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LNG Wins Federal Favor: Energy Need Eclipses Environmental Fears, Commerce Dept. Says

June 27, 2008

By Laura Barnhardt, The Baltimore Sun

Jun. 27–Maryland officials should not block a liquefied natural gas terminal proposed in eastern Baltimore County, the federal Department of Commerce said yesterday in a decision that could provide more momentum for the project’s approval.

Commerce Secretary Carlos M. Gutierrez concluded that the need for natural gas outweighs any environmental damage that could be caused by the LNG terminal and the dredging that would be needed in the Patapsco River to accommodate the tankers importing the fuel.

“The impact of dredging to fish and aquatic vegetation will not be significant,” according to the Commerce report, which notes that the project would “help meet regional energy demand by providing enough natural gas capacity to heat approximately 3.5 million homes per day or to generate electricity for 7.5 million homes per day.”

The ruling from the federal agency does not guarantee approval for the project, but the decision is another disappointment to elected officials and community leaders fighting the plan by AES Corp. to build the terminal at the old Bethlehem Steel shipyard site on Sparrows Point. Once the liquid is processed, it would be distributed for use through an 88-mile pipeline, under the company’s plan.

In a written statement, Kent Morton, AES project manager, called the Commerce Department finding an “important … step in the process toward bringing more clean-burning natural gas to Maryland and the Mid-Atlantic region.”

But elected officials, including Sen. Barbara A. Mikulski, Gov. Martin O’Malley and Baltimore County Executive James T. Smith Jr., rushed to criticize the decision by Gutierrez.

“I remain firmly opposed to a new LNG facility and will examine legislative options to stop this project. … This is not the last step, or the only step. We will fight on,” Mikulski said in a statement.

In July last year, the Maryland Department of the Environment reviewed the AES proposal and found that there was not enough information to determine whether it violated the Coastal Zone Management Act, and that — in essence — if forced to make a decision at that point, officials would conclude the project did not meet the state’s environmental standards.

But in yesterday’s 44-page decision, the Commerce Department concluded AES had provided enough information to show its project meets an overriding goal of the CZMA, meeting the nation’s energy needs.

O’Malley’s office said that state officials are reviewing the decision to determine the next steps. Maryland officials can appeal the Commerce Department’s decision in U.S. District Court.

“The proposed LNG project at Sparrow’s Point represents a threat to our homeland security, a threat to our environment and Chesapeake Bay and a threat to the families of eastern Baltimore County,” O’Malley said in the statement. “The overturning of MDE’s original decision to deny Coastal Zone Consistency enhances this threat.”

Yesterday’s finding does not resolve a separate legal dispute over whether Baltimore County can ban LNG facilities in environmentally sensitive waterfront areas, as part of its federally sanctioned Coastal Zone Management plan. Because of a federal appeals court ruling last month finding fault with the county’s ban, officials have asked for federal approval of its amended coastal zone management plan.

“It seems strange that a decision would come out on a day when the price of oil reached a record high, saying it makes good national policy to increase our foreign sources of energy,” said Donald I. Mohler III, a county spokesman.

When AES announced its plans two years ago, the project was met with almost instant opposition. Concerned about how close the terminal and pipeline would be to homes and schools, community groups formed to lobby against the plan, federal and state lawmakers unsuccessfully proposed laws to ban the LNG terminal, and local officials sought a legal maneuver to stop the project.

But union leaders have long supported the project because of the jobs it would create, including 50 permanent jobs and 375 temporary construction positions.

This year, Federal Energy Regulatory Commission staff members recommended conditional approval for the LNG project. A final report from FERC is expected in August, with the five-member commission tentatively set to make a decision about the project in November.

The Army Corps of Engineers is reviewing the company’s request to dredge an 118-acre area in the Patapsco River.

laura.barnhardt@baltsun.com

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