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Court upholds Freeport LNG approval

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LNG Industry,

According to multiple sources, the US Court of Appeals for the District of Columbia Circuit has denied a Sierra Club appeal challenging the Department of Energy's (DOE) authorisation of the Freeport LNG terminal on Quintana Island, TX, to export to non-free trade agreement (FTA) countries.

The Sierra Club argued that DOE failed to meet its obligations under the Natural Gas Act (NGA) and the National Environmental Policy Act (NEPA) by not sufficiently examining the indirect effects of approving LNG exports from the Freeport terminal. DOE did not properly weigh the impacts of increased domestic natural gas production and the cumulative environmental effects of other export projects, the environmental group contended.

The DOE under the Obama administration – in response to a number of non-FTA LNG export applications – commissioned two studies to examine the impacts of increased natural gas exports. The judges concluded that the types of indirect effects Sierra Club wanted DOE to analyse went beyond the ‘reasonably foreseeable’ standard required under NEPA.

Citing past case law, the court found that DOE "was not required to 'foresee the unforeseeable.' Its determination that an economic model estimating localised impacts" of increased domestic production induced by increased LNG exports "would be far too speculative to be useful is a product of its expertise in energy markets and is entitled to deference.

"...We cannot say that the Department failed to fulfil its obligations under NEPA by declining to make specific projections about environmental impacts stemming from specific levels of export-induced gas production."

As for Sierra Club's challenge of DOE's public interest evaluation under the NGA, the court found that the group's list of environmental concerns "fails to overcome the presumption in favour of exports.

"Notably, even if the department determined the impacts were significant, it could still find that the public interest weighs in favour of allowing exports," the opinion read. "...Sierra Club has given us no reason to question the Department's judgment" that Freeport's application for LNG exports is consistent with the public interest.

"We are disappointed with the court's refusal to require DOE to use available tools to inform communities of the impact of this additional fracking prior to approving exports," said Nathan Matthews, a Sierra Club staff attorney. "This LNG export approval creates unnecessary risks for the people of Freeport, Texas, and for every community that is saddled with fracking rigs next to their homes, schools, and public spaces."

The American Petroleum Institute praised the court's decision.

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