Sierra Club v. Federal Energy Regulatory Commission

827 F.3d 36, 182 Oil & Gas Rep. 1046, 423 U.S. App. D.C. 394, 82 ERC (BNA) 1849, 2016 U.S. App. LEXIS 11744, 2016 WL 3524262, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20117
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 28, 2016
Docket14-1275
StatusPublished
Cited by49 cases

This text of 827 F.3d 36 (Sierra Club v. Federal Energy Regulatory Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Sierra Club v. Federal Energy Regulatory Commission, 827 F.3d 36, 182 Oil & Gas Rep. 1046, 423 U.S. App. D.C. 394, 82 ERC (BNA) 1849, 2016 U.S. App. LEXIS 11744, 2016 WL 3524262, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20117 (D.C. Cir. 2016).

Opinion

MILLETT, Circuit Judge:

The Sierra Club and Galveston Bay-keeper (the “Associations”) take issue with the Federal Energy Regulatory Commission’s decision authorizing Freeport LNG Development, L.P. to redesign its liquefied natural gas terminal in Texas to support export operations. Specifically, the Associations argue that the Commission’s analysis of the proposal’s impact on the environment ran afoul of the National Environmental Policy Act of 1969 (“NEPA”), 42 U.S.C. § 4321 et seq. We hold that the Associations have standing to press their challenges to the Commission’s orders and that their case is not moot, but we deny the petition for review on the merits. To the extent the Associations complain about the environmental consequences of exporting natural gas from Freeport’s terminal, those objections should be raised in the pending challenge to the Department of Energy’s order authorizing Freeport to export natural gas. On the narrower question of whether the Commission’s analysis of the non-export-related environmental consequences of Freeport’s proposal itself complied with NEPA, we find no error in-the Commission’s analysis that would rise to the level of arbitrary or capricious decision-making.

I

A

Export authorizations for natural gas implicate a tangled web of regulatory processes. The Department of Energy maintains exclusive authority over the export of natural gas as a commodity. 42 U.S.C. § 7151(b). The Natural Gas Act, though, authorizes the exportation of natural gas from the United States unless the Department specifically determines that doing so “will not be consistent with the public interest.” 15 U.S.C. § 717b(a). In addition, the Department of Energy’s determination of the public interest in the export of natural gas depends on the country to which the gas will be exported. If it is a country with which the United States has a “free trade agreement requiring national treatment for trade in natural gas,” the Natural Gas Act makes the decision for the Department, because the Act “deem[s]” export “to be consistent with the public interest, and applications for such * * * exportation shall be granted without modification or delay.” Id. § 717b(c). On the other hand, if the gas will be exported to a country with which the United States does not have such a trade agreement, the Department must independently determine whether such exports would be inconsistent with the public interest. See id. § TlTbta). 1

The Department has delegated to the Federal Energy Regulatory Commission the authority to “[ajpprove or disapprove the construction and operation of particular [export] facilities, the site at which such *41 facilities shall be located, and with respect to natural gas that involves the construction of new domestic facilities, the place of * * * exit for [natural gas] exports.” U.S. Department of Energy, Delegation Order No. 00-004.00A, § 1.21.A (May 16, 2006); cf 15 U.S.C. § 717b(e)(l) (“The [Federal Power] Commission shall have the exclusive authority to approve or deny an application for the siting, construction, expansion, or operation of an LNG [liquefied natural gas] terminal.”). As a result, if an operator of a natural gas terminal like Freeport wants to export natural gas and has to construct or modify facilities to do so, it must obtain authorizations from both the Department of Energy (to export) and the Commission (to construct and to operate the necessary facilities). And if the export will be to a natural gas free-trade country, the only potential public-interest analysis ever made is the Commission’s when approving the “siting, construction, expansion or operation of an LNG terminal.” 15 U.S.C. § 717b(e)(l).

In addition to those public-interest determinations, authorizations to export natural gas also require an environmental review under NEPA. See 42 U.S.C. § 4332(2)(C). When, as here, the agency determines that the action under review is a “major Federal aetion[ ]” that will “significantly affect[ ] the quality of the human environment,” the agency must prepare a detailed Environmental Impact Statement that addresses (i) the environmental impact of the proposed action, (ii) any “adverse environmental effects” that “cannot be avoided” if the proposal is implemented, (iii) available alternatives to the proposed action, (iv) the “relationship between local short-term uses of [the] environment and the maintenance and enhancement of long-term productivity,” and (v) any “irreversible and irretrievable commitments of resources” that “would be involved in the proposed action should it be implemented.” Id.

In analyzing the environmental impact of a project, NEPA obligates the agency to consider not just the “direct” environmental effects of the proposed action that “are caused by the action and occur at the same time and place,” but also the action’s “indirect” environmental effects that “are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable.” 40 C.F.R. § 1508.8. The agency must also consider the action’s “cumulative impact” — that is, the impact on the environment that would result “from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions.” Id. § 1508.7.

Notwithstanding the limited scope of the Commission’s delegated authority under the Natural Gas Act, that Act designates the Commission to be “the lead agency for the purposes of coordinating all applicable Federal authorizations and for the purposes of complying with the National Environmental Policy Act.” 15 U.S.C. § 717n(b)(l); see also 42 U.S.C. § 7172(a)(2)(B). As a result, the Department of Energy participates in the NEPA process only as a “cooperating agency,” 40 C.F.R. § 1501.6(b), while the Commission is ultimately responsible for “supervising] the preparation of [the] environmental impact statement,” id. § 1501.5. That arrangement makes it possible for the Department to adopt the Commission’s environmental analysis as its own for purposes of any additional NEPA review triggered by an export-authorization request. But the Department must independently review the Commission’s work and conclude that the Department’s own *42

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827 F.3d 36, 182 Oil & Gas Rep. 1046, 423 U.S. App. D.C. 394, 82 ERC (BNA) 1849, 2016 U.S. App. LEXIS 11744, 2016 WL 3524262, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20117, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sierra-club-v-federal-energy-regulatory-commission-cadc-2016.