AES Sparrows Point v. Smith

May 19: In the U.S. Court of Appeals, Fourth Circuit, Case No. 07-1615. AES Sparrows Point LNG, LLC and Mid-Atlantic Express, LLC (together, AES) brought the suit against Baltimore County, Maryland, its executive, and its zoning commissioner (together, the County) seeking a declaration that County Bill 9-07, which prohibits the siting of any liquefied natural gas (LNG) terminal in the County’s Chesapeake Bay Critical Area, is preempted by the Natural Gas Act (NGA). The district court granted summary judgment to the County, concluding that Bill 9-07 is saved from preemption because it "is within the delegated authority of the State of Maryland and the County under the Coastal Zone Management Act" (CZMA) and "is enforceable as part of the State of Maryland’s Coastal Management Program." J.A. 271, 284. AES appealed.

The Appeals Court overturned the district court ruling and said, "We hold that Bill 9-07 is not part of Maryland’s federally approved Coastal Zone Management Plan (CMP), and therefore is not saved from preemption as an exercise of Maryland’s rights under the CZMA. Accordingly, we reverse the judgment of the district court and remand for further proceedings."

The Appeals Court said "our inquiry must focus first on whether Bill 9-07 has been incorporated into Maryland’s CMP. The CZMA specifies the manner by which a state may amend its approved CMP. . . 'Amendment' for purposes of the CZMA is defined in 15 C.F.R. § 923.80(d) . . . We have no difficulty concluding that Bill 9-07 is an 'amendment' of Maryland’s CMP because it imposes a categorical ban on LNG terminals in the Chesapeake Bay Critical Area that the CMP did not previously contain. . .

"The County does not dispute that it has never presented Bill 9-07 to NOAA for approval as required by the CZMA. The CZMA makes clear, however, that the mere adoption of Bill 9-07 into the County’s CAPP by Maryland’s Critical Area Commission is not sufficient to make Bill 9-07 part of Maryland’s CMP. . . Until NOAA approves Bill 9-07 or fails to take action after being presented with it, it is not part of Maryland’s CMP and cannot be saved from preemption by the NGA’s Savings Clause. Therefore, Bill 9-07 is preempted by the NGA’s grant of exclusive authority to FERC 'to approve or deny an application for the siting, construction, expansion, or operation of an LNG terminal,' 15 U.S.C. § 717b(e)(1), and may not be enforced by the County to prevent the construction of an LNG terminal at Sparrows Point."

Access the complete opinion (click here).