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Chesapeake Climate Action Network v. Export-Import Bank of United States

United States District Court, D. Columbia.

January 21, 2015


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RUDOLPH CONTRERAS, United States District Judge.

Denying Plaintiffs' Motion for Summary Judgment; Granting Defendants' Cross-Motion for Summary Judgment; Denying as Moot Plaintiffs' Motion for Admission of Extra-Record Evidence; Granting in Part and Denying in Part Defendants' Motion to Strike; And Granting in Part and Denying in Part Plaintiffs' Motion to Strike


Chesapeake Climate Action Network, Friends of the Earth, Sierra Club, West

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Virginia Highlands Conservancy, Center for International Environmental Law, and Pacific Environment (collectively, " Plaintiffs" ) initiated the present action to challenge the Export-Import Bank of the United States' (" the Bank" ) approval of a $90 million loan guarantee. The guarantee supports a three-year, $100 million loan from PNC Bank (" PNC" ) to Xcoal Energy & Resources, LLC (" Xcoal" ). According to Plaintiffs, the Bank's guarantee allows Xcoal to export $1 billion in U.S. coal, which in turn results in significant adverse effects on human health and the environment. Plaintiffs contend that the Bank's failure to consider such environmental impacts prior to approving the loan guarantee violated the National Environmental Policy Act, 42 U.S.C. § § 4321 et seq. (" NEPA" ), and the Administrative Procedure Act, 5 U.S.C. § § 701 et seq. (" APA" ). As a consequence, Plaintiffs seek a declaration that the Bank's authorization of the loan guarantee violated NEPA, and an injunction ordering the Bank to rescind the guarantee and to comply with NEPA before providing any additional financing to Xcoal. In response, the Bank and its Chairman, Fred Hochberg (collectively, " Defendants" ), argue first that Plaintiffs lack standing to assert their claims, and second, that the Bank was not required to consider the potential environmental impact of a loan guarantee under NEPA.

Now before the Court are the parties' cross-motions for summary judgment, as well as competing motions to admit and exclude extra-record evidence offered by both Plaintiffs and Defendants. After considering the parties' motions, their memoranda in support thereof and opposition thereto, and the administrative record, the Court hereby allows the introduction of extra-record declarations proffered by both parties for the limited purpose of assessing standing, excludes those portions of the parties' declarations that are inadmissible, finds that Plaintiffs lack standing, and grants summary judgment in favor of Defendants.


A. Statutory background

NEPA was enacted in 1970 " to promote efforts which will prevent or eliminate damage to the environment and biosphere . . . ." 42 U.S.C. § 4321. Specifically, NEPA instructs any agency contemplating a " major Federal action[] significantly affecting the quality of the human environment," to first prepare and solicit public comment on an environmental impact study (" EIS" ).[1] See 42 U.S.C. § 4332(C). The goals of the Act are two-fold: first, " it places upon an agency the obligation to consider every significant aspect of the environmental impact of a proposed action," and second, " it ensures that the agency will inform the public that it has indeed considered environmental concerns in its decisionmaking process." WildEarth Guardians v. Jewell, 738 F.3d 298, 302, 407 U.S.App.D.C. 309 (D.C. Cir. 2013) (quoting Balt. Gas & Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87, 97, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983). Thus, although NEPA does not require federal agencies to act on the basis of environmental concerns or to

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make the best decision for the environment, it does require that all agencies take a " 'hard look' at the environmental consequences before taking a major action." Balt. Gas & Elec., 462 U.S. at 97.

NEPA's implementing regulations further explain that the term " [m]ajor Federal action includes actions with effects that may be major and which are potentially subject to Federal control and responsibility." 40 C.F.R. § 1508.18. Covered actions include " new and continuing activities, including projects and programs entirely or partly financed, assisted . . . or approved by federal agencies . . . ." Id. To determine whether a given action significantly affects the environment, an agency must take into account the action's cumulative impact on the environment. 40 C.F.R. § 1508.27. However, where a category of agency actions " do not individually or cumulatively have a significant effect on the human environment," environmental analysis is not required, and the agency can establish procedures for categorically excluding those actions so long as it allows for exceptions in " extraordinary circumstances in which a normally excluded action may have a significant environmental effect." 40 C.F.R. § 1508.4.

Plaintiffs who believe that they have been harmed by an agency's failure to comply with NEPA may bring suit under the APA, which provides a cause of action to " [a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action," 5 U.S.C. § 702, if the agency action is final and " there is no other adequate remedy in a court," 5 U.S.C. § 704.

B. The Export-Import Bank of the United States

Established as an independent federal agency in 1954, the Bank's purpose is " to facilitate exports of goods and services . . . and in so doing to contribute to the employment of United States workers." See 12 U.S.C. § 635(a)(1). It does so by providing " loans, guarantees, insurance, and credits" to support U.S. exports. Id. Since 1982, Congress has specifically directed the Bank to:

establish a program to provide guarantees for loans extended by financial institutions . . . [to] exporters, when such loans are secured by export accounts receivable, [or] inventories of exportable goods . . ., and when in the judgment of the Board of Directors -- (1) the private credit market is not providing adequate financing to enable otherwise creditworthy export trading companies or exporters to consummate export transactions; and (2) such guarantees would facilitate expansion of exports which would not otherwise occur.

12 U.S.C. § 635a-4. In accordance with these instructions, the Bank established the working capital guarantee program (" WCGP" ), which allows the Bank to enter into Master Guarantee Agreements (" MGAs" ) with lenders on behalf of an exporter-borrower. See generally Export-Import Bank of the United States, Working Capital Guarantee Program Manual (effective Dec. 21, 2005), available at

The Bank has promulgated a number of regulations to fulfill its obligations under NEPA. Although the Bank determined that " [h]istorically, virtually all financing provided by Eximbank has been in aid of U.S. exports which involve no effects on the quality of the environment within the United States," 12 C.F.R. 408.3, it adopted procedures to govern " the relatively rare cases where Eximbank financing of U.S. exports may affect environmental quality in the United States . . . ." Id. More specifically,

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the Bank determined that " [a]pplications for Eximbank financing in the form of insurance or guarantees" normally do not require environmental assessments and are categorically excluded from NEPA's EIS requirement unless " the presence of extraordinary circumstances indicates that some other level of environmental review may be appropriate." 12 C.F.R. § 408.6.

C. The Bank's Approval of the Loan Guarantee

Xcoal is one of the largest coal exporters in the United States, sending millions of tons of metallurgical coal overseas each year since its founding in 2004. AR 32A, 34A, 133. The company takes possession of coal at mines in Pennsylvania and West Virginia, and it transports the coal by rail to port terminals in Maryland and Virginia. AR 34A, 35A. From there, Xcoal sends the coal to its export destination, usually China, South Korea, or Japan. AR 29A, 39A. To finance its export business, Xcoal has obtained lines of credit from PNC in the United States, as well as from several European banks. AR 35A-37A.

In December 2011, Xcoal's Vice President of Finance Craig McLane and a Senior Vice President at PNC completed a joint application for an export working capital guarantee from the Bank. AR 21. Xcoal had previously obtained a $25 million line of credit from PNC with the Bank's support, and it sought to replace the preexisting guaranteed loan with a guaranteed loan of $100 million. AR 19, 273. At the time, Xcoal's export sales were increasing and the company had $530 million in uncommitted lines of credit provided by nine European banks in addition to the $25 million from PNC. AR 32A, 36A. However, due to the European sovereign debt crisis, Xcoal was " concerned that its European banks may not be in a position to fund the Company in the future, and [it sought] to replace those financing arrangements with an increase in the Ex-Im Bank Loan Facility." AR 32A. For that reason, and because PNC " traditionally does not (without Ex-Im Bank support) provide financing against accounts receivable due from foreign buyers," Xcoal and PNC applied for a loan guarantee from the Bank. AR 32A. According to the joint application, the $100 million loan from PNC would support $1 billion in export sales of metallurgical coals, AR 20, and would primarily be used for working capital advances and to support the issuance of standby letters of credit as performance bonds, AR 20, 33A.

Bank staff subsequently reviewed the application and prepared a written report recommending approval of the loan guarantee. See AR 31A-52A. In a section titled " Justification for Ex-Im Bank Support," the Bank observed that Xcoal did " not have the ability to internally generate the necessary working capital," that " [d]omestic financial institutions are not willing to provide enough financing to XCoal without the Ex-Im Bank guarantee," and that with the Bank's support, the company " will be able to ensure liquidity and access to capital should XCoal's European banks hesitate in providing the necessary working capital financing." AR 37A. At no point during its consideration of the application did the Bank ever request or receive an EIS or an environmental analysis.

On May 24, 2012, the Bank approved a $100 million transaction-specific revolving working capital guarantee loan from PNC to Xcoal with a term of 36 months. AR 1, 30A, 273. The loan is supported by the Bank's $90 million loan guarantee, AR 30A, and is subject to the Bank's Master Guarantee Agreement, AR 53-99. The Bank's WCGP procedures dictate that " all transactions . . . require approval by Ex-Im Bank staff prior to being included under the . . .

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Loan Facility." AR 33A. Since the Bank approved the loan guarantee, Xcoal has sought and received the Bank's approval for more than a dozen transactions. See AR 135-205.

On July 31, 2013, Plaintiffs initiated this suit to challenge the Bank's authorization of the $90 million loan guarantee by filing a complaint in U.S. District Court for the Northern District of California. The case was transferred to this Court on November 20, 2013, and it is presently before the Court on the parties' cross-motions for summary judgment.


A. Standing

Federal courts are courts of limited jurisdiction, possessing " only that power authorized by Constitution and statute, which is not to be expanded by judicial decree." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citations omitted). " It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Id. (citations omitted). The judicially created doctrine of standing derives from Article III of the U.S. Constitution, which confines the federal courts to adjudicating actual " Cases" and " Controversies, U.S. Const. art. III, § 2, cl. 1, and from " the separation-of-powers principles underlying that limitation." Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1386, 188 L.Ed.2d 392 (2014). Thus, a showing of standing " is an essential and unchanging" predicate to any exercise of this Court's jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The Court must therefore determine first if it has jurisdiction over a given action before ruling on the merits. Talal Al-Zahrani v. Rodriguez, 669 F.3d 315, 318, 399 U.S.App.D.C. 258 (D.C. Cir. 2012).

Ordinarily, a party has established standing if it shows that, at the time the complaint was filed: (1) " the party has suffered an 'injury in fact,'" (2) " the injury is 'fairly traceable' to the challenged action of the defendant," and (3) " it is 'likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.'" Grocery Mfrs. Ass'n v. EPA, 693 F.3d 169, 174, 402 U.S.App.D.C. 307 (D.C. Cir. 2012) (citing Defenders of Wildlife, 504 U.S. at 560-61); La Botz v. Fed. Election Comm'n, No. 13-cv-997, 61 F.Supp.3d 21, 2014 WL 3686764, at *4-5 (D.D.C. July 25, 2014) (" [S]tanding in the present action is ascertained from the facts as they existed when [the plaintiff] first filed his complaint in this Court in 2013." ).

The standing inquiry is modified, however, in cases where a plaintiff alleges a violation of his or her procedural rights. In such cases -- as when a plaintiff sues over the failure to conduct an EIS under NEPA -- the plaintiff must " show that the interest asserted is more than a mere general interest in the alleged procedural violation common to all members of the public, the plaintiff must show that the government act performed without the procedure in question will cause a distinct risk to a particularized interest of the plaintiff." Fla. Audubon Soc. v. Bentsen, 94 F.3d 658, 664, 320 U.S.App.D.C. 324 (D.C. Cir. 1996) (internal quotation marks and citation omitted). Although procedural rights plaintiffs need not show that, but for the procedural defect, the agency would have reached a different decision, they must establish " a causal relationship between the final agency action and the alleged injuries." Ctr. for Law & Educ. v. Dep't of Educ., 396 F.3d 1152, 1160, 364 U.S.App.D.C. 416 (D.C. Cir. 2005). The causation

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prong of the standing inquiry looks to the " causal nexus between the agency action and the asserted injury, while redressability centers on the causal connection between the asserted injury and judicial relief." Id. at 1160 n.2 (quoting Freedom Republicans v. FEC, 13 F.3d 412, 418, 304 U.S.App.D.C. 289 (D.C. Cir. 1994)).

Furthermore, in those cases where the plaintiff was not the subject of government action or inaction, and where the harm to the plaintiff comes instead from the agency's regulation of an independent third party not before the court, standing is ordinarily " substantially more difficult to establish." See Defenders of Wildlife, 504 U.S. at 562 (internal quotation marks omitted). In such instances, the elements of causation and redressability " hinge on the independent choices of the regulated third party," and " it becomes the burden of the plaintiff to adduce facts showing that those choices have been or will be made in such manner as to produce causation and permit redressability of injury." Ctr. for Law & Educ., 396 F.3d at 1161 (quoting Nat'l Wrestling Coaches Ass'n v. Dep't of Educ., 366 F.3d 930, 938, 361 U.S.App.D.C. 257 (D.C. Cir. 2004)).

The Plaintiffs, as the parties invoking this Court's jurisdiction, bear the burden of establishing all three elements of standing. WildEarth Guardians, 738 F.3d at 305. At the summary judgment stage, Plaintiffs bear the burden of showing that, taking their facts as true and drawing all reasonable inferences in their favor, a reasonable juror could find that they have standing. Dominguez v. UAL Corp., 666 F.3d 1359, 1362, 399 U.S.App.D.C. 92 (D.C. Cir. 2012). To meet this burden, Plaintiffs must put forth specific facts -- not mere allegations -- that show a " substantial probability" that Plaintiffs were injured, that the Defendants caused the injury, and that a favorable decision of this Court could redress that injury. Sierra Club v. EPA, 292 F.3d 895, 898-99, 352 U.S.App.D.C. 191 (D.C. Cir. 2002).

Where a plaintiff is an organization suing on behalf of its members -- as is the case here for Plaintiffs Chesapeake Climate Action Network (" CCAN" ), Friends of the Earth, Sierra Club, and West Virginia Highlands Conservancy (" WVHC" )[2] -- the organization has " representative" or " associational" standing if: " (1) at least one of its members would have standing to sue in his own right; (2) the interests the association seeks to protect are germane to its purpose, and (3) neither the claim asserted nor the relief requested requires that an individual member of the association participate in the lawsuit." Id. at 898. Because the Center for International Environmental Law (" CIEL" ) and Pacific Environment are organizations suing on their own behalf, however, they " must make the same showing required of individuals: an actual or threatened injury in fact that is fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by a favorable court decision." ASPCA v. Feld Entm't, Inc., 659 F.3d 13, 24, 398 U.S.App.D.C. 79 (D.C. Cir. 2011).

Ultimately, the Court need only find that one plaintiff has established standing to allow a case to proceed to the merits. See Comcast Corp. v. FCC, 579 F.3d 1, 6, 388 U.S.App.D.C. 102 (D.C. Cir. 2009) (" [I]f one party has standing in an action, a court need not reach the issue of the standing of other parties when it makes no difference to the merits of the case." ).

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B. Admissibility of Extra-Record ...

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