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Dominion Cove Point Liquefaction Nuclear Group is one step closer toward its expansion of the facility to export LNG to other countries, after a Calvert County Circuit Court judge ruled that the project does not violate a 2005 agreement with environmental organizations.

On Jan. 2, Calvert County Circuit Court Judge James P. Salmon declared that a 2005 agreement with the Sierra Club, the Sierra Club Maryland Chapter and the Maryland Conservation Counsel permits the construction, operation and maintenance of additional facilities for the LNG expansion within a particular area of the terminal site in Lusby. The decision further declares that the 2005 agreement permits Dominion to export LNG from the terminal site.

The Sierra Club, collectively, filed a cross motion for declaratory judgment, which was denied in the ruling by Judge Salmon on the basis that “the Sierra Club, in various ways, attempts to circumvent the plain language of [the portion of the 2005 agreement in question].” MCC filed an answer stating it did not object to the declaratory relief sought by Dominion.

“Dominion will move forward with engineering, marketing and regulatory review processes,” a Dominion press release states.

The ruling states, “There is no provision in the 2005 Agreement explicitly prohibiting use of the facility for exporting LNG.”

Judge Salmon wrote in the ruling, “In my opinion, [the portion of the 2005 agreement in question] unambiguously does give Dominion the right to use the Cove Point Facility for the export of LNG. [The agreement] allows Dominion to carry on activities related to ... the receipt by tanker and the receipt or delivery by pipeline of LNG, revaporized LNG, or natural gas at or from the LNG Terminal Site.”

Craig Segall, lawyer for the Sierra Club, said the environmental group is “certainly” thinking about appealing the ruling. “We do think the opinion’s wrong,” he said, adding that the Sierra Club believes Dominion strung together clauses to make its point.

Segall said that when the 2005 agreement was made, there was “absolutely no possibility” of exporting LNG, which is why it wasn’t explicitly included in that agreement.

“We still expect to be a partner with them,” Dan Donovan, manager of media relations for Dominion, said of the Sierra Club. “We expect to get along with them in the future.”

In May 2012, Dominion filed for a declaratory judgment against the Sierra Club, collectively, and the MCC, asking the court to resolve a dispute between Dominion and the Sierra Club regarding Dominion’s rights in a March 2005 agreement. Dominion asked the court to declare the agreement permits construction, operation and maintenance of additional facilities for the LNG expansion within the “fenced area” of the terminal site, and that the agreement permits the exportation of LNG.

The ruling states that the Sierra Club did not object to Dominion’s first request for declaratory judgment; however, it “strenuously” objected to the second, taking the position that Dominion does not have the right to use the Cove Point terminal site for exporting LNG according to the 2005 agreement.

The Cove Point Liquefaction Project will expand the natural gas terminal in Cove Point to include the exportation of LNG.

According to Dominion, the project will create an additional $40 million annually in property tax revenue, as well as $22 billion in new government royalties and other revenues to federal, state and local governments. Dominion estimates the cost of the project to be between $2.5 and $3.5 billion.

Currently, Dominion is “in the middle” of the pre-filing process with the Federal Energy Regulatory Commission regarding the proposed expansion project, said Donovan. Dominion expects to file the application with the FERC this year and, after FERC approval, construction would begin at the Cove Point location in early 2014 with a projected in-service date for the entire project in 2017.

In addition, the release states that engineering studies are continuing and expected to be completed soon.

“I think it’s progressing pretty well,” Donovan said, adding that in the next month or so, Dominion expects to complete the engineering studies.

According to the release, there are also terminal service agreements under negotiation with potential customers, like Sumitomo Corp., “a major Japanese trading company.”

aharrison@somdnews.com