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The New Balance of Power

Do states have any rights in siting LNG terminals?

Fortnightly Magazine - June 2007

Congressman Bishop of New York introduced this bill to amend the Federal Water Pollution Control Act on March 19, 2007, to prohibit the siting on an LNG facility in an “estuary of national significance.” Specifically, the bill provides that “it is the national policy that given the environmental risk that a floating storage regasification unit poses to an estuary, the construction or use of such a unit in an estuary of national significance be prohibited.” National Estuary Protection Act, H.R. 1564, 110th Cong. § 2 (2007).

7. AES Sparrows Point LNG , 2007 WL 184736. As of the writing of this article, no appeal has been filed to the district court’s decision. However, on Jan. 16, 2007, the Baltimore County Council enacted another bill that has as its purpose “prohibiting the establishment … of a liquefied natural gas facility in the Chesapeake Bay Critical Area.” In an attempt to meet the requirements of EPACT, the bill frames the prohibition as a “land-use issue.” AES has filed an action in the U.S. District Court of Maryland challenging this bill.

8. AES Sparrows Point LNG , 2007 WL 184736 at *2.

9. Cf. In Natural Gas Pipeline Co. of America v. Iowa State Commerce Commission , 369 F. Supp. 156, 160 (S.D. Iowa 1974), the court ruled that an Iowa statute, which required a state permit for the operation of gas storage facilities, violated the Supremacy Clause of the United States Constitution because it was in conflict with the eminent domain power granted by the Natural Gas Act.

10. AES Sparrows Point LNG , 2007 WL 184736 at *1.

11. 151 Cong. Rec. H6949, H6962 (July 28, 2005).

12. 15 U.S.C. § 717b-1(c) (2006).

13. Freeport LNG Development, L.P ., 107 FERC ¶ 61278 (2004).

14. Cameron LNG, LLC , 104 FERC ¶ 61269 (2003).

15. Weaver’s Cove Energy, LLC , 112 FERC ¶ 61070 (2005).