Aes Sparrows Point Lng v. Wilson

• Decision Date: 22 December 2009
• Docket Number: No. 09-1539.,09-1539.
• Citation: 589 F.3d 721
• Parties: AES SPARROWS POINT LNG, LLC; Mid-Atlantic Express, LLC, Petitioners, v. Shari T. WILSON, Secretary of the Maryland Department of the Environment; Maryland Department of the Environment, Respondents.
• Court: U.S. Court of Appeals — Fourth Circuit

589 F.3d 721

AES SPARROWS POINT LNG, LLC; Mid-Atlantic Express, LLC, Petitioners, v. Shari T. WILSON, Secretary of the Maryland Department of the Environment; Maryland Department of the Environment, Respondents.

No. 09-1539.

United States Court of Appeals, Fourth Circuit.

Argued: September 24, 2009.

Decided: December 22, 2009.

ARGUED:

Jeffrey A. Lamken, Baker Botts, LLP, Washington, D.C., for Petitioners. Adam Dean Snyder, Office of the Attorney General of Maryland, Baltimore, Maryland, for Respondents.

ON BRIEF:

G. Mark Cook, Jessica A. Fore, Adam J. White, Emil J. Barth, Baker Botts, LLP, Washington, DC, for Petitioners. Douglas F. Gansler, Attorney General of Maryland, Emily A. Vainieri, Assistant Attorney General, Office of the Attorney General of Maryland, Baltimore, Maryland, for Respondents.

Before TRAXLER, Chief Judge, HAMILTON, Senior Circuit Judge, and Mark S. DAVIS, United States District Judge for the Eastern District of Virginia, sitting by designation.

Petition for review denied by published opinion. Senior Judge HAMILTON wrote the opinion, in which Chief Judge TRAXLER joined. Judge DAVIS wrote a concurring opinion.

OPINION

HAMILTON, Senior Circuit Judge:

Pursuant to § 19(d)(1) of the Natural Gas Act, 15 U.S.C. § 717r(d)(1), we are petitioned by AES Sparrows Point LNG, LLC and Mid-Atlantic Express Holdings, LLC (collectively AES) to review the State of Maryland Department of the Environment's denial of a request for water quality certification pursuant to § 401(a)(1) of the Clean Water Act, 33 U.S.C. § 1341(a)(1), with respect to a proposed large-scale liquefied natural gas marine import terminal and pipeline project. For the reasons that follow, we deny the petition for review.

I.

A. The Project.

This case involves a proposal by AES to construct and operate a liquefied natural gas (LNG) marine import terminal at Sparrows Point (a heavily industrialized area adjacent to Baltimore Harbor) and an eighty-eight-mile pipeline connecting the terminal to three interstate natural gas pipelines in Eagle, Pennsylvania (the Project). "LNG, which is natural gas that has been cooled to -260? Fahrenheit to form a liquid, occupies one six-hundredth of the volume of natural gas in its gaseous state." AES Sparrows Point LNG, LLC v. Smith, 527 F.3d 120, 123-24 (4th Cir.2008). The Project

would receive LNG, store it, and regasify it for transportation and delivery to residential, commercial, and industrial end users. Because LNG can be economically transported by sea from gas-producing areas worldwide to many domestic and foreign markets, LNG import terminals are typically sited in coastal areas with shipping access to foreign countries.

Id. at 124.

The Project involves three different aspects, each of which raises different environmental concerns. Many of these concerns derive from the fact that the water and sediments around Sparrows Point are already contaminated by past industrial use and fail to meet Maryland water quality standards. First, in order to accommodate the LNG tankers, the Project requires dredging an approximately 118-acre turning basin and approach channel within Baltimore Harbor to forty-five feet of depth. One environmental concern of such dredging is that dissolved oxygen levels in the additional deep channel areas would drop below Maryland water quality standards, rendering aquatic life virtually impossible.

The second aspect of the Project is the terminal itself, which includes facilities to process the approximately 3.7 million cubic yards of contaminated material to be dredged from the harbor. The processing of the dredged material as called for under the Project involves both the de-watering of the dredged spoil and the mixing of the de-watered spoil with Portland cement and other additives in an effort to bind the contaminants within the processed dredged material (the PDM). Depending on the success of that process in preventing the leaching of historical contaminants, AES hopes to make the PDM available as fill material for mine reclamation projects, construction fill, and other development projects, with placement in land fills as a secondary option.

The final aspect of the Project is the installation of a natural gas pipeline, thirty inches in diameter and approximately eighty-eight miles long, from Baltimore Harbor to Eagle, Pennsylvania, where the pipeline would connect with three existing interstate pipelines. Among other things, the pipeline would cross streams and wetlands in Maryland, raising concerns regarding the destruction of aquatic habitat and water quality through sedimentation.

B. Relevant Statutes and Agencies Involved in Authorizing the Project.

The Natural Gas Act, 15 U.S.C. §§ 717 to 717z, requires a party seeking to construct a LNG terminal to obtain authorization from the Federal Energy Regulatory Commission (FERC). Id. § 717b(a). In order to do so, applicants must comply with the Natural Gas Act's requirements as well as complete FERC's extensive pre-filing process. 18 C.F.R. § 157.21. FERC must then consult with the appropriate state agencies on numerous state and local issues. 15 U.S.C. § 717b-1(b).

FERC carries out reviews under the Natural Gas Act and the National Environmental Policy Act, 42 U.S.C. §§ 4321-4370f, and, as the statutorily designated "lead agency," coordinates other agencies' reviews related to a LNG project under other applicable statutes. 15 U.S.C. § 717n(b)(1). The FERC docket serves as a central conduit and repository for information requests and responses and is the foundation for the consolidated record for petitions for review, such as this one, concerning water quality certifications under the Clean Water Act. 15 U.S.C. § 717n(d).

The Army Corps of Engineers (the Corps) issues authorizations pursuant to § 404 of the Clean Water Act, 33 U.S.C. § 1344, and § 10 of the Rivers and Harbors Act of 1899, 33 U.S.C. § 403, to conduct dredging in navigable waters of the United States and to discharge dredged and fill materials into jurisdictional wetlands and waters. Other federal agencies participated in FERC's review of the Project, with comments being submitted by the United States Environmental Protection Agency, the National Oceanic and Atmospheric Administration, and the United States Fish & Wildlife Service. The Maryland Department of the Environment (Maryland) is charged with reviewing the Project under the Coastal Facilities Review Act, Md.Code Ann., Envir. §§ 14-501 to 14-511, and § 401(a)(1) of the Clean Water Act.

C. The Review Process.

1. Maryland's Initial Review.

Of relevance to the present petition for review, on January 8, 2007, AES submitted its request to Maryland for water quality certification under § 401(a)(1) of the Clean Water Act (AES's Request for § 401(a)(1) Water Quality Certification or AES's § 401(a)(1) Certification Request). Both on May 7 and August 15, 2007, Maryland notified AES that its § 401(a)(1) Certification Request was incomplete and identified additional information needed for processing the request. AES submitted information in response to each notification. Continuing to deem AES's § 401(a)(1) Certification Request incomplete, Maryland requested further additional information from AES on January 23, 2008. AES responded with a series of submissions, the last of which it submitted on April 14, 2008.

2. The Corps' Initial Review.

During the same time frame, the Corps undertook its review of AES's application for a dredging and discharge permit under § 404 of the Clean Water Act and § 10 of the Rivers and Harbors Act of 1899. Like Maryland, the Corps made a series of requests to AES for additional information in order to make AES's application complete. Having received AES's final response to its data requests in April 2008, on April 25, 2008, the Corps issued a public notice of AES's application for a dredging and discharge permit under § 404 of the Clean Water Act and § 10 of the Rivers and Harbors Act of 1899 for review and comment. In relevant part, the public notice stated:

For [Corps] permitting purposes, the applicant is required to obtain a Water Quality Certification in accordance with Section 401 of the [Clean Water Act] from [Maryland] and the Pennsylvania Department of Environmental Protection (PDEP). The [Corps] hereby requests that [Maryland] and PDEP review the proposed discharges for compliance with the applicable water quality standards. The Section 401 certifying agencies have a statutory limit of one year in which to make their decisions.

73 Fed.Reg. 24276-02, 24277 (May 2, 2008) (emphasis added).

3. FERC's Initial Review.

The April 25, 2008 public notice was jointly issued with FERC and also announced the availability of the Draft Environmental Impact Statement (the Draft EIS) for review and comment.

4. Maryland, the Corps, and FERC's Continued Review.

On June 15, 2008, Maryland submitted comments to FERC regarding the Draft EIS, concerning a number of different aspects of the Project, including the creation of anoxic/hypoxic areas caused by the deep-dredging of the turning basin.¹ The Corps submitted comments on the Draft EIS as well. On December 5, 2008, FERC published for review and comment the final Environmental Impact Statement for the Project (the Final EIS). In official comments on the Final EIS directed to FERC, Maryland and the Corps repeated many of their earlier concerns regarding deficiencies in certain areas of information.

On January 15, 2009, FERC adopted the Final EIS and issued its order approving the Project under the Natural Gas Act (the FERC Order). Issuance of the FERC Order, however, did not end the regulatory review process. By letter dated February 6, 2009, the Corps informed AES that, due to outstanding information about the ultimate disposal of the PDM, the final pipeline alignment and crossing methodologies, and the Project's impact on endangered species, the Corps was not in a position to finalize its review. The Corps also...