United States: There May Be Trouble Ahead

Last Updated: August 12 2014
Article by Neal McAliley, John Tivey and Rebecca Campbell

Legal Challenges on Home Turf Threaten US Ex-Im Bank Funding for Foreign Mining Projects

The Export-Import Bank of the United States (Ex-Im Bank) is facing a new wave of legal challenges related to the financing of natural resource projects outside of the US, and which threaten to derail one of Western Australia's most promising financing deals.

In the past two years, environmental non- governmental organisations (NGOs) have attempted to block Ex-Im Bank funding for a number of foreign projects. One recent objection was directed against Ex-Im Bank funding of the Roy Hill iron-ore project in WA's Pilbara region, which is one of the largest development projects in the global mining sector.

These challenges seek to apply US environmental laws to non-US projects, and force Ex-Im Bank to analyse the local environmental effects of those projects before making financing decisions.

While none of these challenges has yet succeeded, if they were to prevail, it could block the individual loans in question and force Ex-Im Bank to engage in more thorough and time-consuming environmental reviews of mining projects outside of the US.

In the mining industry, where the permitting and development timeline is often a key driver of the feasibility of a project, the implications of the resultant delays to mining projects reliant on Ex-Im Bank funding are potentially far-reaching.

Ex-Im Bank is an agency of the US federal government, which provides financing related to non-US projects to facilitate exports by US companies. In recent years, it has become a significant source of financing for mining and energy projects throughout the world, and seeks to fill gaps in private sec- tor trade financing.

All US federal agencies are subject to procedural laws that require evaluation of the environmental impacts of projects before final decisions are made, such as decisions to issue loans.

The primary law is the National Environmental Policy Act (NEPA), which requires agencies to prepare lengthy environmental impact statements (EIS) for any "major federal action significantly affecting the quality of the human environment".

EISs typically take three to five years to complete, require intensive examination of the environmental impacts of proposals and alternatives to those proposals, and the identification of potential mitigation measures.

The Endangered Species Act (ESA) requires all federal agencies to ensure that any action they authorise or fund is unlikely to jeopardise the continued existence of any species on the US threatened and endangered species list, and in particular, requires them to consult with US wildlife bodies.

The National Historic Preservation Act (NHPA) requires agencies to consider the effect of any proposed undertaking on certain designated historic sites.

An agency's compliance with these laws can be challenged in US courts by any person who claims to be injured as a result of the proposed action, and courts regularly set aside agency actions made without full compliance with these laws.

Environmental NGOs often use these laws to try to slow down or block projects they do not support, and to force agencies to condition their project approvals in ways that reduce environmental impacts.

These US laws do not expressly limit their reach to environmental impacts in the US. Ex-Im Bank and other federal agencies have interpreted these statutes in ways that limit their applicability to foreign projects.

In particular, Ex-Im Bank has interpreted NEPA to apply "only to the relatively rare cases where Ex-Im Bank financing of US exports may affect environmental quality in the US, its territories or possessions."

Moreover, federal wildlife agencies have interpreted the ESA to require interagency consultation only for federal agency actions "in the United States or upon the high seas".

Environmental challenges

Over the past two years, environmental NGOs have launched a wave of challenges directed at Ex-Im Bank's financing decisions, seeking to block funding for foreign projects.

In 2012, several environmental NGOs challenged Ex-Im Bank's decision to provide approximately US$4.8 billion in financing for two liquefied-natural-gas projects in Australia, claiming that the agency did not adequately consider the effect of the projects on endangered species or the Great Barrier Reef World Heritage Area, and alleged that it had therefore violated the ESA and the NHPA. This case is pending. In December 2013, the same environmental NGOs submitted written objections to Ex-Im Bank's preliminary approval of a US$694 million loan to Australia's Roy Hill iron-ore mine, alleging similar violations of the ESA and NEPA.

Such objection letters typically signal an intention to file legal proceedings. Other cases have been filed in recent years against Ex-I'm Bank for financings of US and foreign energy and mining projects, including a challenge to a US mine intended to produce coal for export and a challenge to the agency's consideration of greenhouse gas emissions in the financing of foreign energy projects.

These challengers face an uphill battle if they are to succeed. Courts generally defer to agencies' interpretation of the statutes they administer, and for many years Ex-Im Bank and other agencies have interpreted that NEPA and the ESA do not apply to projects where the environmental impacts occur in other countries.

It can also be difficult for environmental NGO challengers to establish that they have the necessary standing to challenge these loan decisions, or that the courts otherwise have jurisdiction to adjudicate the merits of the claims.

It helps, of course, that Ex-Im Bank conducts other types of environmental reviews of the projects it finances, although these are not pursuant to the legal strictures of NEPA or the ESA.

While these challenges face significant hurdles, there have been instances where challengers making similar claims have had some limited success in the courts.

However, it should be noted that some of these favourable court decisions have been overturned on appeal, suggesting there are no guarantees that Ex-Im Bank is certain to prevail.

If any of these environmental challenges does prove successful, it could have a significant effect on Ex-Im Bank financing related to non-US mining projects.

In the case of the Roy Hill project, it could result in the Ex-Im Bank's financing decision being set aside by a court until there was further environmental review.

Environmental review under NEPA and the ESA can be quite detailed and time consuming.

Such a review could result in Ex-Im Bank second-guessing local environmental regulators by placing more conditions on its financing approvals.

Project opponents would also have a new forum where they could seek to challenge large mining projects around the world, by seeking to block part of the financing in US courts.

Non-US project sponsors would then be put in the same position as US mine sponsors, which have to ensure that US agencies properly analyse the environmental impacts of their projects and also intervene in legal proceedings to defend their interests.

Originally published in Mining Journal,February 2014.

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.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions