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Accokeek, Mattawoman, Piscataway Creeks Communities Council, Inc. v. Maryland Public Service Commission

Court of Special Appeals of Maryland

March 30, 2016

ACCOKEEK, MATTAWOMAN, PISCATAWAY CREEKS COMMUNITIES COUNCIL, INC.
v.
MARYLAND PUBLIC SERVICE COMMISSION, et al.

Wright, Arthur, Raker, Irma S., (Retired, Specially Assigned), JJ.

OPINION

Arthur, J.

Pursuant to Md. Code (1998, 2010 Repl. Vol., 2014 Supp.), §§ 7-207 and 7-208 of the Public Utilities Article ("PUA"), the Maryland Public Service Commission authorized Dominion Cove Point LNG, LP ("Dominion"), to construct an electric generating station to power a natural gas liquefaction facility. The Circuit Court for Baltimore City affirmed the decision after Accokeek, Mattawoman, Piscataway Creeks Communities Council, Inc., a nonprofit environmental advocacy organization, petitioned for judicial review. On appeal, we affirm.

Factual and Procedural Background

A. The Dominion Cove Point Liquefied Natural Gas Terminal

Dominion owns and operates a natural gas import terminal on the western shore of the Chesapeake Bay near Cove Point in Calvert County.[1] The Cove Point terminal receives imported liquefied natural gas (LNG) from ocean-going tankers, vaporizes the LNG, and transports the gas by pipeline to an interstate transmission grid for consumption.

In 2011, Dominion announced plans to convert the Cove Point site from an import-only terminal to a bi-directional terminal. Proposed liquefaction facilities, covering approximately 49 acres, would liquefy natural gas from domestic sources, so that it could be stored in canisters, loaded onto vessels, and exported abroad. Dominion sought approval from the Federal Energy Regulatory Commission to construct the liquefaction facilities and approval from the federal Department of Energy to export LNG to foreign countries.

As a major component of the project, Dominion planned to install combustion turbines to mechanically drive the refrigerant compressors used in the liquefaction process.[2] Dominion proposed a design that would repurpose waste heat from those turbines to generate much of the electricity required for the liquefaction process. This design called for the construction of an electricity generation station, closely integrated into the larger liquefaction facilities. The generating station, with a "name-plate capacity" of 130 megawatts, [3] would not be linked to the larger power grid, as the generated electricity would be consumed exclusively on site.

B. Application for Certificate of Public Convenience and Necessity

At the same time that Dominion was pursuing federal approval for the liquefaction project, Dominion applied to state authorities for permission to construct the generating station. Under Maryland law, a party may not begin construction on a generating station unless that party obtains a certificate of public convenience and necessity from the Public Service Commission. PUA § 7-207(b)(1)(i). "The certificate may be granted only after other state agencies evaluate and comment upon the proposal, the [Commission] holds a public hearing which local governing bodies may attend, " and the Commission considers the recommendation of the local governing body and various societal effects of the generating station. See Potomac Elec. Power Co. v. Montgomery Cnty., 80 Md.App. 107, 114 (1989), aff'd sub nom. Howard Cnty. v. Potomac Elec. Power Co., 319 Md. 511 (1990). For certain generating stations, the party must apply for the certificate at least two years before beginning construction. PUA § 7-208(c)(1).

On April 1, 2013, Dominion submitted an Application for Certificate of Public Convenience and Necessity. Dominion requested expedited treatment so that it could begin construction before February 2014.

The Commission initially delegated the matter to a public utility law judge, who set a procedural schedule. Multiple parties intervened, including two environmental organizations: the Sierra Club and Chesapeake Climate Action Network (CCAN). The Commission later rescinded its delegation of the proceedings and set the matter for hearing by an en banc panel of commissioners.

In December 2013, Accokeek, Mattawoman, Piscataway Creeks Communities Council, Inc. (AMP), moved to intervene out-of-time. AMP, whose primary mission is to protect local waterways, asserted that the Sierra Club and CCAN, as national and regional environmental groups, would not adequately represent its interests in the proceedings. Over Dominion's objection, the Commission granted AMP's intervention request.

Through the Power Plant Siting and Research Act of 1971 and its subsequent revisions, the General Assembly has established a comprehensive process for evaluating the effects of proposed power generation facilities on surrounding communities. In accordance with the siting law, the Commission solicited a review from Maryland's Power Plant Research Program (PPRP). PPRP, a division of the Department of Natural Resources, is a "continuing research program for electric power plant site evaluation and related environmental and land use considerations." Md. Code (1974, 2012 Repl. Vol.), § 3-301(d) of the Natural Resources Article ("NR"). In coordination with other government agencies, PPRP studies the environmental and socioeconomic effects of electric power generation facilities in Maryland. NR § 3-303.

PPRP submitted an environmental review report on behalf of seven Maryland agencies.[4] PPRP concluded "that the power plant site [wa]s suitable and that the generating facility c[ould] be constructed and operated in accordance with all applicable environmental regulations, " provided that the Commission adopted an extensive list of conditions. First and foremost, PPRP recommended that the Commission require Dominion to obtain necessary federal approvals for the larger LNG facility before constructing the generating station. The majority of the proposed limitations related to air quality. The remaining requirements concerned terrestrial and aquatic ecology, stormwater management or erosion and sediment control, water supply, cultural resources, visual quality, emergency preparedness and security, traffic, and noise.

C. Evidentiary Hearing Before the Commission

The Commission received testimony and heard arguments at an evidentiary hearing on February 20, 21, and 24, 2014.

In support of its application, Dominion offered testimony from consultants and from company executives. Dominion asserted that the project would result in "significant economic benefits in Maryland, " in the form of temporary jobs for construction of the facilities, permanent jobs for the operation of the facilities, and increased tax revenue for Calvert County. Dominion admitted that the export of LNG would put upward pressure on energy prices, but Dominion argued that benefits to the local economy would outweigh the potential adverse effects on consumers.

AMP and the other environmental groups opposed the application, offering testimony from environmental experts and energy industry experts. AMP argued that the Commission could not consider benefits of the larger liquefaction project in determining whether to certify the generating station. AMP also argued that Dominion had provided inadequate information about the economic benefits of the generating station and that the application should be denied on that basis.

PPRP submitted extensive testimony from experts in air quality, water management, geology, ecology, engineering, and economics. The program's deputy director testified that the power plant could be constructed and operated in compliance with applicable environmental and other regulations as long as Dominion complied with PPRP's proposed conditions.[5]

The Public Service Commission's staff presented its analysis of the effect of the generating station on the power grid. The Commission's staff concluded that the proposed station, as an "islanded" project that benefitted a single energy user, would not adversely affect the grid. The staff concluded that the Commission could approve the project, subject to a set of conditions.

D. Post-Hearing Developments

The Commission presided over a public hearing in Lusby on March 1, 2014, in accordance with PUA § 7-207(d). Approximately 80 members of the community offered comments either in support of or in opposition to Dominion's proposals. A member of the Board of County Commissioners for Calvert County spoke at the hearing to announce the Board's "unanimous support" for the project. In a letter dated March 25, 2014, signed by the five county commissioners, the Board affirmed that it "fully support[ed]" Dominion's application for a certificate to construct the generating station.

At AMP's request, the Commission extended the public comment period until April 2, 2014. In total, the Commission received over 60, 000 written comments and letters. Most of the comments, from both proponents and opponents of the project, emphasized broader consequences of the LNG facility rather than direct effects of the construction and operation of the generating station.

In a post-hearing reply brief, Dominion stated that it would accept all conditions proposed by PPRP and by the Commission's staff, along with four "additional conditions developed at the suggestion of the [c]ommissioners." As Condition J-3, Dominion offered to "make a one-time contribution in the amount of $400, 000 to the Maryland Energy Assistance Program, or other low income energy assistance program to be specified" by the Commission.

As a final condition, Condition J-4, Dominion offered to "provide $20.38 million in in-kind contributions and funding to support Maryland [Greenhouse Gas Reduction Act] goals." Under this proposal, Dominion would offer "[a] $1 cost perpetual license of Dominion's EDGE® Energy Efficiency Program" to Maryland electric distribution utilities and would "service, maintain and provide software updates at no cost for the first 4 years" to each utility that adopted the program. Dominion agreed that, in the event that utility companies might decline to adopt its energy efficiency technology, Dominion would finance a trust or similar instrument with funds "not to exceed $20.38 million, " to support other greenhouse-gas reduction projects determined by the Commission.

In a joint reply brief submitted on the same day as Dominion's reply brief, the Sierra Club and CCAN recommended that the Commission require Dominion to make a "significant investment in carbon-free Maryland-based renewables . . . in order to help mitigate several of the most significant adverse impacts of the project."

After reviewing the final briefs, the Commission's staff submitted a comment on the additional conditions proposed by Dominion. The Commission's staff determined that it would be "unworkable" for utility companies to adopt Dominion's energy-efficiency software, as Dominion had proposed. The staff concluded that "the $20.38 million funding support . . . would be more appropriately directed to the Strategic Energy Investment Fund in which these monies are allocated specifically to greenhouse-gas reduction-related activities."[6]

E. Approval from the Commission

On May 30, 2014, by Order No. 86372, the Commission granted the certificate of public convenience and necessity subject to a revised set of conditions. The Commission explained its findings and conclusions in an 83-page opinion and set forth the required conditions in a 64-page appendix. The Commission declared: "if all conditions imposed under this Order are met to address environmental, economic, health and safety impacts demonstrated in this proceeding, the Generating Station can be built in conformity with applicable Maryland and Federal laws and standards, and in a way that will be consistent with the public convenience and necessity standard."

After a comprehensive summary of the testimony and arguments of the parties, the opinion discussed the required statutory considerations:

(e) The Commission shall take final action on an application for a certificate of public convenience and necessity only after due consideration of:
(1) the recommendation of the governing body of each county or municipal corporation in which any portion of the construction of the generating station . . . is proposed to be located; and
(2) the effect of the generating station . . . on:
(i) the stability and reliability of the electric system;
(ii) economics;
(iii) esthetics;
(iv) historic sites;
(v) aviation safety as determined by the Maryland Aviation Administration and the administrator of the ...

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