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U.S. Enviro Laws at Stake in Oz Pipeline Loan

OAKLAND, Calif. (CN) - U.S.-based Export-Import Bank may have breached federal environmental laws for funding projects that extract liquefied natural gas from Australia's Great Barrier Reef since the wells' operators plan to use the high seas to export the gas to Asia and beyond, a federal judge ruled last week.

The Center for Biological Diversity, Pacific Environment and Turtle Island Restoration Network sued Ex-Im Bank in 2012, claiming that it failed to make mandatory biological assessments and environmental impact surveys before agreeing to a $4.8 billion funding of two liquefied natural gas projects in the Great Barrier Reef World Heritage Area.

Environmentalists say the Australia Pacific LNG Project and the Queensland Curtis LNG Project - collectively amounting to up to 16,000 on-land wells and 510 miles of pipeline to the coast - will irreparably damage the reef's beauty and vibrant ecosystem. Both projects will be located partially within the boundaries of the heritage site, and within the habitats of threatened and endangered species.

They also argue that Ex-Im Bank had an obligation to consult with federal conservation agencies in the United States before agreeing to fund the projects, given the potential harm to both species listed on the Endangered Species Act and a UNESCO World Heritage Site.

This past August, U.S. District Judge Saundra Brown Armstrong dismissed the suit with leave to amend, noting that the federal government stopped requiring consultations on actions taken internationally in 1986 - except for those done on the high seas. The natural gas wells and lines will not be located on the high seas, and the environmental groups didn't show that Ex-Im had funded the transportation portion of the projects, Armstrong said at the time.

But the groups' second amended complaint states that the bank funded "downstream" portions of the projects, namely two marine jetties and loading berths to transfer the gas to tankers for shipping abroad - presumably on the high seas and through the habitats of endangered species. This led Armstrong to reject Ex-Im's second request to dismiss the suit on Feb. 20.

"While it is undisputed that all construction-related activities associated with the projects will occur entirely within Australia and its territorial seas and that Ex-Im Bank did not specifically provide financing for any post-construction shipping activities associated with the projects, defendants have not pointed to any facts in the documents properly before the court or cited any authority supporting the conclusion that the scope of Ex-Im Bank's actions is limited to construction-related activities occurring within Australia and its territorial seas," the judge wrote in a 13-page order. "Because it is reasonable to infer that exporting LNG to destinations abroad is one of the primary objectives/components of the projects, and because the term 'agency action' is interpreted broadly, plaintiffs have pled facts plausibly showing that the scope of Ex-Im Bank's actions entail not only construction-related activities occurring in Australia and its territorial seas but also post-construction shipping activities occurring upon the high seas such that it is plausible Ex-Im Bank violated the Endangered Species Act by failing to consult with the federal agencies."

A trial date for the case has not yet been set.

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