Ctr. for Biological Diversity v. Export-Import Bank of the U.S.

• Decision Date: 28 June 2018
• Docket Number: No. 16-15946,16-15946
• Citation: 894 F.3d 1005
• Parties: CENTER FOR BIOLOGICAL DIVERSITY; Pacific Environment; Turtle Island Restoration Network, Plaintiffs-Appellants, v. EXPORT–IMPORT BANK OF THE UNITED STATES; Fred P. Hochberg, in his official capacity as Chairman and President of the Export–Import Bank of the United States, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

894 F.3d 1005

CENTER FOR BIOLOGICAL DIVERSITY; Pacific Environment; Turtle Island Restoration Network, Plaintiffs-Appellants,

v.EXPORT–IMPORT BANK OF THE UNITED STATES; Fred P. Hochberg, in his official capacity as Chairman and President of the Export–Import Bank of the United States, Defendants-Appellees.

No. 16-15946

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 13, 2017, San Francisco, California

Filed June 28, 2018

Brendan Ridgely Cummings (argued), Center for Biological Diversity, Joshua Tree, California; Miyoko Sakashita and Emily S. Jeffers, Center for Biological Diversity, Oakland, California; Sarah Uhlemann, Center for Biological Diversity, Seattle, Washington; for Plaintiffs–Appellants.

Eric Allen Grant (argued) and Ellen J. Durkee, Attorneys; John C. Cruden, Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; Lauren T. Nguyen, Senior Counsel, Export–Import Bank of the United States, Washington, D.C.; for Defendants–Appellees.

Before: Ronald M. Gould and Mary H. Murguia, Circuit Judges, and James E. Gritzner,^* District Judge.

GRITZNER, District Judge:

In 2012, the Export–Import Bank of the United States (the Ex-Im Bank) authorized nearly $4.8 billion in financing for two liquid natural gas (LNG) projects in Queensland, Australia, near the Great Barrier Reef (the Projects). Plaintiffs–Appellants, environmental organizations, sued the Ex-Im Bank and its chairman (collectively, Defendants) for violations of the Endangered Species Act (ESA), 16 U.S.C. § 1531 et seq. , the National Historic Preservation Act (NHPA), 54 U.S.C. § 307101 et seq. , and the Administrative Procedure Act (APA), 5 U.S.C. § 706. Plaintiffs argue that the Ex-Im Bank failed to follow the proper procedures set forth in the ESA and NHPA before approving financing for the Projects.

On cross-motions for summary judgment, the district court found that Plaintiffs were unable to establish that a decision in this case would redress the Projects’ environmental harms, and thus the Plaintiffs lacked standing. Plaintiffs appealed. Following the district court’s ruling, work on the Projects continued, and the Ex-Im Bank fully disbursed both of its loans—one of which has been repaid. Defendants argue that this entire action is now moot. We hold that the action is not moot and affirm the district court on the question of standing.

I. BACKGROUND

The Ex-Im Bank is the official export credit agency (ECA) of the United States. Acting pursuant to federal statute, 12 U.S.C. § 635 et seq. , the Ex-Im Bank offers funds to projects undertaken in the United States and around the globe to support procurement of goods and services from U.S. exporters by the project sponsors. The purpose of these efforts is to keep U.S. exporters competitive with foreign exporters—many of whom are supported directly by foreign governments or by foreign ECAs.

In 2012, the Ex-Im Bank authorized nearly $4.8 billion in financing for two LNG projects in Queensland, Australia. For both Projects, the primary U.S. exporter was the Bechtel Corporation, a contractor that performs engineering, procurement, and construction work. For most Ex-Im Bank loans, including those at issue here, disbursements are not made until the borrower submits proof that the loan funds will be directed to expenses for U.S. exporters pursuant to the terms of the loan.

In May 2012, the Ex-Im Bank authorized a $2.95 billion direct loan (the APLNG Loan) for the Australia Pacific LNG Project (APLNG Project), a joint venture owned and operated by Origin Energy Limited, ConocoPhillips, and the China Petrochemical Corporation (Sinope). The APLNG Project involves "upstream" and "downstream" components. The upstream component includes natural gas wells in interior Queensland as well as pipelines to transport the natural gas to the downstream production facility on the coast. The downstream component, located on Curtis Island near the town of Gladstone, Australia, includes an LNG production facility, where natural gas is converted to a liquid state, and facilities to transport the LNG onto oceangoing tankers for shipping.

The cost of the APLNG Project was estimated to be approximately $12 billion for the downstream component and approximately $16 billion for the upstream component. The upstream component was not funded by the Ex-Im Bank. The APLNG Loan thus made up approximately 25% of the downstream component’s estimated costs and 10.5% of the overall project costs.

In December 2012, the Ex-Im Bank authorized a $1.8 billion direct loan (the QCLNG Loan) for the Queensland Curtis LNG Project (QCLNG Project), which is owned and operated by BG Energy Limited. The QCLNG Project has separate upstream and downstream components similar to the APLNG Project, with gas wells and pipelines in interior Queensland and an LNG production facility and shipping facilities on Curtis Island on the coast. As with the APLNG Project, the upstream component of the QCLNG Project was not funded by the Ex-Im Bank. The cost of the downstream component of the QCLNG Project was estimated to be approximately $9.9 billion, and the entire cost of the QCLNG Project was estimated to be approximately $20 billion. Thus, the QCLNG Loan made up approximately 18% of the downstream component’s estimated costs and 9% of the overall project costs.

Both Projects are located within the Great Barrier Reef World Heritage Area. The Great Barrier Reef World Heritage Area encompasses the world’s largest coral reef system, representing about 10% of the world’s coral reef area. In 1981, the Great Barrier Reef was included on the World Heritage List in recognition of its scientific, ecological, and aesthetic value. The habitats within the Great Barrier Reef World Heritage Area support many threatened and endangered species. Because the Projects both would result in massive industrial facilities located within this area and would also result in significantly increased shipping nearby, the entities behind the Projects submitted environmental analyses to the Australian government. The Australian government approved the Projects based on its assessment of the proposed environmental impacts and the effects of proposed mitigation measures prior to the Ex-Im Bank’s approval of the Projects’ respective loans. Notwithstanding Australia’s approval of the Projects, in 2011 the World Heritage Committee expressed "extreme concern" about LNG facility development on Curtis Island within the Great Barrier Reef World Heritage Area.

The Ex-Im Bank, before approving the loans for each of the Projects, conducted a review of the Projects’ environmental impacts, relying on the environmental impact statements submitted to the Australian authorities as well as other relevant documents. Plaintiffs allege that the Ex-Im Bank did not engage in a consultation pursuant to Section 7 of the ESA, 16 U.S.C. § 1536(a)(2), and that the review the Ex-Im Bank did perform did not satisfy the Ex-Im Bank’s duty to take into account the Projects’ impacts on the Great Barrier Reef World Heritage Area as required by the NHPA. Documents in the record suggest that the Ex-Im Bank did condition financing on certain reporting obligations that would allow the Ex-Im Bank to ensure the Projects continued to comply with Australian environmental law. However, the record on appeal does not include the terms of the loan agreements themselves, which may disclose greater or more specific rights and obligations.

By the time the Ex-Im Bank approved financing, each of the Projects had already commenced. Construction of the downstream component of the QCLNG Project—the component partially financed by the Ex-Im Bank’s loan—was about 46% complete by the time the Ex-Im Bank approved its loan for that project in December 2012. Construction for the APLNG Project was also underway when the Ex-Im Bank authorized financing.

On December 13, 2012, Plaintiffs filed suit in federal district court challenging the Ex-Im Bank’s decisions to fund the Projects. Plaintiffs are non-profit organizations dedicated to promoting the protection of wildlife and wildlife habitats. Plaintiffs have members with various interests in the preservation of the Great Barrier Reef World Heritage Area and assert that the Projects will contribute substantially to environmental degradation in that important area. Plaintiffs allege that the Projects would harm Plaintiffs’ members’ interest in conserving critical habitats for various species and would reduce the area’s aesthetic appeal. Plaintiffs’ original complaint challenged only the Ex-Im Bank’s funding decision for the APLNG Project. On October 4, 2013, Plaintiffs amended their complaint to challenge the Ex-Im Bank’s funding for the QCLNG Project. Plaintiffs requested declaratory relief and an injunction that would compel the Ex-Im Bank to comply with the ESA’s and NHPA’s procedural requirements.

On March 31, 2016, the district court granted Defendants’ Cross–Motion for Summary Judgment. The district court found that as a threshold matter, Plaintiffs lacked standing to pursue either of their NHPA or ESA claims. The district court found that Plaintiffs failed to establish redressability, necessary for standing, because Plaintiffs did not offer a sufficient basis to determine that there was a reasonable probability the Projects would be halted if the Ex-Im Bank’s funding was vacated. The district court highlighted that funding from the Ex-Im Bank constituted a relatively small percentage of the costs of the Projects and that the Projects had already begun before securing Ex-Im Bank approval and had made substantial progress to that point. The district court also noted the large financial resources available to the principals behind the Projects. The district court noted that another LNG project had also gone forward on Curtis Island without receiving any funding from the Ex-Im Bank.

Progress continued on construction of the...