On July 25, 2016, an environmental group ("Petitioner") filed two petitions for review with the United States Court of Appeals for the District of Columbia Circuit challenging the Department of Energy's ("DOE") May 12 and June 26, 2015, orders authorizing the exportation of liquefied natural gas ("LNG") to non-free trade agreement nations from a yet-to-be-constructed import, export, storage, and vaporization terminal in Texas and an existing terminal in Louisiana. Sierra Club v. U.S. Dep't of Energy, No. 16-1252; Sierra Club v. U.S. Dep't of Energy, No. 16-1253. DOE granted three natural gas companies' applications to export LNG in an amount equal to 1.38 Bcf/d (billion cubic feet per day) from Louisiana and 2.1 Bcf/d from Texas, after concluding that record evidence was insufficient to rebut the statutory presumption that the proposed exports were in the public interest. The companies authorized to export LNG, based on the grant of these applications, and an oil and natural gas industry group were granted leave to intervene in the cases pending before the D.C. Circuit.
Briefing in both cases concluded on March 31, 2017. Among other things, Petitioner contended that DOE violated the National Environmental Policy Act ("NEPA") by failing to adequately consider indirect environmental effects from increased domestic natural-gas production and export, including greenhouse gas emissions and ozone-forming air pollutants. Additionally, Petitioner argued that DOE's assessment of whether the proposed exports are consistent with the public interest—an assessment required by the Natural Gas Act—was arbitrary and capricious.
DOE responded that potentially adverse environmental effects attributable to export-induced natural-gas production are speculative and therefore prohibit DOE from reasonably forecasting any meaningful effects for NEPA purposes, and that any potential impacts are not contrary to the public interest. DOE explained that its Environmental Addendum and Life Cycle Analysis evaluate and disclose the impacts associated with natural-gas production and LNG exports on global climate change. Ultimately, DOE concluded that, after taking a hard look at the applications, foreseeable effects of exportation would not significantly affect the human environment and are not contrary to the public interest. The intervenors second DOE's arguments.
Petitioner argued, however, that such adverse impacts are not only substantial, but foreseeable, and that DOE has the tools necessary to provide a sufficiently detailed and meaningful analysis. According to Petitioner, there is substantial evidence that proposed exports will have adverse effects on both the environment and the domestic natural gas market.
On March 28, 2017, after all proof briefs were filed, the President issued an Executive Order on Promoting Energy Independence and Economic Growth with an eye toward rolling back the prior Administration's regulatory approach to climate change. The March 28th Executive Order includes a requirement for the Council on Environmental Quality to rescind its "Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews." The current Administration has also indicated its approval of LNG export projects for creating jobs and advancing national security interests. It is unclear what impact, if any, this Executive Order or the Administration's general position on LNG exports will have on these cases as they progress. The D.C. Circuit has not yet scheduled oral argument for these matters.
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