Dominion, MDE square off in D.C. Circuit

A clash of federal and state environmental laws lies at the core of a dispute over the construction of a natural gas compressor in Frederick County.

The U.S. Court of Appeals for the District of Columbia Circuit heard arguments Tuesday on Dominion Transmission Inc.’s proposal to build a compressor station in Myersville — a key element of its $115 million project to increase natural gas flow across the mid-Atlantic.

At issue is whether the federal Natural Gas Act pre-empts a Maryland law that was created to comply with the federal Clean Air Act.

In August, the Myersville town council denied Dominion’s application to change the current commercial zoning on the site to allow for the station’s construction.

The Maryland Department of the Environment, in turn, rejected Dominion’s request for an air quality control permit because Dominion had not receive approval from the local zoning authority. Local consent is a requirement under Environment Article §2-404(b), the Maryland law created to comply with the Clean Air Act.

“The department is not seeking to stop the facility from being built…,” said Assistant Attorney General for the Department of the Environment Roberta R. James at the hearing. “The department is simply trying to follow state law.”

In December, the Federal Energy Regulatory Commission approved Dominion’s plan to build a compressor, saying the station was a “public convenience and necessity,” according to the FERC certificate.

“The punch line is that this is a project FERC has considered, and rejected all of the concerns Myersville had,” Dominion’s attorney, Christopher T. Handman of Hogan Lovells US LLP in Washington, D.C., told the court.

Dominion filed a petition in the D.C. Circuit in February, claiming the Maryland Department of the Environment’s rejection of its application was a “failure to act” under the Natural Gas Act.

The energy company, which operates in 15 states, argued that the Natural Gas Act and FERC’s approval pre-empt §2-404(b), the state’s air quality permit requirements.

“They are leveraging the certification in order to bypass the permit process,” said Ted Cady, secretary of Myersville Citizens for a Rural Community Inc., which opposes the station and was an intervenor in the appellate case.

Dominion declined to comment on pending litigation.

The case in the D.C. Circuit is separate from another lawsuit Dominion filed in U.S. District Court in Baltimore in January against Myersville, its town council and its mayor. The energy provider contended in that case that the Natural Gas Act pre-empts local zoning and land use ordinances.

Clean Air vs. Natural Gas acts

Under the Clean Air Act, states must submit an implementation plan to the U.S. Environmental Protection Agency for approval. Maryland’s requirements for air-quality permits are part of the state’s implementation plan, according to the appellate brief filed by the Maryland Department of the Environment.

MDE contended that it was simply following the requirements laid out in the state code.

“The town has to be the one that says it’s OK, not the applicant,” James said.

Dominion argued that the state provision under the Clean Air Act is not federal law and that the Natural Gas Act pre-empts that law and any other local and state laws.

“This unconstitutional obligation is pre-empted by federal law,” Handman said.

MDE said the appellate court would have jurisdiction under the Natural Gas Act only if the department had failed to act on Dominion’s application, and that the duty to act was never triggered because Dominion’s application was incomplete without the local consent.

Dominion argued that the department did in fact “act” by rejecting its air quality permit application.

“Dominion cannot have its cake and eat it, too,” James wrote in a brief to the U.S. Court of Appeals. “Whether this Court decides this case on the merits of preemption or dismisses it for lack of jurisdiction, this Court may not provide the relief Dominion seeks.”

The department said Dominion’s action is barred by the Eleventh Amendment, which gives states sovereign immunity. Dominion, however, said Maryland waived its sovereign immunity.

The department also said the case should be held in abeyance until Dominion’s lawsuit in U.S. District Court against the town is resolved.

Handman called the air quality permit the “one final stumbling block” for Dominion during Tuesday’s hearing.

“But for that obstacle, this project could go forward,” Handman said.

The compressor station is part of Dominion’s Allegheny Storage Project, which would increase the natural gas provided to Washington Gas Light Co., Baltimore Gas and Electric Co. and TW Phillips Gas and Oil Co.

The plan requires the construction of four compressor stations, expected to cost $112.3 million. For one facility, Dominion wants to build a 16,000 horsepower natural gas combustion engine in Myersville on a 21-acre site at the northwest intersection of Maryland Route 17 and Milt Summers Road.

The station would receive gas from an existing pipeline that runs from Leesburg, Va., to Leidy, Pa., compress the gas and return it via 500 feet of new pipelines.

Dominion transports natural gas throughout the Northeast and mid-Atlantic, serving 6 million customers, according to its 2011 annual report.

Dominion has migrated across Frederick County in its efforts to build the compressor station. The natural gas company met opposition in nearby Middletown and Jefferson before proposing a site in Myersville.

The Myersville Town Council denied Dominion’s application because it feared the station would be a hazard to public health, violate the current master plan, create unwanted noise and be an eyesore.

“It’s a safety issue,” Cady said. “It’s a health issue. It’s also a cultural issue. This could dramatically change the culture the historical significance of Myersville.”

The Myersville Citizens for a Rural Community, the town and other groups petitioned FERC to reconsider its decision regarding the compressor station.

The commission is expected to issue an opinion on its reconsideration Thursday. If FERC still sides with Dominion, Myersville will look at appealing that decision, Cady said.