Md. court rules in favor of plan to export gas

Dominion Resources won an important legal victory last week when a court ruled in favor of its plan to export natural gas from the terminal at Cove Point in Lusby, Md.

The terminal was originally built for import, not export, and Dominion and Calvert County officials argue the massive, $3.8 billion renovation required to reverse the flow of gas at the site would benefit the state economically, employing thousands of people over several years.

Yet environmentalists and concerned residents worry the project would worsen global warming, reduce local property values and harm the ecology of the Chesapeake Bay. Natural gas must be condensed into a liquid at around 260 degrees below zero before it can be shipped, a process that requires large amounts of energy and heavy machinery.

In a lawsuit in federal court in Maryland, the Sierra Club had also argued that an agreement the terminal’s original owner signed in 1972 with environmentalists precludes export at the site, but the Maryland Court of Special Appeals disagreed, affirming a lower court’s ruling.

Josh Tulkin, director of the Sierra Club chapter in the state, said that his group was “disappointed” and was still considering options for appeal to Maryland’s highest court.

In an opinion released Friday, the Court of Special Appeals weighed the meaning of ten crucial words in the most recent version of the agreement, which Dominion, Sierra and another group signed in 2005. The agreement permits “receipt by tanker and the receipt or delivery by pipeline” of natural gas at the site.

The opinion by Judge Michele Hotten even includes the full dictionary entry for the word “by” as part of the court’s efforts to parse the phrase.

According to Sierra, this clause means that Dominion can receive shipments of gas by sea and over land, via pipeline, at the site, and that the company can make deliveries over land to domestic buyers. However, the group argues, Dominion is not permitted to make deliveries by sea.

The court agreed with Dominion that the company is allowed to make deliveries via the underwater pipeline that connects the facility to the offshore platform where deepwater vessels dock at Cove Point. From there, Dominion is free to load the gas onto outbound tankers, the court held.

“We certainly felt we had a strong case going in, that it was based on the language of the agreement, and the court agreed with us,” said Jim Norvelle, a spokesman for Dominion.

The company must still obtain approval from regulators for the project, and the state Public Service Commission held hearings in Lusby on the project over the weekend. Around 700 people came, including the project’s proponents as well as its detractors, according to attendees.

It isn’t only in Lusby that the project has aroused strong feelings. Earlier last week, four people were arrested while protesting against the project outside a courthouse in Cumberland. The group was led by a Unitarian minister, the Rev. Terence Ellen.

Max Ehrenfreund is a blogger on the Financial desk and writes for Know More and Wonkblog.
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