Background

Sierra Club petitioned for review of the Louisiana Department of Environmental Quality's (LDEQ) decision to issue pre-construction permits for a planned liquefied natural gas (LNG) export facility. The environmental organization alleged that LDEQ's permitting decision was arbitrary and contrary to law because the facility's emissions would exceed the Clean Air Act's (CAA) National Ambient Air Quality Standards (NAAQS) for air pollutants and LDEQ failed to require the permittee to use the best available control technology (BACT) to limit those emissions.

The Dispute: SILs, Emission Factors, and BACT

Sierra Club's challenge centered on three principal issues. First, it contested LDEQ's use of significant impact levels (SILs) in its emissions analysis after initial modeling showed nitrogen dioxide concentrations would exceed NAAQS. Second, it challenged LDEQ's reliance on average "AP-42" emission factors—representative values set by EPA to relate the quantity of an air pollutant with an activity associated with its release—for a facility not yet constructed. Third, Sierra Club argued LDEQ acted arbitrarily in approving BACT for the facility's gas-fired combustion turbines to limit emissions of nitric oxide and nitrogen dioxide, and in approving thermal oxidizers rather than catalytic oxidizers for the oxidation system.

The Court's Analysis

The Fifth Circuit applied Louisiana's arbitrary and capricious standard of review. Federal courts reviewing state agency action afford the agencies the deference they would receive under state law. Under Louisiana law, a court may uphold an agency decision of less than ideal clarity if the agency's path may reasonably be discerned, though the court will not supply a finding from the evidence or a reasoned basis for the agency's action that the agency has not found or given.

The court held that LDEQ could rely on reasonable Environmental Protection Agency (EPA) guidance to use significant impact levels (SILs) throughout its emissions analysis. The court further held that LDEQ did not act arbitrarily or contrary to law in using the average AP-42 emission factors set by EPA. On the BACT challenges, the court held that LDEQ did not act arbitrarily in approving BACT to limit emissions of nitric oxide and nitrogen dioxide from the facility's gas-fired combustion turbines, or in approving use of thermal oxidizers and not catalytic oxidizers as BACT to limit emissions from the facility's oxidation system.

Holding

The Fifth Circuit denied Sierra Club's petition for review, holding that LDEQ satisfied its trustee duty under Louisiana's public trust doctrine to determine that adverse environmental impacts were minimized or avoided as much as possible.