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Board Upholds DNREC Decision,
Now What?

by Nicholas DiPasquale
Delaware Audubon Conservation Chair

On March 31, 2005, the Coastal Zone Industrial Control Board heard the appeal of the decision by the Department of Natural Resources and Environmental Control(DNREC) to deny the "status decision request" made by Crown Landing LLC, a wholly owned indirect subsidiary of BP. The Board upheld DNREC's decision.

The status decision request involved the construction of a docking pier for a Liquefied Natural Gas (LNG) Import Facility that BP proposed to build at the Crown Landing site in Logan Township, New Jersey. The proposed docking facility would be located in Delaware waters.

Delaware Audubon applauds the Board's action upholding the DNREC decision to deny BP's request for a docking pier.

The appeal revolved around some very narrow issues, primarily whether the proposed LNG Import Facility is considered a manufacturing operation as defined under the state Coastal Zone Act of 1971. While the Board acknowledged other issues and concerns, such as the safety of LNG facilities and the possibility of terrorist attack, which were raised by members of the public, these issues were not germane to the Board's area of legal responsibility.

The Board received almost ten hours of testimony. Prior to the testimony, however, they took up several procedural motions. Four individuals filed motions to intervene, as did several organizations including Delaware Audubon, the Delaware Nature Society and the Sierra Club. The Department of Natural Resources and Environmental Control and BP opposed the motions to intervene arguing that the parties were not aggrieved by the agency's action since they supported the department's decision to deny the status decision request. They also argued that these parties could influence the Board through public comments at the hearing. The Board agreed and denied the motions to intervene.

Delaware Audubon does not support the Board's decision on the procedural motions to intervene. We believe the Board has the discretion to allow parties to intervene and should have allowed them to do so, because this is arguably the most important Coastal Zone issue to come before the Board in the 34-year history of the Act.

THE GOOD NEWS

The balance of the hearing centered on whether the proposed activity was a manufacturing operation, for which a docking facility in Delaware waters would be permissible under the state Coastal Zone Act, or a bulk product transfer facility, which is clearly prohibited by the Act.

Testimony offered by BP legal counsel and expert witnesses was unpersuasive. DNREC counsel argued that to declare this facility anything but a bulk product transfer operation essentially would render the CZA prohibition meaningless for all future proposals—since any alteration to incoming materials, however slight, would be considered manufacturing and therefore the associated docking system permissible. Delaware Audubon argued that this is clearly a case of "fuel in, fuel out," despite the fact that the gas changes state and is altered to make it safe for distribution and use. The Board agreed and upheld the department's decision.

THE BAD NEWS

To date, BP has not appealed the Board's decision to Superior Court or sought review in U.S. District Court. Appealing the Board's decision would keep this issue adminstratively alive, but BP is unlikely to prevail on the merits of their arguments. A more effective course of action for BP may be to get relief through federal legislation.

There have been attempts by the energy industry and the Federal Energy Regulatory Commission (FERC) to give the federal government sole authority for siting LNG Import Facilities, essentially overriding state siting and permitting requirements. Given the current administration's views on energy and the inclinations of Congress, such a provision is likely to succeed in the energy bill or some other piece of legislation.

The project proponents could also move the docking pier outside of Delaware's jurisdiction. The company acknowledged that alternative pier designs are currently under consideration.

THE RIGHT THING

There currently are more than fifty proposed LNG Import Facilities in North America. Based on the most exaggerated demand scenarios, only six to twelve of these facilities will need to be built.

Delaware Audubon has announced publicly that it supports natural gas over the use of other, more polluting fossil fuels, such as coal and oil. We believe that FERC should establish siting criteria that would give a preference to expanding existing facilities or siting new ones in remote locations, away from population centers and ecologically sensitive areas.

The financial payback to companies that are among the first to site an LNG Import Facility will be enormous. Instead of proceeding in a deliberate and thoughtful way, using rational criteria to decide the best locations for these operation, the federal government—by its lack of action—endorses a free-for-all process that is vulnerable to political influence and corruption. Delaware Audubon believes federal leadership on this important issue is sorely lacking.


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This page was last updated on April 12, 2005.