Environmental Policy Act (NEPA) of 1969.

But in keeping with the reasons outlined earlier this year in a Sierra Club challenge to a FERC decision, “the Commission was not required under NEPA to consider indirect effects of increased natural gas exports through the Cove Point facility, including climate impacts,” the appeals court held.

The petitioners remaining challenges “fail to show that the Commission did not adequately address these concerns,” the appeals court went on to say.

The Cove Point LNG facility is located in Maryland on the western shore of the Chesapeake Bay. It is owned by Dominion Cove Point LNG, LP. The facility was originally constructed to serve as an import terminal for maritime LNG shipments.

Due to changes in market conditions, Cove Point was largely dormant from 1980 until 1994. In 1994, the Commission authorized the reactivation of Cove Point’s vaporization and storage facilities and the construction of a liquefaction facility that could turn conventional natural gas into LNG for storage, the court noted.

Eventually, in April 2013, Dominion filed an application for authorization to convert its Cove Point LNG facility from a facility for maritime LNG imports to a dual-use facility for maritime LNG exports and imports.

The project called for the construction of an additional liquefaction facility within the Cove Point facility’s existing footprint as well as modifications to Cove Point’s marine terminal facilities and compressors on its dedicated pipeline in Virginia.

The project did not include the addition of any LNG storage tanks or any increase in the size or frequency of LNG marine traffic previously authorized for the Cove Point LNG terminal, the court noted.

Under the Natural Gas Act (NGA), regulatory oversight for the export of LNG and supporting facilities is divided between the FERC and the Department of Energy (DOE).

“The Commission devoted almost two years to preparing an environmental assessment of over 200 pages for the Cove Point expansion project,” the court said. FERC concluded that the LNG export facility would not significantly affect “the quality of the human environment.”

FERC outlined certain mitigation measures for Dominion and eventually issued a finding of no significant impact (FONSI). FERC also concluded that an Environmental Impact Statement (EIS) was not required because the new facilities would be within the footprint of the existing LNG terminal.

“Accordingly, because petitioners fail to show that the Commission’s NEPA analysis was deficient for failing to consider indirect effects of the Cove Point conversion project or inadequately considered their remaining concerns and that the Commission thus acted arbitrarily and capriciously, we deny the petition for review,” the appeals court concluded.

Judge Judith Rogers drafted the opinion for the D.C. Circuit Court of Appeals in No. 15-1127.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.