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Sparrows Point LNG, Maryland

STATUS:  In progress with opposition

TYPE:  Natural Gas

OPPOSITION:  Environmental groups, U.S. Sens. Barbara Mikulski and Ben Cardin, local residents

PROSPECT:  Likely

BACKGROUND: The Sparrows Point liquefied natural gas (LNG) project is a proposed LNG import and re-gasification facility to be constructed, owned and operated by AES Sparrows Point LNG, a subsidiary of AES Corporation.  The project would be located at the Sparrows Point Industrial Complex near Baltimore, Maryland.  Output would be 1.5 billion cubic feet of natural gas; AES estimates that it will cost $400 million to construct.  AES would also build an 88-mile pipeline in a separate project, called the Mid-Atlantic Express, to connect Sparrows Point to existing natural gas pipelines.

AES began the process of obtaining roughly 100 needed permits in 2006, with the hope that the construction would begin between 2008 and 2010, and operations would commence in 2012.

In 2006, responding to public opposition to the siting of an LNG terminal at Sparrows Point, the Baltimore County Council approved Bill 71-06, which amended the County’s Zoning Regulations as it pertains to siting of LNG facilities near residential and commercial areas, a move that would effectively bar AES from constructing the Sparrows Point LNG project.  AES sued in federal court and won an injunction barring the county from enforcing the ordinance.  The County responded in 2007 by passing Bill 9-07, which changed coastal zoning regulations to again bar Sparrows Point LNG.  Once again, AES sued, arguing that Bill 9-07 was preempted by the Natural Gas Act.  The U.S. Court of Appeals for the Fourth Circuit agreed with AES.

The Federal Energy Regulatory Commission (FERC) conditionally approved Sparrows Point LNG in January 2009.  Nearly a dozen government, business and community groups, including the state of Maryland and Baltimore County, appealed FERC decision in federal court.  A judgment is pending.  One of the conditions AES must meet under the FERC approval is the issuance of a water-quality permit by the Maryland Department of Environment, which denied approval of the company’s dredging plan.

The opposition to Sparrows Point has not only been in federal court.  In March 2010, U.S. Senators from Maryland Barbara Mikulski and Ben Cardin introduced legislation that would repeal FERC’s authority to site LNG facilities and would instead give control over them to the state.  The Senators explicitly referenced Sparrows Point LNG as the reason they introduced the legislation.  The bill did not receive a floor vote in the 111th Congress.

SOURCES:  AES Sparrows Point LNG: http://www.aessparrowspointlng.com/;
Baltimore Business Journal: http://www.bizjournals.com/baltimore/stories/2010/03/01/daily26.html;
Baltimore Sun: http://articles.baltimoresun.com/2009-12-18/news/bal-md.co.lng18dec18_1_sparrows-point-lng-natural-gas-million-project;
http://articles.baltimoresun.com/2010-02-13/news/bal-md.co.lng13feb13_1_liquid-natural-gas-terminal-lng-opposition-team-aes-sparrows-point-lng;
Baltimore Sun (via istockanalyst.com): http://www.istockanalyst.com/article/viewiStockNews/articleid/3245494;
FindLaw: http://caselaw.findlaw.com/us-4th-circuit/1055641.html

Last Updated:  November 23, 2010