Requiem for an LNG Project

Posted on August 29, 2016 by Rick Glick

Perhaps not many, at least not in Oregon, would mourn the failure of a liquefied natural gas terminal and associated gas pipeline project.  As counsel for over a decade to the Oregon LNG project at the mouth of the Columbia River, I mourn less for the failure of the project than the process.  I am confident that if the standards-based approval process had been allowed to play out, we would have satisfied all federal and state permitting criteria.  But, alas, we never got that opportunity.

The Natural Gas Act, as amended in 2005, confers upon the Federal Energy Regulatory Commission exclusive authority over the siting of LNG export terminals and interstate pipelines.  The NGA, however, preserves authority delegated to the states by the Clean Water Act, Clean Air Act, and Coastal Zone Management Act.  The problem is that Oregon law requires state agencies to first receive affirmation from local governments of compatibility with land use regulations before issuing a state permit. 

Other states have similar laws and have attempted to use them to halt or impede LNG projects, only to have  Courts of Appeals for the D.C., First and Fourth Circuits reject the incorporation of local land use planning into state processes as preempted by the NGA.  But the conflict with state law sets up an unnecessary confrontation, adding expense and delay that can prove fatal to a project under development, as it was here.

The Oregon LNG project, aware of the federal preemption argument, nonetheless filed land use applications at the City of Warrenton for the terminal, and at Clatsop County for the pipeline.  The project filed the applications to demonstrate a desire to comply with all applicable regulations, confident in its ability to do so.  In fact, an independent hearings officer, following an evidentiary hearing, concluded the project met all County criteria.  Following approval by the County Commission, and, while an appeal by opponents was pending, an election occurred.  An anti-LNG slate was elected to the Board of Commissioners, and the newly constituted County Commission promptly reversed course.  And there’s the rub: the criteria had not changed, only the elected officials passing judgment.  Thus, local land use compatibility statements were not to be had, rendering the state permitting process impossible to complete.

This is not a screed against the multitude of state or federal agencies reviewing our various, complex permit applications.  To be sure, the agencies felt the political pressure brought by opponents, which caused them to be cautious and deliberate (perhaps too deliberate) and thus slow moving.  Nor is this to suggest that local governments and sentiment should have no role in siting energy projects that affect their communities.  Of course they should.

The real problem, however, is the total deference given under Oregon law to local land use regulations, even when the local land use decision is so blatantly political, thus creating a legal basis for NIMBY-ism.  In our case, this deference essentially gave veto authority to the Clatsop County Board of Commissioners, which cannot have been the intent of Congress or the state legislature.  Otherwise, how would any infrastructure project of national importance ever be constructed—highways, power plants, transmission lines, fiber optic cables, telephone lines, railroads, bridges, or dams—if locals could block it through a land use resolution?



Comments (1) -

john c evans United States
9/2/2016 8:41:49 AM #

Rick

Good note.  I appreciated your observations.  The first goal of any regulatory process should be to establish objective standards that when applied you end up with a predictable result.  Reasonable people can disagree about what the objective standards should be and about the process - but once in place the outcome should be the same regardless of who oversees the process.  These Commissioners appear to believe they possess executive, legislative, and quasi-judicial powers simultaneously.  

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