WASHINGTON – Although none of the Sierra Club’s recent antitrust
complaints resulted in a court order stopping a liquid natural gas (LNG) pipeline project, antitrust
and industry experts say legal victory was not the environmental group’s
“They have opposed infrastructure projects from a number of
angles, even if there is recognition that at the end of the day they might not
be successful,” David Wochner, energy attorney in the oil and gas sector at
K&L Gates, told the Pennsylvania Record.
“The idea being, if (they) can inject enough uncertainty in the project, maybe
that will make the market and investors and lenders less willing to continue to
support the project.”
The Sierra Club has thrown down the gauntlet on fossil fuels projects.
Its website states: “We have a vision of a world powered by clean energy, where
dirty and dangerous fossil fuels are a thing of the past …”
While filing a complaint usually indicates a party is
requesting that a court consider and respond to their grievance, that has not
been the case with the Sierra Club’s antitrust complaints. The environmental group has
taken a unique route, contacting oversight agencies like the Federal Energy
Regulatory Commission and the Department of Justice’s Antitrust Division that
seldom, if ever, adjudicate, attorneys say.
“These requests could be pending indefinitely,” John
Longstreth, antitrust attorney with K&L Gates, told the Pennsylvania Record. “Sierra Club’s complaints don’t trigger any
legal process requiring action or decision the way a complaint filed in court
The Sierra Club kicked off its campaign of antitrust challenges
with the Atlantic Coast Pipeline (ACP) project in June, sending a letter to the
Federal Trade Commission asking for an investigation. The project entails 550
miles of pipeline and three compressor stations across West Virginia, Virginia
and North Carolina. In its letter, the group argued the project is anticompetitive
because it hinders alternative fuels development and will increase cost to
consumers since ACP has no incentive to ensure the projects’ operating efficiency.
The group also filed a complaint against the NEXUS project,
which involves 256 miles of new pipeline across Pennsylvania, West Virginia,
Ohio, Michigan and Ontario. It argued the project is anticompetitive because it
is more expensive than other energy alternatives.
“Having been in the industry for nearly 15 years, I have
always viewed these attempts to be more efforts to move markets than to really
score a legal victory,” Wochner said.
The purpose of antitrust laws is to ensure competition in a
well-defined market. “The courts and enforcement agencies have developed some
very specific requirements for antitrust claims, and the Sierra Club is not
meeting those in their filings,” Longstreth said, adding that the strategy of environmental
groups is, “If we delay it long enough … maybe the financing will go away or
maybe we’ll have a political change and (they) lose support for the project … just
drag it out.”
History seems to indicate the stall tactic can be
effective. A decade ago, the LNG industry was booming, with 70 import projects
underway. But the legal challenges by environmental groups and subsequent
delays resulted in only a handful of LNG import terminals being built. During
that time, the market shifted as reservoirs of natural gas were discovered in
the U.S. and companies began producing it to the point there was a surplus.
“There were investors that spent millions and millions to
build import terminals that withered on the vine because markets changed and no
longer supported imports,” Wochner said. “In many cases, it wasn’t that the
environmental challenges were victorious. It dragged the legal process out long
enough that conditions changed and investors packed up and went home.”