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 goal.
“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 would.”
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.”