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Court Deals Setback to Sierra Club’s Opposition of Sabine Pass, Freeport LNG Exports

A federal appeals court on Tuesday rejected two cases brought by the Sierra Club in its effort to thwart exports of U.S. liquefied natural gas (LNG). However, the door is still open to new and ongoing challenges.

The court found that environmental objections to exporting LNG should be raised in U.S. Department of Energy (DOE) proceedings that authorize export of natural gas, not in FERC’s permitting of export facilities.

Sierra Club sued the Federal Energy Regulatory Commission in D.C. Circuit Court over the Commission's approvals related to Cheniere Energy's Sabine Pass terminal in Louisiana [Sierra Club v.s FERC, 14-249] and the Freeport LNG terminal (FLEX facility) in Texas [Sierra Club et al. v. FERC, 14-1275]. The environmental group challenged approval of increased output from the Sabine Pass terminal and the approval of the Freeport terminal (see Daily GPINov. 14, 2014July 31, 2014).

The court found that Sierra Club had standing to challenge the export project approvals, according to an analysis by ClearView Energy Partners LLC published Tuesday. "However, the court ultimately found that the appeals failed on the merits as to the non-export-related environmental impacts," ClearView said, adding that this was a "limited win" for FERC's authority under the National Environmental Policy Act (NEPA).

Sierra Club was disappointed.

"This disappointing decision fails to address the significant environmental harms of increased gas exports, and is not the end of the road in this fight," said Sierra Club's Lena Moffitt, director of the group's "beyond dirty fuels" campaign. "There continues to be a groundswell of grassroots efforts adamant in stopping the extraction, burning and export of gas…”

Center for Liquefied Natural Gas Executive Director Charlie Riedl said, "Today's rulings make clear that the existing NEPA process adequately and completely assesses the environmental impacts of LNG exports. The court found that attempts to draw the bounds of environmental analysis for purposes of siting and constructing an LNG facility outside the local impacts of a given facility are not valid.”

For some time now, Sierra Club and like-minded environmental groups have fought authorizations by FERC and DOE that support the export of LNG from the United States. They argue that exports induce increased production of domestic natural gas, leading to environmental and other harms.

In its analysis, ClearView said on Tuesday the court found that environmentalist objections to "the implications of exporting natural gas pursuant to NEPA remains an issue that can only be challenged" during appeal of the multi-year export licenses issued by DOE. "The court rejected the challenges to the FERC's NEPA review of non-export-related environmental impacts only."

That means that Sierra Club and others have a shot at advancing their argument in appeals of DOE non-free trade agreement (FTA) authorizations of LNG exports. An appeal of DOE's non-FTA authorization for the Freeport FLEX facility is pending in the D.C. Circuit with the potential for oral arguments to be heard this fall, ClearView said.

Washington, DC-based ClearView also said environmentalists are "refining their arguments and bringing more detailed challenges to individual project reviews." Export project authorizations will continue under the Natural Gas Act, but environmental reviews will "continue to take longer and be more expensive," ClearView said.

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