United States: DC Circuit Denies Sierra Club Appeal Of FERC Authorization Of Two LNG Facilities

Since 2012, the major opponent of new large-scale liquefied natural gas (LNG) export projects has been the Sierra Club. The Sierra Club has adopted a two-pronged approach in its opposition to LNG exports projects, opposing both authorizations granted by the Federal Energy Regulatory Commission (FERC) under Section 3 of the Natural Gas Act (NGA) to construct and operate facilities for the export of LNG and authorizations granted by the US Department of Energy Office of Fossil Energy (DOE/FE) under Section 3 of the NGA to export LNG to countries with which the US does not have free trade agreements that require "national treatment" for trade in natural gas. The Sierra Club has argued that in granting authority to construct LNG facilities and export LNG, FERC and DOE/FE have not complied with the requirements of the National Environmental Policy Act of 1968 (NEPA) by failing to consider the indirect, cumulative and nationwide environmental effects of increased natural gas production due to increased natural gas exports.

In separate opinions issued on June 28, the US Court of Appeals for the District of Columbia Circuit denied the Sierra Club's appeals of two orders issued by FERC authorizing the construction and operation of LNG facilities. The D.C. Circuit found that because DOE/FE – and not FERC – has jurisdiction to authorize exports of natural gas, including LNG, FERC does not have to consider the potential environmental effects of increased natural gas production due to greater natural gas exports resulting from the construction of LNG export facilities. The court's decisions defer consideration of the Sierra Club's arguments to cases challenging DOE/FE's authorization of LNG exports.

Background

Section 3 of the NGA gives FERC exclusive jurisdiction to approve the construction and operation of LNG terminals, which include natural gas facilities located onshore or in state waters used to receive, unload, load, store, transport, gasify, liquefy or process natural gas that is exported to a foreign country from the US. FERC approves the siting, construction and operation of LNG terminals upon a finding that such activities are not inconsistent with the public interest. In addition, under NEPA, FERC is obligated to consider the potential environmental effects of its authorization to construct LNG terminals.

Section 3 of the NGA also gives DOE/FE authority over exports of natural gas. Under Section 3(c) of the NGA, LNG exports to countries with which the US has free trade agreements that require "national treatment" for trade in natural gas are automatically considered in the public interest, and applications to export gas to such countries must be approved without modification or delay. Requiring "national treatment" means treating an imported good the same as a locally produced good once it enters a market. The US currently has such free trade agreements with Australia, Bahrain, Canada, Chile, Colombia, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Republic of Korea and Singapore. Authorization to export LNG to countries without such free trade agreements requires DOE/FE to find that the proposed exports are not inconsistent with the public interest. In making this determination, DOE/FE considers the domestic need for the natural gas proposed to be exported, whether the proposed exports pose a threat to the security of domestic natural gas supplies and other factors bearing on the public interest. DOE also must review the potential environmental effects of the proposed export under NEPA.

FERC is the lead agency for conducting the environmental review of proposed LNG export projects under NEPA, and DOE/FE has been a participating agency in FERC's environmental review. Once FERC issues its final environmental review document (either an Environmental Impact Statement or an Environmental Assessment), DOE/FE issues its own Record of Decision, making its own environmental determinations in connection with its export authorization.

The Sabine Pass Case

In the first case considered by the D.C. Circuit, Sierra Club v. FERC, Case No. 14-1249 (the "Sabine Pass Case"), Sierra Club challenged FERC's 2014 order amending its 2012 orders authorizing the construction and operation of Trains 1-4 of LNG export facilities in Cameron Parish, Louisiana operated by Sabine Pass Liquefaction, LLC and Sabine Pass LNG, L.P. (the "Sabine Pass LNG Facility"). This resulted in an increase of four million tons per year of natural gas in the production capacity at the Sabine Pass LNG Facility.

Sierra Club argued that in its NEPA analysis, FERC failed to consider the indirect environmental effect of increased US natural gas production induced by greater exports of US-produced LNG, and the increased air pollution resulting from rising coal use due to inflated natural gas prices caused by larger LNG exports. Sierra Club contended that FERC should have considered these indirect effects cumulatively with all pending and approved proposals for LNG export projects in the US.

The D.C. Circuit found that, at bottom, Sierra Club's challenge to FERC's order relates to the potential environmental effects of greater natural gas exports from the Sabine Pass LNG Facility, but that FERC's orders do not authorize Sabine Pass to increase exports from the Sabine Pass LNG Facility. The court agreed with FERC that DOE/FE alone has legal authority to authorize Sabine Pass to increase commodity exports of LNG, and therefore FERC did not need to consider the indirect effects of concern to the Sierra Club in its NEPA review. The court also said that Sierra Club is free to raise these issues in a challenge to DOE's NEPA review of its export decisions.

The Freeport Case

In the second case, Sierra Club and Galveston Baykeeper v. FERC, Case No. 14-1275 (the "Freeport Case"), Sierra Club challenged FERC's 2014 order authorizing Freeport LNG Development, L.P. to construct and operate facilities for the export of LNG at its existing LNG terminal in Texas (the "Freeport LNG Facility").

Sierra Club argued that contrary to its obligation under NEPA, FERC had failed to consider the indirect environmental effects of a possible increase in domestic natural gas production being induced by LNG exports from the Freeport LNG Facility and had failed to analyze the cumulative environmental effects of the Freeport LNG facilities with all of the proposed export projects in the US.

The D.C. Circuit considered whether FERC discharged its duty under NEPA to adequately consider the indirect and cumulative environmental effects of authorizing the siting, construction, expansion and operation of the Freeport LNG Facility. As in the Sabine Pass Case, the court agreed with FERC that because DOE/FE alone has authority to authorize the export of any natural gas through the Freeport LNG Facility, FERC's NEPA analysis did not have to address the indirect effects of the anticipated export of natural gas from the Freeport LNG Facility. As in the Sabine Pass Case, the D.C. Circuit's decision defers consideration of the Sierra Club's arguments to appeals of DOE/FE orders authorizing LNG exports to non-FTA countries.

The Sierra Club petitioned the D.C. Circuit for review of one of DOE/FE's orders authorizing the export of LNG to non- FTA countries from the Freeport LNG Facility. The Sierra Club did not, however, seek judicial review of DOE/FE's orders authorizing the export of LNG to non-FTA countries from Trains 1-4 of the Sabine Pass LNG Facility.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.