A proposed terminal on the Chesapeake Bay for exporting natural gas has divided environmentalists and members of the Calvert County Board of Commissioners, who approved a zoning exemption for the project last week and will consider another proposal Tuesday for granting the terminal’s owner tax credits that are potentially worth tens of millions of dollars.
If the project receives approvals from state and federal regulators, the owner, Dominion Resources, expects construction at the terminal in Lusby to cost $3.8 billion over three years, requiring thousands of workers.
Business leaders and county officials say the project will help the county’s economy and expand its tax revenue. But leading environmentalists and some residents worry about the consequences for traffic and the environment.
The company plans to build the new facilities on its existing footprint at the terminal, which was designed for importing natural gas but now could help meet a burgeoning demand for exports of natural gas from hydraulic fracturing, or “fracking.”
Gov. Martin O’Malley (D) signed a law in May giving Calvert the authority to discount Dominion’s taxes. A proposal to do so, the subject of Tuesday’s hearing, would replace Dominion’s property taxes with a fixed schedule of payments for several years.
Dominion would make a single payment to the county of $25 million in January 2018 if the project goes as planned, and for the first five years of the completed plant’s operation, the company would pay an average of about $60 million per year, depending on the property’s assessed value.
For the next nine years, Dominion would receive a credit of 42 percent on the property taxes it owes the county.
County officials declined to estimate how much in taxes Dominion would avoid paying because of the agreement, saying that such a prediction would be premature.
“You would think that when you’re making a budget calculation like that, it would be very relevant to the conservation what the financial implication would be,” said Josh Tulkin, director of the Maryland chapter of the Sierra Club.
According to Dan Donovan, a Dominion spokesman, the credit is necessary to make the project economically viable, and even with the credit, Dominion would be Calvert’s largest taxpayer after the project was completed.
“To me, it’s our way of paying our fair share. We’ll pay a lot of taxes,” he said.
The proposal is likely to pass. After a contentious hearing last week, the board voted 4 to 1 in favor of another measure to facilitate the Cove Point project. Commissioner Steve Weems, who cast the sole vote in opposition, said he supported the measure in principle but wanted to delay a vote to allow the public more time to comment.
The proposal adopted last week amends the county’s zoning ordinance and building codes to exempt the terminal. Although the amendment is written as a total exemption from the rules, county officials said that several important restrictions will remain in force. For example, the exemption would not waive certain environmental regulations relating to ecologically sensitive areas that the state requires the county to protect. The same is true of a review by the fire marshal, likewise mandated by the state.
County officials say the exemption is necessary because their staffs lack the expertise to deal with a major industrial facility and because the Federal Energy Regulatory Commission and other agencies will be thoroughly vetting the construction anyway.
Jocelyn D’Ambrosio, an attorney at the legal nonprofit group Earthjustice, argued that the county still had its own responsibilities to residents. “FERC just doesn’t have the same concerns over community character and isn’t looking out for that,” she said. “There is a role for the county to play.”
Dominion hopes to start work at Cove Point sometime next year.
The company must still obtain dozens of permits from state and federal authorities before the project begins.
Environmentalists say the apparent need for an indirect subsidy casts doubt on the economic rationale for the project. “I don’t believe the industry, and maybe even the county, is confident that this thing is going to make financial sense when all is said and done,” said Diana Dascalu-Joffe, senior general counsel at the Chesapeake Climate Action Network.