On November 1, 2017, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied a petition from the Sierra Club challenging the Department of Energy’s (“DOE”) approval of liquified natural gas (“LNG”) exports from three facilities.  In doing so, the D.C. Circuit rejected arguments made by the Sierra Club that the DOE did not properly fulfill its obligations under the National Environmental Policy Act (“NEPA”) and the Natural Gas Act (“NGA”).

The Sierra Club sought to overturn DOE’s authorization of LNG exports at three terminals in Maryland, Louisiana, and Texas.  Three issues were raised by the Sierra Club before the Court on appeal.  First, that the DOE erred in finding there was no significant environmental impact and that an environmental impact statement (“EIS”) under NEPA was not needed.  Second, that the DOE should have examined the regional environmental impacts of the three projects.  Third, that the DOE did not properly consider the public interest of the three projects under the NGA.  These arguments mirrored a previous Sierra Club petition also challenging the DOE’s approval of an LNG export application from a fourth facility.  The D.C. Circuit denied the earlier petition in August 2017 and used its prior rationale as support for its resolution of the instant petition.

The D.C. Circuit sided with the DOE on all three issues.  Relying on precedent involving prior agency decisions not to prepare an EIS, the Court found that the DOE’s findings—that there was no significant environmental impact and that an EIS was not needed—were neither arbitrary nor capricious in the circumstances presented.  In addition, the Court found that given the speculative and non-specific nature of information regarding where additional gas production would occur, it was neither arbitrary nor capricious for DOE not to engage in a more localized analysis of the environmental impacts.  Finally, the Court found that the DOE adequately addressed the Sierra Club’s public interest concerns by determining that while there were economic risks, the exports would benefit the economy as a whole, and therefore were consistent with the public interest.  Accordingly, the D.C. Circuit denied the petition for review upon finding that the DOE adequately complied with its obligations under NEPA and the NGA.

With the D.C. Circuit’s denial of the petition, the three LNG facilities will commence exporting LNG per the DOE’s original approval.  To view the D.C. Circuit’s decision, click here.