SIERRA CLUB, Et Al. v. DOMINION COVE POINT LNG, L.P.
86 A.3d 82
Md. Ct. Spec. App.2014Background
- Cove Point is a 1,017-acre LNG terminal site formerly owned by Columbia Gas and acquired by Dominion in 2002; prior agreements (1972, 1994) regulated its use for environmental protection and LNG operations.
- In 2005 Dominion, Sierra Club, and Maryland Conservation Counsel executed an agreement (the 2005 Agreement) that superseded prior agreements and limited activities on the LNG Terminal Site to defined "LNG Terminal Operations."
- Section 1.01 defines "LNG Terminal Operations" by an enumerated list (a)–(j), including subparagraph (e): "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."
- After fracking expanded domestic supply, Dominion sought federal approvals (FERC, DOE) to add on-site liquefaction and export capability and consulted Sierra Club as required by the 2005 Agreement; Sierra Club withheld consent.
- Dominion sued for a declaratory judgment; the Calvert County circuit court granted summary judgment to Dominion, holding the 2005 Agreement unambiguous and permitting export-related activities (transfer by pipeline to offshore pier and construction within the Fenced Area).
- Sierra Club appealed, arguing the Agreement limits Cove Point to import/peaking and that exportation is not authorized because it is not listed nor contemplated in recitals; the Court of Special Appeals affirmed the circuit court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2005 Agreement authorizes exportation of LNG from the Terminal Site | Sierra Club: the Agreement’s enumerated operations are exclusive and recitals show intent for import only; export not listed so prohibited | Dominion: text permits each step of export (liquefaction, pipeline delivery to pier, tanker transfer); Agreement unambiguous and supersedes prior deals | Court: Held for Dominion — Agreement unambiguous; subparagraph (e) authorizes receipt by tanker and delivery by pipeline "at or from" the Terminal Site, which allows export-related transfers |
| Whether the disputed clause ("receipt by tanker and receipt or delivery by pipeline at or from the LNG Terminal Site") is ambiguous | Sierra Club: clause could be read to authorize only import/peaking; extrinsic evidence should be considered | Dominion: clause is clear; extrinsic evidence and prior dealings are superseded and inadmissible | Court: Clause not ambiguous; ordinary dictionary and contextual reading permit delivery both to and from the site |
| Whether recitals or prior agreements restrict substantive rights in the 2005 Agreement | Sierra Club: recitals and earlier agreements show Cove Point was intended for import only | Dominion: recitals do not override clear operative provisions; 2005 Agreement expressly supersedes prior agreements | Court: Operative provisions govern; recitals do not negate clear substantive language authorizing delivery "from" the site |
| If ambiguous, would extrinsic evidence (technology change, prior agreements, environmental concerns) alter result? | Sierra Club: export was not technologically feasible or contemplated in 2005; prior agreements and environmental risks support a restriction | Dominion: changed circumstances do not defeat clear contractual language; 2005 Agreement supersedes prior deals | Court: Even if ambiguous, extrinsic evidence does not overcome the plain meaning permitting export; environmental/regulatory concerns are for agencies, not contract construction |
Key Cases Cited
- Myers v. Kayhoe, 391 Md. 188 (objective contract interpretation controls)
- Dennis v. Fire & Police Employees’ Ret. Sys., 390 Md. 639 (courts give effect to clear contract terms; parol evidence not considered when agreement is unambiguous)
- Sy-Lene of Washington, Inc. v. Starwood Urban Retail II, LLC, 376 Md. 157 (contract ambiguous only if reasonably prudent person could read it more than one way)
- Newell v. Johns Hopkins Univ., 215 Md. App. 217 (restrictive covenants enforced as written; court examines the agreement signed, not parties’ later preferences)
- Pulaski v. Riland, 199 Md. 426 (recitals do not control over clear substantive provisions)
- Slice v. Carozza Properties, Inc., 215 Md. 357 (changed circumstances after contracting do not override clear contractual language)