## Facts

- Freeport LNG Development, L.P. operated an LNG terminal on Quintana Island, Texas, originally authorized for LNG imports.
- Freeport sought authorization to redesign and expand the terminal to liquefy natural gas for export, including new liquefaction facilities and related infrastructure.
- FERC authorized the project under Natural Gas Act (NGA) § 3 and completed an environmental assessment addressing construction and operational impacts at the terminal site.
- Sierra Club and Galveston Baykeeper (the Associations) sought rehearing, arguing FERC’s NEPA review and NGA § 3 public-interest determination were inadequate because they did not address upstream production effects (including increased hydraulic fracturing) or downstream effects from foreign consumption of exported gas (including greenhouse-gas emissions).
- FERC denied rehearing, and the Associations petitioned for review in the D.C. Circuit.

## Issues

1. Whether the Associations had Article III standing to challenge FERC’s authorization under NEPA.
2. Whether NEPA required FERC to analyze upstream effects of increased natural-gas production and downstream effects from foreign combustion of exported LNG as indirect or cumulative impacts of the terminal authorization.
3. Whether FERC’s NGA § 3 “public interest” determination was arbitrary or capricious for not considering broader export-related environmental effects that are addressed in the export-authorization process administered by the Department of Energy (DOE).

## Decision

- The court held the Associations had standing based on members’ concrete aesthetic and recreational interests in areas allegedly affected by terminal-related impacts.
- The court denied the petition for review, upholding FERC’s NEPA analysis and NGA § 3 authorization.
- The court concluded FERC reasonably limited its environmental review to impacts of constructing and operating the terminal and was not required to evaluate upstream production or foreign downstream emissions tied to export volumes and market behavior.
- The court concluded FERC’s public-interest determination permissibly reflected the statutory division of responsibilities in which DOE addresses export authorizations and related broader considerations.

## Legal Principles

- Environmental organizations may establish standing by showing members’ concrete use and enjoyment of affected areas and a plausible risk of harm within NEPA’s zone of interests.
- NEPA requires analysis of reasonably foreseeable effects that have a reasonably close causal relationship to the agency action; effects that depend on separate agency decisions and independent market choices may be too attenuated to qualify as indirect effects of the action under review.
- Where statutory authority is divided, an agency’s NEPA scope may be bounded by the effects of the matters it regulates; FERC’s LNG terminal authorization responsibilities focus on siting, construction, and operation rather than export policy.
- Under NGA § 3’s regulatory structure, FERC need not replicate broader export-level analysis assigned to DOE when determining whether authorizing terminal facilities is consistent with the public interest.

## Conclusion

The D.C. Circuit upheld FERC’s authorization of an LNG export-terminal expansion, holding that NEPA and the NGA did not require FERC to analyze upstream production impacts or foreign downstream emissions that were not closely caused by FERC’s terminal siting approval and were addressed, if at all, through DOE’s export-authorization role.


Sierra Club v. Fed. Energy Regul. Comm'n, 827 F.3d 36 (D.C. Cir. 2016)