80 FR 26321 - Deepwater Port License Application Process for Offshore Export Facilities

DEPARTMENT OF TRANSPORTATION
Maritime Administration

Federal Register Volume 80, Issue 88 (May 7, 2015)

This notice serves to inform interested parties and the public of the Maritime Administration's (MARAD) final policy to accept, evaluate and process license applications for the construction and operation of offshore deepwater port facilities for the export of oil and natural gas from the United States to foreign markets abroad and to use the existing Deepwater Port regulations for such purposes. On October 16, 2014, MARAD published a notice in the Federal Register seeking public comment on a draft policy under which such export applications would be accepted and processed. In response, the agency received 337 comments to which it provides its responses below.

[Federal Register Volume 80, Number 88 (Thursday, May 7, 2015)]
[Notices]
[Pages 26321-26324]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-10619]


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DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket Number MARAD-2014-0132]


Deepwater Port License Application Process for Offshore Export 
Facilities

AGENCY: Maritime Administration, Department of Transportation.

ACTION: Final policy.

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SUMMARY: This notice serves to inform interested parties and the public 
of the Maritime Administration's (MARAD) final policy to accept, 
evaluate and process license applications for the construction and 
operation of offshore deepwater port facilities for the export of oil 
and natural gas from the United States to foreign markets abroad and to 
use the existing Deepwater Port regulations for such purposes. On 
October 16, 2014, MARAD published a notice in the Federal Register 
seeking public comment on a draft policy under which such export 
applications would be accepted and processed. In response, the agency 
received 337 comments to which it provides its responses below.

DATES: This policy is effective May 7, 2015.

ADDRESSES: The complete file for this policy is available for 
inspection with the Docket Clerk, Docket Management Facility, U.S. 
Department of Transportation, 1200 New Jersey Avenue SE., West 
Building, Room W12-140, Washington, DC 20590, between 9 a.m. and 5 
p.m., Monday through Friday, except on Federal holidays. You may also 
view the comments submitted to the docket via the Federal eRulemaking 
Portal at http://www.regulations.gov by following search instructions 
using DOT Docket Number MARAD-2014-0132.

FOR FURTHER INFORMATION CONTACT: You may contact Yvette M. Fields, 
Director, Office of Deepwater Ports and Offshore Activities, Maritime 
Administration, at (202) 366-0926. You may send mail to

[[Page 26322]]

Ms. Fields at Maritime Administration, 1200 New Jersey Avenue SE., MAR 
530, W21-309, Washington, DC 20590-0001. You may send electronic mail 
to [email protected]. If you have questions on viewing the Docket, 
call Docket Operations, telephone: (202) 366-9826.

SUPPLEMENTARY INFORMATION: Pursuant to this notice, MARAD announces its 
final policy to accept and process applications for licenses for the 
ownership, construction and operation of deepwater port oil and natural 
gas export facilities. MARAD previously published a Notice of Proposed 
Policy (79 FR 62242, Oct. 16, 2014).

Comments on the Proposed Policy

    In response to the Federal Register notice seeking public comment 
on its proposed policy for deepwater ports license application process 
for offshore export facilities, MARAD received a total of 337 comment 
submissions from the following entities: 328 individual comments from 
private citizens expressing support for the proposed application 
process; a letter of support from Senator Lisa Murkowski of Alaska; a 
letter of support from Delfin LNG, LLC, a private energy company; a 
letter from the New York Department of State (NYDOS) Office of Planning 
and Development, Deputy Secretary of State generally supportive of the 
proposed policy, but requesting additional considerations; a letter 
containing five comments from Clean Ocean Action (COA), an 
environmental interest group; one comment from a private citizen, who 
stated that MARAD should link the approval of deepwater port export 
projects to the use of U.S. flag vessels and U.S. crews; and four 
comments erroneously submitted to the docket by private individuals 
expressing opposition to a specific deepwater port application, which 
is not the subject of this notice or the proposed application process. 
As the bulk of the comments were in favor of the proposed policy 
without qualification, the agency has elected to respond below to 
specific comments provided by NYDOS, COA and the private citizen that 
expressed support of the use of U.S. flag vessels and U.S. crews in 
conjunction with deepwater port exports.
    In its letter, NYDOS provided four substantive comments on the 
proposed policy. NYDOS' first comment requested that MARAD include the 
approval from the Governor(s) of adjacent coastal State(s) as a fourth 
licensing requirement for the conversion of licensed import facilities 
to export facilities. Receiving approval or presumptive approval of the 
Governor of the adjacent coastal State(s) is a mandatory requirement of 
the Deepwater Port Act, as amended, (DWPA) (33 U.S.C. 1503(c)(8)), and 
as such will continue to be a condition for issuance of a deepwater 
port export facility license.
    NYDOS' second comment requested that MARAD's proposed policy 
language require compliance with the nine factors specified in 33 
U.S.C. 1503(c), not simply ``consideration'' of those factors as 
currently stated in the policy. MARAD has clarified the final policy to 
make it clear that an applicant must meet all nine conditions set forth 
in 33 U.S.C. 1503(c) before the Maritime Administrator may issue a 
license for an export facility. The Maritime Administrator's Deepwater 
Port Licensing record of decision (ROD) will address whether the 
(import or export) deepwater port license application satisfies each of 
the nine criteria and the requirements of the National Environmental 
Policy Act (NEPA), 42 U.S.C. 4321-4347, and other applicable 
requirements. The ROD will serve as the decision document (and, if 
appropriate, may contain a Finding of No Significant Impact) for 
purposes of complying with NEPA.
    NYDOS' third comment requested that, at a minimum, NEPA analysis 
for an export facility should address: The offshore port; the 
processing and liquefaction/regasification facilities; new pipelines; 
and other infrastructure necessary to support the production and 
conveyance of oil and/or natural gas to and from the export facility. 
The NEPA process requires a thorough analysis of the direct, indirect 
and cumulative environmental impacts of the proposed action. This 
analysis includes all aspects of the siting, construction, operation 
and decommissioning of the deepwater port. The commenter's concern 
regarding the components and operational aspects of the deepwater port 
are currently and will continue to be addressed in the statutorily-
required NEPA analysis, which is performed as part of all deepwater 
port license applications. The specific components of a deepwater port 
terminal, including those the commenter listed, are and will continue 
to be included in the preparation of the NEPA document. Finally, NYDOS 
requested that to ensure the NEPA review process adequately identifies 
and analyzes all potential impacts, MARAD's final policy clearly 
describe the relevant shore-based and offshore infrastructure that will 
be considered within the scope of an export facility. The U.S. Coast 
Guard (Coast Guard) and MARAD's environmental review of the proposed 
action includes all direct, indirect and cumulative impacts. This 
review must cover all offshore and onshore components and support 
activities associated with the deepwater port. However, it is important 
to note that every deepwater port application is considered on a case-
by-case basis. While the DWPA provides a comprehensive definition of 
what constitutes a deepwater port, it would be inappropriate to try and 
set forth a specific list of shore-based and offshore components that 
should be considered as part of an application and made part of the 
NEPA analysis.
    COA provided five comments on the proposed policy. COA's first 
comment stated that it is critical that MARAD's proposed policy have 
broad application and require a full review process that, among other 
requirements, engages the public in a meaningful way. In compliance 
with the DWPA, NEPA and other applicable laws and regulations, MARAD 
will ensure that a full and comprehensive public engagement and 
application review process is applied to the processing of all 
deepwater port license applications for both imports and exports.
    COA's second comment stated that it agrees with MARAD's proposal to 
encompass both established and proposed facilities in any export 
licensing policy it might adopt. The comment goes on to state that COA 
finds the proposed policy is sufficiently broad in this regard.
    In addition, COA discussed the scope of review contained in MARAD's 
proposed policy and expressed support for the concept of treating all 
requests for export authorization as new license applications and 
indicated support for the scope of review to occur under the proposed 
policy. MARAD will treat any proposal for deepwater port exports as a 
new license application, and MARAD will apply a full and comprehensive 
application review and public engagement process to the processing of 
export applications.
    COA's fourth comment requested that in instances where MARAD 
prepares an Environmental Assessment and intends to issue a Finding of 
No Significant Impact, it should provide a public review and comment 
period of not less than 90 days. According to COA, such a requirement 
would help maintain the integrity of the export application review 
process, ensure public involvement therein, and further enhance MARAD's 
environmental review.
    As part of the existing application review process, MARAD ensures 
that an

[[Page 26323]]

adequate and comprehensive environmental review is applied to the 
evaluation of all deepwater port license applications. MARAD will 
continue its comprehensive environmental review process and provide for 
the public review and comment periods required by current regulations 
for all applications.
    The final comment provided by COA relates to the environmental 
review of indirect and cumulative impacts. COA stated that there are a 
number of indirect and cumulative impacts that MARAD should consider 
with respect to any export license application. They include the 
impacts of a facility (operating with the functionality the proponent 
seeks) upon (1) the natural aquatic environment, including from 
increased vessel traffic and shipping lane congestion, (2) air quality, 
both on and offshore, (3) the environment onshore and proximate to the 
distribution infrastructure, (4) the environment in and around the 
extraction areas, and (5) the upstream (e.g., increased shale 
production and fracking activities), downstream (e.g., carbon 
emissions), and climate change impacts. Further, COA states that MARAD 
should consider the proposed activity's impacts in conjunction with 
impacts from other reasonably foreseeable projects, such as wind farms 
and other pipelines within the designated application area. As noted 
above, the Coast Guard and MARAD's environmental review of the proposed 
action includes all direct, indirect and cumulative impacts. This 
review must cover all offshore and onshore components and support 
activities associated with the deepwater port. It is important to note, 
however, that every deepwater port application is considered on a case-
by-case basis. While the DWPA provides a comprehensive definition of 
what constitutes a deepwater port, it would be inappropriate to try and 
set forth a specific list of shore-based and offshore components that 
may be considered as part of an application and made part of the NEPA 
analysis.
    The final commenter, a private citizen, supported the proposed 
policy and requested that MARAD follow the precedent established by 
former MARAD Administrator Sean Connaughton and link application 
approval to the use of U.S. vessels and U.S. crews to export liquefied 
natural gas (LNG). Under this policy, MARAD will continue its efforts 
to support the use of U.S. flag vessels and U.S. crews in the operation 
of all deepwater port licensed facilities.

Final Policy

    On December 20, 2012, the Coast Guard and Maritime Transportation 
Act of 2012 (Pub. L. 112-213, Sec. 312 (Dec. 20, 2012)) (CG&MT Act) 
amended Section 3(9)(A) (33 U.S.C. 1502(9)(A)) of the Deepwater Port 
Act (DWPA) and brought offshore export facilities within the DWPA's 
definition of a deepwater port. Previously, the definition of a 
deepwater port was limited to facilities transporting oil or natural 
gas to any State. The Secretary of Transportation must license the 
ownership, construction and operation of a deepwater port, now 
including export facilities, pursuant to 33 U.S.C. 1503(a) and (b). 
This amendment will be implemented in accordance with existing 
statutory and regulatory requirements applicable to the DWPA. The CG&MT 
Act provided no other amendments to the DWPA.
    Pursuant to 33 U.S.C. 1501-1524,\1\ the Maritime Administration 
(MARAD) and U.S. Coast Guard (Coast Guard) jointly process deepwater 
port license applications under delegations from the Secretary of 
Transportation (49 CFR 1.93(h)) and the Secretary of Homeland Security 
(Department of Homeland Security Delegation 0170.1(75)), respectively. 
In general, the Coast Guard and MARAD are co-lead agencies for 
compliance with NEPA, 42 U.S.C. 4321 through 4347. The Coast Guard also 
is responsible for matters related to navigation safety, engineering 
and safety standards, and facility operations and inspections. MARAD is 
responsible for determining citizenship and financial capability of the 
potential licensees, preparing the Record of Decision (ROD), and 
issuing or denying the license. The Coast Guard and MARAD share various 
other responsibilities under the DWPA, including the duty to consult 
with other Federal or State agencies. Such agencies include the U.S. 
Department of Energy (DOE), which is responsible for authorizing the 
transaction of importing or exporting liquefied natural gas (LNG) to or 
from the United States; the Federal Energy Regulatory Commission 
(FERC), responsible for authorizing onshore LNG import or export 
facilities, including the construction and operation of onshore natural 
gas pipelines that interconnect with deepwater ports; and the Pipeline 
and Hazardous Materials Safety Administration (PHMSA), which is 
responsible for ensuring the safe construction, operation and 
maintenance of natural gas pipelines located on Federal lands, 
including offshore deepwater port pipelines.
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    \1\ When the Coast Guard moved from the Department of 
Transportation to the Department of Homeland Security, its 
responsibilities for deepwater ports transferred with it. See 6 
U.S.C. 468(b).
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    Additionally, the Coast Guard has previously developed 
comprehensive regulatory requirements for deepwater port license 
applications. Regulations detailing the requirements of the deepwater 
port license application process; design, construction, and equipment; 
and port operations can be found in 33 CFR parts 148, 149 and 150. 
Additionally, it is noted that on April 9, 2015, the Coast Guard 
published in the Federal Register a Notice of Proposed Rulemaking (80 
FR 19118) updating 33 CFR parts 148, 149 and 150. These regulations 
pertain to the application review process, planning, environmental 
review, design, construction and operation of deepwater port facilities 
without specific regard to whether the facility imports or exports oil 
and/or natural gas products. With the addition of oil and natural gas 
exportation under the amendment to the DWPA, MARAD does not foresee any 
reason to alter the deepwater port licensing application process.
    Accordingly, MARAD, with the concurrence of the Coast Guard, 
intends to use the existing Deepwater Port regulations for the review, 
evaluation and processing of any deepwater port license application 
involving the export of oil or natural gas from domestic sources within 
the United States as provided for in 33 CFR parts 148, 149 and 150.
    A deepwater port license issued by MARAD does, not, by itself, 
convey an authorization to export crude oil or natural gas. Pursuant to 
15 CFR 754.2, a license granted by the U.S. Department of Commerce 
(DOC) would generally be required for exports of crude oil. Exports of 
natural gas, including LNG, will generally require authorization from 
DOE pursuant to Section 3 of the Natural Gas Act of 1938. Exports of 
refined petroleum products do not generally require an export license. 
MARAD licenses the deepwater port facility, while DOC and DOE approve 
the transactions that utilize the facility.
    Any deepwater port applicant who proposes to export oil or natural 
gas from domestic sources within the United States must submit an 
export-specific comprehensive license application conforming to all 
established and applicable deepwater port licensing requirements and 
regulations. Note that 33 CFR 148.5 defines ``oil'' as ``petroleum, 
crude oil and any substance refined from petroleum or crude oil.'' 
Thus, this

[[Page 26324]]

requirement would also cover a deepwater port intended for the export 
of refined products.
    The considerable technical, operational and environmental 
differences between import and export operations for oil or natural gas 
projects are such that any licensed deepwater port facility operator or 
any proponent of a deepwater port that has an application in process 
who proposes to convert from import to export operations must submit a 
new license application (including application fee) and conform to all 
licensing requirements and regulations in effect at such time of 
application. For licensed deepwater ports, an application to convert 
from import operations to export operations requires, at a minimum: (1) 
Approval from DOE or other approval authority to export oil or natural 
gas to free trade and/or non-free trade agreement countries; (2) a new 
or supplemental environmental impact statement or environmental 
assessment pursuant to NEPA that assesses the environmental impacts of 
the proposed change in operations; and (3) a revised operations manual 
that fully describes the proposed change in port operations. Only after 
all required application processes are completed, and MARAD issues a 
ROD or Finding Of No Significant Impact (FONSI) that explicitly 
addresses the nine mandatory criteria specified in the DWPA (33 U.S.C. 
1503(c)), may the Maritime Administrator approve, approve with 
conditions, or disapprove an application to export oil or natural gas 
through a deepwater port.
    For deepwater ports that already have a license to import oil or 
natural gas, if the Maritime Administrator approves an application to 
convert to export operations, the licensee must surrender the existing 
license, and the Maritime Administrator will issue a new license, as 
outlined above, with conditions appropriate to all intended activities, 
including, if applicable, authority to engage in bidirectional oil or 
natural gas import and export operations. For applications to site, 
construct and operate a new deepwater port, the Maritime Administrator 
will issue a new license with conditions appropriate to the applied-for 
activity.

Policy Analysis and Notices

    MARAD is publishing this policy in the Federal Register to indicate 
how it plans to exercise the discretionary authority provided by the 
DWPA, as amended by the CG&MT Act. This policy establishes an 
administrative process for the review of deepwater port applications 
that propose to export oil or natural gas. It is consistent with the 
existing process previously established for the review of import 
applications. This policy acknowledges that these existing statutory 
and regulatory procedures are sufficient and appropriate for the 
processing of export applications.

    Authority:  The Coast Guard and Maritime Transportation Act of 
2012; The Deepwater Port Act of 1974, as amended, 33 U.S.C. 1501-
1524; 49 CFR 1.93.

    Dated: May 1, 2015.

    By Order of the Maritime Administrator.
Thomas M. Hudson, Jr.,
Secretary, Maritime Administration.
[FR Doc. 2015-10619 Filed 5-6-15; 8:45 am]
 BILLING CODE 4910-81-P