Sierra Club v. U.S. Department of Energy

The D.C. Circuit Court of Appeals upheld the U.S. Department of Energy’s (DOE) authorization of the export of liquefied natural gas (LNG) from the Freeport Terminal on Quintana Island in Texas, rejecting claims that DOE had not sufficiently examined environmental impacts under the National Environmental Policy Act (NEPA) or fulfilled its obligations under the Natural Gas Act. The court ruled that DOE had provided a “reasoned explanation as to why it believed the indirect effects pertaining to increased gas production were not reasonably foreseeable” and had not failed to comply with NEPA “by declining to make specific projections about environmental impacts stemming from specific levels” of increased production. Similarly, the court found that DOE was not required to make specific projections about the indirect effects of a potential switch in the U.S. power sector from gas to coal in response to higher gas prices due to increased exports. The court also found that DOE had adequately considered the potential greenhouse gas emissions resulting from the indirect effects of exports, noting that DOE had evaluated the upstream and downstream emissions of carbon dioxide and methane from producing, transporting, and exporting LNG in a “Life Cycle Report” commissioned by DOE to supplement the EIS prepared by FERC. (The D.C. Circuit said DOE “plainly relie[d]” on the Life Cycle Report and another supplemental report to justify its hard look. The D.C. Circuit therefore considered both supplemental reports to be part of DOE’s environmental review even though DOE argued that it complied with NEPA by adopting FERC’s EIS.) The court was not persuaded that DOE was required to consider the cumulative impacts of other pending and anticipated LNG export approvals. The court also upheld DOE’s “public interest,” finding under the Natural Gas Act, rejecting contentions that DOE had failed to thoroughly consider environmental concerns.