In April 2013, an energy company requested authorization from
the Federal Energy Regulatory Commission ("FERC") to
site, construct upon, and operate an already existing liquefied
natural gas ("LNG") terminal in Calvert County, Maryland.
Although the facility began operations in 1972, originally as an
import site for LNG, the company sought to repurpose the facility
to allow for the export of close to one billion cubic feet of
natural gas per day to customers in India and Japan. After
conducting a lengthy environmental assessment, FERC green-lit the
project in September 2014, concluding that the construction and
operation of the terminal would have no significant impacts on the
environment.
On October 15, 2014, a group of environmental organizations
requested a rehearing on FERC's approval of the project and a
halt to the planned construction. Seven months passed before FERC
eventually denied the requests, during which time the company began
building on the site.
On May 7, 2015, the environmental groups filed suit in the United
States Court of Appeals for the District of Columbia Circuit.
EarthReports Inc. v. FERC, No. 15-1127. The environmental groups
petitioned for expedited review of FERC's previous
authorization and for an emergency stay on construction pending the
court's decision.
The groups argued that FERC failed to take a "hard look"
at the indirect effects of exporting natural gas from Cove Point.
In addition to issues arising from pre-construction activities,
petitioners cited to potential upstream and downstream consequences of the
multibillion-dollar project. They argued that the terminal would
lead to heightened production of LNG from the Marcellus Shale
region, which would result in emissions of climate-disrupting
pollutants from the increased drilling and pipeline transportation.
Moreover, customers in India and Japan would likely burn the LNG,
releasing greenhouse gases that contribute to climate change.
In response, FERC and the company disputed the petitioners'
conclusions as overly speculative and lacking the requisite
causation to warrant a halt to construction. FERC explained that
the source of the gas to be exported from Cove Point is relatively
unknown and will likely change throughout the operation of the
terminal. Therefore, an increase in the production of LNG from the
Marcellus Shale region and the resulting greenhouse gas emissions
are not reasonably foreseeable impacts of the project. Likewise,
FERC and the company argued that the release of climate-disrupting
pollutants associated with the consumption of exported LNG by
foreign countries is too speculative to quantify and would occur
regardless of the terminal's operations.
On June 15, 2015, the D.C. Circuit rejected the petition in a
one-page order. The court held that the petitioners fell short of
satisfying the requirements for an emergency stay on the
construction. The court further noted that the groups failed to
articulate any "strongly compelling" reasons why their
request for expedited review should be granted.
This litigation may foreshadow additional challenges by
environmental groups to the domestic LNG export industry. Although
Cove Point will be the first export terminal on the east coast,
four others are currently being constructed throughout the United
States. Three more export terminals have already been approved and
await construction, highlighting the expansion of the industry
within the last few years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
