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Court denies challenge to FERC environmental review of Dominion Cove Point

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Court denies challenge to FERC environmental review of Dominion Cove Point

FERCdoes not have to consider climate change and other indirect impacts ofincreased natural gas exports for proposed LNG export projects, a federalappeals court said as it denied an environmentalist challenge to the approvalof Dominion ResourcesInc.'s Cove Point LNG export terminal.

Alongwith earlier decisions from the U.S. Court of Appeals for the Districtof Columbia Circuit, the opinion supported how FERC calculates the climateeffects of individual gas projects. The commission says many climate changeeffects are impossible to measure or connect with individual gas projects. TheU.S. EPA and environmental groups, meanwhile, have pushed the commission to domore.

TheD.C. Circuit denied a petition filed by several that argued FERChad failed to consider all of the environmental effects of converting the CovePoint LNG terminal from an import facility to an export facility. Thecommission is required to consider environmental effects of energy projects inits jurisdiction under the National Environmental Policy Act, or NEPA.

TheD.C. Circuit said in its July 15 opinion that "the commission was notrequired under NEPA to consider indirect effects of increased natural gasexports through the Cove Point facility, including climate impacts."

FERCapproved theDominion Cove Point LNGLP export project in September 2014. In May 2015, FERC upheld itsdecision to approve the project against a challenge by environmental groups.(CP13-113)

Thenearly $4 billion project is being installed at an LNG receiving terminal inLusby, Md., on the western side of the Chesapeake Bay. The export facilitiesare well along on construction. The project would have gas liquefaction andexport capacity in the equivalent of 0.82 Bcf/d of gas.

Theenvironmental groups, including EarthReports Inc. d/b/a Patuxent Riverkeeper,had argued that the project would increase LNG exports, and in turn increasethe production of natural gas and push the U.S. to use more coal within itsborders as its gas supplies were sold overseas. The court disagreed on the samegrounds that it denied a Sierra Club challenge to the project inJune, saying the FERC NEPA analysis did not have to address the indirecteffects of the export of gas because the commission does not license theactivity, only the project. The U.S. Department of Energy has "soleauthority to license the export of any natural gas," as the D.C. Circuitruled in earlier cases, including the Sierra Club's challenge to Freeport. TheDOE completed its environmental review of the Cove Point export application andapproved exports in May2015. (DOE Office of Fossil Energy Docket No. 11-128-LNG)

Thecourt also said the environmental groups failed to show that the FERC reviewhad not adequately considered other impacts of the export project, such as theeffect of ballast water on water quality, the effect of ship traffic on NorthAtlantic right whales and the effect of terminal operations on public safety.The court observed that FERC had spent almost two years preparing theenvironmental report for the Cove Point project. (U.S. Court of Appeals for theDistrict of Columbia Circuit No. 15-1127)