On August 15, the U.S. Court of Appeals for the D.C. Circuit decided the case of Sierra Club v. U.S. Department of Energy. The Sierra Club challenged the U.S. Department of Energy’s (DOE) grant of a license to export liquefied natural gas (LNG) from new Texas LNG terminals and liquefaction facilities. The Court of Appeals concluded that

Sierra Club has standing but that its challenges to the Commission’s orders fail on the merits, largely for the reasons stated in the companion case, Sierra Club v. FERC (Freeport), No. 14-1275 (D.C. Cir June 28, 2016), and otherwise the court lacks jurisdiction over challenges to the Commission’s cumulative impacts analysis due to Sierra Club’s failure to exhaust its administrative remedies. Accordingly, we dismiss the petition in part and deny the petition in part.

Just last year, this Court of Appeals turned aside the Sierra Club’s challenge of the Federal Energy Regulatory Commission’s (FERC) authorization to site and construct these facilities, and the Court of Appeals noted then that the decision to grant an export authorization lay exclusively with the DOE.

In this case, the Sierra Club argued that the DOE failed to properly discharge its duties under the Natural Gas Act and National Environmental Policy Act of 1969 (NEPA), in particular the duty to sufficiently analyze the indirect impacts of these exports resulting from the inevitable increase in domestic natural gas production as well as other effects resulting from the export of this product. Regarding NEPA, the Court of Appeals stated that, under the law, FERC is the lead agency for assuring compliance with NEPA and the DOE was a “cooperating agency,” as several federal agencies had a hand in assessing the project’s overall environmental compliance.

FERC’s final environmental impact statement was completed in 2014, and the Court of Appeals was satisfied with its analysis of the data and the fact that some effects were not reasonably foreseeable at this time. The Sierra Club’s objections rooted in the Natural Gas Act foundered on the policy enunciated in the Act that strongly favors the export of LNG.

Having decided several similar cases in the past few years, the Court of Appeals may have developed a template by which these projects can be authorized and licensed in compliance with the Natural Gas Act and NEPA.