Environmental Group Challenges Department of Energy's Decision to Authorize Export of Liquefied Natural Gas from Texas and Louisiana

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.

Recent Developments in Legal Challenge to Clean Power Plan

As reported in the Fall 2016 issue of The Climate Report, an en banc panel of the United States Court of Appeals for the District of Columbia Circuit heard oral argument on September 27, 2016, in West Virginia v. EPA, No. 15-1363, a case involving challenges to the U.S. Environmental Protection Agency's ("EPA") 2015 rule known as the Clean Power Plan ("CPP"). Despite the fact that the court has not yet issued an opinion, there have been a number of noteworthy developments in the case.

On January 12, 2017, EPA took final action denying additional petitions for reconsideration of the CPP. Parties began filing petitions for review of these denials in the United States Court of Appeals for the District of Columbia Circuit on January 17, 2017. These petitions have been consolidated in North Dakota v. EPA, No. 17-1014.

Beginning on February 24, 2017, parties who had filed petitions for review in both North Dakota v. EPA and West Virginia v. EPA began filing motions requesting that the D.C. Circuit sever and consolidate their petitions in North Dakota v. EPA with their petitions in West Virginia v. EPA and set a briefing schedule on the new petitions. EPA responded that it did not oppose consolidation but argued that all of the petitions for review of the CPP, and not just some, should be consolidated in one action for purposes of judicial economy and to avoid overlapping claims.

More significantly, on March 28, 2017, EPA filed a motion in West Virginia v. EPA to hold the case in abeyance while EPA conducts a review of the Rule pursuant to the President's March 28, 2017, Executive Order titled "Promoting Energy Independence and Economic Growth" that directed EPA to review the CPP. EPA argued that because the CPP is now under EPA review and may be substantially modified or rescinded through further rulemaking, holding the case in abeyance: (i) is in the interest of judicial economy and efficiency; (ii) will avoid the untenable situation where the United States is unable to represent the current Administration's position on the substantive questions that are at the subject of the case; and (iii) will preserve the status quo because implementation of the rule has already been stayed by the U.S. Supreme Court. Parties filed both motions in support of and opposition to EPA's motion.

On April 28, 2017, in consideration of the motions to sever and consolidate and EPA's motion to hold the case in abeyance, the D.C. Circuit ordered that: (i) the case be held in abeyance for 60 days from the date of the order and that EPA file status reports at 30 day intervals; (ii) the parties file supplemental briefing due May 15, 2017, addressing whether the case should be held in abeyance or remanded to EPA; and (iii) the parties' motions to sever and consolidate be deferred pending further order of the court.

We will continue to monitor the challenges to the CPP for significant developments.

D.C. Circuit Postpones Oral Argument in Consolidated Challenges to U.S. EPA's Startup-Shutdown-Malfunction Rule in Light of EPA's Potential Reconsideration of Rule

As first reported in the Fall 2015 issue of The Climate Report, a coalition of energy companies, industry organizations, and states ("Petitioners") challenged a final rule promulgated by U.S. EPA in 2015 requiring 36 states to revise their State Implementation Plans ("SIPs") under the Clean Air Act ("CAA") to disallow automatic exemptions from emissions limits during periods of equipment startup, shutdown, or malfunction ("SSM"). See Walter Coke, Inc. v. EPA, No. 15-1166 (D.C. Cir.).

Since 2015, the parties have completed briefing in the United States Court of Appeals for the District of Columbia Circuit. Petitioners argued that the SSM rule exceeded EPA's authority and improperly overrode state decisions regarding the control measures necessary and appropriate to achieve CAA objectives. In particular, they contended that the "broad mandate" enshrined in the rule was not based any new statutory requirement, mandated by any court decision, or tied to any demonstrated air quality problem. Petitioners further asserted that EPA had run afoul of the CAA by failing to make a "finding" based on "available information" that the SSM provisions in the SIPs rendered the SIPs "substantially inadequate" or that revisions to the SIPs were "necessary to correct such inadequacies."

EPA, for its part, asserted that the SSM rule was necessary to correct specific SIP provisions that violated "bedrock principles of the CAA." EPA argued that provisions automatically exempting emissions during SSM events, for example, violated the CAA's requirement that emission limitations be continuous and enforceable. EPA further noted that even where the exemption was discretionary and not automatic, exempting SSM emissions contravenes the CAA because a state cannot revise EPA-approved emission limitations unless it complies with the CAA's procedural and substantive requirements for revising SIPs.

On April 17, 2017, the D.C. Circuit scheduled oral argument for May 8, 2017. The next day, however, EPA moved to postpone oral argument, arguing that additional time was necessary for it to determine whether the SSM rule "should be maintained, modified or otherwise reconsidered," in light of the turnover in Administration. Environmental groups, intervenors in the consolidated petitions, opposed the motion on the grounds that EPA had failed to demonstrate the requisite "extraordinary cause" for postponing argument. On April 25, 2017, the D.C. Circuit granted EPA's motion, removed the petitions from the May 8, 2017, oral argument calendar, and held the challenges in abeyance pending further order. EPA is required to provide the court updates on the status of EPA's review of the SSM rule every 90 days.