Environmental activists file SEC complaint over Cove Point gas facility

A coalition of environmental activists and investors opposed to the proposed construction of the Cove Point liquid natural gas export facility in Maryland want to hit Dominion Resources right in the wallet.

At the core of a complaint filed Monday with the Securities and Exchange Commission by the Chesapeake Climate Action Committee and others is an allegation that Dominion Resources has failed to disclose risks to investors, including potential cost overruns, construction delays and lack of transparency regarding customers who have already signed contracts with the company related to the yet-to-be-built facility.

Mike Tidwell, director of the Chesapeake Climate Action Network, said the uniqueness of the project and concerns about what he said were undisclosed risks to investors and the environment are behind the filing with the federal agency.

“This is a novel strategy,” said Tidwell, whose environmental group opposes the $3.8 billion proposed liquid natural gas export facility proposed by Dominion for Lusby.

Tidwell said Dominion was expected to begin construction of the facility during the first quarter of this year, but that has already been delayed.

But Richmond, Virginia-based Dominion Resources said the filing is not unusual.

“This is nothing new,” said Jim Norvelle, a Dominion Resources spokesman.

Tidwell said the questions raised in the letter to the SEC should give pause to both federal regulators who must green-light the investment request and to investors who would be asked to pony up as much as $400 million in capital for the project.

In March, Dominion Resources filed a request with the SEC seeking to raise cash for construction of the facility through a stock offering.

The announcement of the complaint with the SEC comes one day before Dominion Resources is scheduled to hold an annual shareholders meeting in Cleveland. The group said a protest is planned for outside the meeting venue.

Tidwell said the filing and other shareholder activism is “part of an ongoing movement now focusing on Cove Point” over environmental issues related to investments in fossil fuels and the relationship to global warming.

“We’re turning our attention to Wall Street and what investment firms will be part of the political conversation,” Tidwell said.

Tidwell said some investment firms are already expressing concerns.

Norvelle said federal rules prohibit the company from discussing the terms of its filing but called it “a collaborative process. It’s not static; it can be updated as things change and evolve.”

“Complaints, letters to the SEC are all part of the process,” Norvelle said. “Anybody can send one in. All it takes is a postage stamp.”

The company remains on track for completion of the export facility in late 2017.

Meanwhile, the company expects to clear several regulatory hurdles this month. The Public Service Commission could issue a ruling on the project by the end of the month, and the Federal Energy Regulatory Commission could rule on an environmental assessment in the next 10 days. A 30-day public comment period would begin after that federal ruling.

Lawyers for the coalition said their clients want a more in-depth environmental impact study to be done and hinted at the possibility of a federal lawsuit if that does not happen.

Norvelle rejected the idea that investment firms were souring on the project, pointing to a March rating by Standard & Poor’s Rating Services that specifically cited the proposed Cove Project and its effect on the company as a whole.

“The remaining business ventures have relatively low risk or are well-managed to contain risk, and many, such as the Cove Point liquefied natural gas facility, actually enhance Dominion’s credit quality,” according to the report.

“Standard & Poor’s certainly has been wrong in the past,” Tidwell countered. “The market has been wrong. There are a lot of precedents here for being wrong on projections.”