DC Circuit Denies Petitions to Review Non-Export-Related Environmental Consequences of FERC Action

Two recently issued decisions are important because they clarify how the formidably complex legal structure affecting a growing American business—the export of liquefied natural gas (LNG) –will be interpreted by the one federal Court of Appeals that has singular expertise in interpreting such requirements. On June 28, the U.S. Court of Appeals for the DC Circuit denied two petitions to review National Environmental Policy Act (NEPA) environmental issues affecting two separate FERC LNG export terminal facilities; the two cases are Sierra Club and Galveston Baykeeper v. FERC ( pertaining to the Freeport, Texas terminal ) and Sierra Club v. FERC (regarding the Sabine Pass Terminal). These cases were argued by and decided by the same attorneys and panel of judges. The Court of Appeals found that the petitioners had demonstrated sufficient standing, but the basic flaw in their argument seems to have been that FERC’s role is fairly circumscribed by law, and the major complaint was that the export of LNG would inevitable reduce the supply of natural gas for domestic purposes, thus increasing reliance on cheaper sources of energy such as coal.

The Court of Appeals was satisfied with the quality and comprehensiveness of FERC’s NEPA review of non-export-related environmental consequences, and that FERC did not act in an arbitrary and capricious manner. The Court of Appeals’ opinion elucidates the “tangled web” of federal export authorization authority.

Since the issue of the environmental consequences of exporting natural gas is the responsibility of the Department of Energy, the Court of Appeals advises the petitioners that those objections should be raised with the Department of Energy in a separate proceeding. Nevertheless, these are very important rulings.