82_FR_41739 82 FR 41570 - Small-Scale Natural Gas Exports

82 FR 41570 - Small-Scale Natural Gas Exports

DEPARTMENT OF ENERGY

Federal Register Volume 82, Issue 169 (September 1, 2017)

Page Range41570-41577
FR Document2017-18580

The Department of Energy (DOE or Department) proposes to revise its regulations to provide that DOE will issue an export authorization upon receipt of any complete application that seeks to export natural gas, including liquefied natural gas (LNG), to countries with which the United States has not entered into a free trade agreement (FTA) requiring national treatment for trade in natural gas and with which trade is not prohibited by U.S. law or policy (non-FTA countries), provided that the application satisfies the following two criteria: The application proposes to export natural gas in a volume up to and including 0.14 billion cubic feet (Bcf) per day (Bcf/d), and DOE's approval of the application does not require an environmental impact statement (EIS) or an environmental assessment (EA) under the National Environmental Policy Act of 1969 (NEPA). In proposing this revision, DOE is interpreting the phrase ``public interest'' set forth in the Natural Gas Act (NGA). DOE proposes that applications that satisfy these criteria are requesting authorization for ``small-scale natural gas exports'' and, as such, the exports are deemed to be consistent with the public interest under the NGA. DOE's regulations regarding notice of applications and procedures conducted on applications would no longer apply to applications that satisfy these criteria. The proposed regulation is intended to expedite DOE's processing of these applications, thereby reducing administrative burdens for the small-scale natural gas export market.

Federal Register, Volume 82 Issue 169 (Friday, September 1, 2017)
[Federal Register Volume 82, Number 169 (Friday, September 1, 2017)]
[Proposed Rules]
[Pages 41570-41577]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-18580]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 82 , No. 169 / Friday, September 1, 2017 / 
Proposed Rules

[[Page 41570]]



DEPARTMENT OF ENERGY

10 CFR Part 590

[FE Docket No. 17-86-R]
RIN 1901-AB43


Small-Scale Natural Gas Exports

AGENCY: Office of Fossil Energy, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Energy (DOE or Department) proposes to 
revise its regulations to provide that DOE will issue an export 
authorization upon receipt of any complete application that seeks to 
export natural gas, including liquefied natural gas (LNG), to countries 
with which the United States has not entered into a free trade 
agreement (FTA) requiring national treatment for trade in natural gas 
and with which trade is not prohibited by U.S. law or policy (non-FTA 
countries), provided that the application satisfies the following two 
criteria: The application proposes to export natural gas in a volume up 
to and including 0.14 billion cubic feet (Bcf) per day (Bcf/d), and 
DOE's approval of the application does not require an environmental 
impact statement (EIS) or an environmental assessment (EA) under the 
National Environmental Policy Act of 1969 (NEPA). In proposing this 
revision, DOE is interpreting the phrase ``public interest'' set forth 
in the Natural Gas Act (NGA). DOE proposes that applications that 
satisfy these criteria are requesting authorization for ``small-scale 
natural gas exports'' and, as such, the exports are deemed to be 
consistent with the public interest under the NGA. DOE's regulations 
regarding notice of applications and procedures conducted on 
applications would no longer apply to applications that satisfy these 
criteria. The proposed regulation is intended to expedite DOE's 
processing of these applications, thereby reducing administrative 
burdens for the small-scale natural gas export market.

DATES: Public comment on this proposed rule will be accepted until 
October 16, 2017.

ADDRESSES: You may submit comments identified by Regulation Identifier 
Number (RIN) 1901-AB43 and FE Docket No. 17-86-R. Use any of the 
following methods, although the eRulemaking Portal is preferred:
    1. Federal eRulemaking Portal (the preferred method): Follow the 
instructions for submitting comments on the Federal eRulemaking Portal 
at http://www.regulations.gov.
    2. Email: Send email to [email protected]. Include RIN 1901-AB43 
and FE Docket No. 17-86-R in the subject line of the email. Please 
include the full body of your comments in the text of the message or as 
an attachment.
    3. Regular Mail: U.S. Department of Energy (FE-34), Office of 
Regulation and International Engagement, Office of Fossil Energy, P.O. 
Box 44375, Washington, DC 20026-4375.
    4. Hand Delivery or Private Delivery Services (e.g., FedEx, UPS, 
etc.): U.S. Department of Energy (FE-34), Office of Regulation and 
International Engagement, Office of Fossil Energy, Forrestal Building, 
Room 3E-042, 1000 Independence Avenue SW., Washington, DC 20585. 
Telephone: 202-586-9478.
    Due to potential delays in the delivery of postal mail, we 
encourage respondents to submit comments electronically to ensure 
timely receipt. Please Note: If submitting a filing via email, please 
include all related documents and attachments (e.g., exhibits) in the 
original email correspondence. Please do not include any active 
hyperlinks or password protection in any of the documents or 
attachments related to the filing. All electronic filings submitted to 
DOE must follow these guidelines to ensure that all documents are filed 
in a timely manner. Any hardcopy filing submitted greater in length 
than 50 pages must also include, at the time of the filing, a digital 
copy on disk of the entire submission.
    Docket: This notice of proposed rulemaking and any comments that 
DOE receives will be made available on the Federal eRulemaking Portal 
at http://www.regulations.gov, and also on DOE's Web site at: https://www.energy.gov/fe/services/natural-gas-regulation.

FOR FURTHER INFORMATION CONTACT: Amy Sweeney, U.S. Department of Energy 
(FE-34), Office of Regulation and International Engagement, Office of 
Fossil Energy Forrestal Building, Room 3E-042, 1000 Independence Avenue 
SW., Washington, DC 20585; (202) 586-2627; or Cassandra Bernstein or 
Ronald (R.J.) Colwell, U.S. Department of Energy (GC-76), Office of the 
Assistant General Counsel for Electricity and Fossil Energy, Forrestal 
Building, Room 6D-033, 1000 Independence Ave. SW., Washington, DC 
20585; (202) 586-9793 or (202) 586-8499.

SUPPLEMENTARY INFORMATION:

I. Background
    A. Statutory Background
    B. DOE's Public Interest Analysis
    C. DOE's Non-FTA Export Authorization Orders Since 2012
II. Discussion of Proposed Rule
    A. Summary of and Reasons for Proposed Rule
    B. Consistency With Section 3 of the Natural Gas Act
    C. Consistency With the Public Interest
    D. Consistency With Free Market Principles
III. Regulatory Review
    A. Executive Orders 12866 and 13563
    B. National Environmental Policy Act
    C. Regulatory Flexibility Act
    D. Paperwork Reduction Act
    E. Unfunded Mandates Reform Act of 1995
    F. Treasury and General Government Appropriations Act, 1999
    G. Executive Order 13132
    H. Executive Order 12988
    I. Treasury and General Government Appropriations Act, 2001
    J. Executive Order 13211
IV. Approval of the Office of the Secretary

I. Background

A. Statutory Background

    The Department of Energy is responsible for authorizing exports of 
natural gas to foreign nations pursuant to section 3 of the NGA, 15 
U.S.C. 717b. For applications to export natural gas to non-FTA 
countries under NGA section 3(a), 15 U.S.C. 717b(a),\1\ DOE has 
consistently interpreted section 3 of the NGA as creating a rebuttable 
presumption that a proposed export of natural gas is in the public 
interest. Accordingly, DOE conducts an informal adjudication and grants 
the application unless DOE finds that the proposed exportation will not 
be consistent with

[[Page 41571]]

the public interest.\2\ Before reaching a final decision on any non-FTA 
application, DOE must also comply with NEPA, 42 U.S.C. 4321 et seq.
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    \1\ This notice of proposed rulemaking does not apply to exports 
to FTA countries under section 3(c) of the NGA, 15 U.S.C. 717b(c).
    \2\ 15 U.S.C. 717b(a); see, e.g., Golden Pass Products LLC, DOE/
FE Order No. 3978, FE Docket No. 12-156-LNG, Opinion and Order 
Granting Long-Term, Multi-Contract Authorization to Export Liquefied 
Natural Gas by Vessel from the Golden Pass LNG Terminal Located in 
Jefferson County, Texas, to Non-Free Trade Agreement Nations, at 18, 
162 (Apr. 25, 2017).
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    Typically, the federal agency responsible for permitting the export 
facility serves as the lead agency in the NEPA review process, and DOE 
serves as a cooperating agency within the meaning of the Council on 
Environmental Quality's (CEQ) regulations, 40 CFR 1501.4, 1501.5. For 
LNG terminals located onshore or in state waters, the agency 
responsible for permitting the export facilities is the Federal Energy 
Regulatory Commission (FERC) pursuant to authority delegated by DOE 
under section 3(e) of the Natural Gas Act, 15 U.S.C. 717b(e). For LNG 
terminals located offshore beyond state waters, the responsible agency 
is the Maritime Administration (MARAD) within the Department of 
Transportation pursuant to section 3(9) of the Deepwater Ports Act, as 
amended by section 312 of the Coast Guard and Maritime Transportation 
Act of 2012 (Pub. L. 112-213).
    DOE's environmental review process under NEPA usually results in 
the preparation or adoption of an EIS or EA describing the potential 
environmental impacts associated with the application. In some cases, 
DOE may determine that an application is eligible for a categorical 
exclusion from the preparation or adoption of an EIS or EA pursuant to 
DOE's regulations implementing NEPA, 10 CFR 1021.410, appendices A & B. 
For example, categorical exclusion B5.7 of DOE's regulations (10 CFR 
part 1021, subpart D, appendix B5.7) applies to natural gas import or 
export activities requiring minor operational changes to existing 
projects, but no new construction.

B. DOE's Public Interest Analysis Under Section 3(a) of the Natural Gas 
Act

    Although NGA section 3(a) establishes a broad public interest 
standard and a presumption favoring export authorizations, the statute 
does not define ``public interest'' or identify criteria that must be 
considered in evaluating the public interest. In prior decisions, DOE 
has identified a range of factors that it evaluates when reviewing an 
application for export authorization. These factors include economic 
impacts, international impacts, security of natural gas supply, and 
environmental impacts, among others. To conduct this review, DOE looks 
to record evidence developed in the application proceeding.\3\
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    \3\ See, e.g., Golden Pass Products, DOE/FE Order No. 3978, at 
135-66.
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    DOE's prior decisions have also looked to certain principles 
established in its 1984 Policy Guidelines.\4\ The goals of the Policy 
Guidelines are to minimize federal control and involvement in energy 
markets and to promote a balanced and mixed energy resource system. The 
Guidelines provide that:
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    \4\ New Policy Guidelines and Delegations Order Relating to 
Regulation of Imported Natural Gas, 49 FR 6684 (Feb. 22, 1984) 
[hereinafter 1984 Policy Guidelines].

    The market, not government, should determine the price and other 
contract terms of imported [or exported] natural gas. . . . The 
federal government's primary responsibility in authorizing imports 
[or exports] will be to evaluate the need for the gas and whether 
the import [or export] arrangement will provide the gas on a 
competitively priced basis for the duration of the contract while 
minimizing regulatory impediments to a freely operating market.\5\
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    \5\ Id. at 6685.

While the Policy Guidelines are nominally applicable to natural gas 
import cases, DOE subsequently held in Order No. 1473 that the same 
Policy Guidelines should be applied to natural gas export 
applications.\6\
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    \6\ Phillips Alaska Natural Gas, DOE/FE Order No. 1473, at 14 
(citing Yukon Pacific Corp., DOE/FE Order No. 350, Order Granting 
Authorization to Export Liquefied Natural Gas from Alaska, 1 FE ] 
70,259, at 71,128 (1989)).
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    In Order No. 1473, DOE stated that it was further guided by DOE 
Delegation Order No. 0204-111. That delegation order, which authorized 
the Administrator of the Economic Regulatory Administration to exercise 
the agency's review authority under NGA section 3, directed the 
Administrator to regulate exports ``based on a consideration of the 
domestic need for the gas to be exported and such other matters as the 
Administrator finds in the circumstances of a particular case to be 
appropriate.'' \7\ (In February 1989, the Assistant Secretary for 
Fossil Energy assumed the delegated responsibilities of the 
Administrator of ERA.\8\)
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    \7\ DOE Delegation Order No. 0204-111, at 1; see also 1984 
Policy Guidelines, 49 FR at 6690.
    \8\ See Applications for Authorization to Construct, Operate, or 
Modify Facilities Used for the Export or Import of Natural Gas, 62 
FR 30,435, 30,437 n.15 (June 4, 1997) (citing DOE Delegation Order 
No. 0204-127, 54 FR 11,436 (Mar. 20, 1989)).
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    Although DOE Delegation Order No. 0204-111 is no longer in effect, 
DOE's review of export applications has continued to focus on: (i) The 
domestic need for the natural gas proposed to be exported, (ii) whether 
the proposed exports pose a threat to the security of domestic natural 
gas supplies, (iii) whether the arrangement is consistent with DOE's 
policy of promoting market competition, and (iv) any other factors 
bearing on the public interest, as determined by DOE.
    Additionally, since 2011, DOE has commissioned several studies to 
evaluate the reasonably foreseeable economic and environmental impacts 
of natural gas exports, and to respond to concerns about exports 
submitted to DOE in various proceedings. These studies include: Effect 
of Increased Natural Gas Exports on Domestic Energy Markets (2012 EIA 
\9\ Study) and Macroeconomic Impacts of LNG Exports from the United 
States (NERA Study) (collectively, 2012 LNG Export Study); \10\ Effect 
of Increased Levels of Liquefied Natural Gas Exports on U.S. Energy 
Markets (2014 EIA LNG Export Study); \11\ The Macroeconomic Impact of 
Increasing U.S. LNG Exports (2015 LNG Export Study); \12\ the Addendum 
to Environmental Review Documents Concerning Exports of Natural Gas 
from the United States (Addendum); \13\ and the Life Cycle Greenhouse 
Gas Perspective on Exporting Liquefied Natural Gas from the United 
States (LCA GHG Report).\14\ DOE published these studies in the Federal 
Register and has responded to the public comments received on each 
study.\15\
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    \9\ ``EIA'' refers to the U.S. Energy Information 
Administration.
    \10\ See 2012 LNG Export Study, 77 FR 73,627 (Dec. 11, 2012), 
available at: http://energy.gov/sites/prod/files/2013/04/f0/fr_notice_two_part_study.pdf.
    \11\ U.S. Energy Info. Admin., Effect of Increased Levels of 
Liquefied Natural Gas Exports on U.S. Energy Markets (Oct. 2014), 
available at: https://www.eia.gov/analysis/requests/fe/pdf/lng.pdf.
    \12\ Center for Energy Studies at Rice University Baker 
Institute and Oxford Economics, The Macroeconomic Impact of 
Increasing U.S. LNG Exports (Oct. 29, 2015), available at: http://energy.gov/sites/prod/files/2015/12/f27/20151113_macro_impact_of_lng_exports_0.pdf.
    \13\ Dep't of Energy, Addendum to Environmental Review Documents 
Concerning Exports of Natural Gas From the United States, 79 FR 
48,132 (Aug. 15, 2014), available at: http://energy.gov/fe/addendum-environmental-review-documents-concerning-exports-natural-gas-united-states.
    \14\ Dep't of Energy, Life Cycle Greenhouse Gas Perspective on 
Exporting Liquefied Natural Gas From the United States, 79 FR 32,260 
(June 4, 2014). DOE/FE announced the availability of the LCA GHG 
Report on its Web site on May 29, 2014.
    \15\ See, e.g. Cheniere Marketing, LLC and Corpus Christi 
Liquefaction, LLC, DOE/FE Order No. 3638, FE Docket No. 12-97-LNG, 
Final Order and Opinion Granting Long-Term, Multi-Contract 
Authorization to Export Liquefied Natural Gas by Vessel from the 
Proposed Corpus Christi Liquefaction Project to Be Located in Corpus 
Christi, Texas, to Non-Free Trade Agreement Nations, at 94-148, 167-
83 (May 12, 2015); Golden Pass Products, DOE/FE Order No. 3978, at 
71-92.

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[[Page 41572]]

    The 2012 EIA Study generally found that natural gas exports will 
lead to higher domestic natural gas prices, increased domestic natural 
gas production, reduced domestic natural gas consumption, and increased 
natural gas imports from Canada via pipeline. Among the key findings of 
the NERA Study (the second part of the 2012 LNG Export Study), NERA 
projected that the United States would gain net economic benefits from 
allowing LNG exports. For every market scenario examined, the NERA 
Study determined that economic benefits increased as the level of 
natural gas exports increased.
    The 2014 EIA LNG Export Study found that natural gas exports will 
generally lead to relatively modest domestic natural gas price 
increases, increased domestic natural gas production, reduced domestic 
natural gas consumption, and higher levels of economic output (as 
measured by real gross domestic product).
    The 2015 LNG Export Study considered export volumes ranging from 12 
to 20 Bcf/d of natural gas, as well as a high resource recovery case 
examining export volumes up to 28 Bcf/d of natural gas. The analysis 
covered the 2015 to 2040 time period. The 2015 Study made the following 
key findings:
     Rising natural gas exports are associated with a net 
increase in domestic natural gas production;
     As exports increase, the spread between U.S. domestic 
prices and international benchmarks narrows;
     The overall macroeconomic impacts of higher natural gas 
exports are marginally positive--a result that is robust to alternative 
assumptions for the U.S. natural gas market;
     An increase in U.S. natural gas exports will generate 
small declines in output at the margin for some energy-intensive, 
trade-exposed industries; and
     Negative impacts in energy-intensive sectors are offset by 
positive impacts elsewhere.
    The Addendum evaluated environmental impacts including water 
resources, air quality, greenhouse gas emissions, induced seismicity, 
and land use impacts. The DOE Addendum concluded that DOE cannot 
meaningfully estimate where, when, or by what particular method 
additional natural gas would be produced in response to non-FTA export 
demand.
    Finally, although not directly relevant to this proposed rule,\16\ 
the LCA GHG Report reached conclusions regarding the use of U.S. 
natural gas exports to produce electricity in European and Asian 
markets, as well as the life cycle greenhouse gas emissions of exported 
U.S. natural gas as compared to other sources of natural gas in those 
markets.
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    \16\ DOE considers the LCA GHG Report in non-FTA export 
proceedings whenever an application seeks to transport LNG by LNG 
tanker from large-scale liquefaction facilities to non-FTA 
countries. By contrast, small-scale exports of natural gas 
(including LNG) typically are transported shorter distances using 
other transportation methods, such as ISO containers loaded onto 
container ships. DOE therefore does not consider the LCA GHG Report 
as part of the record in those proceedings. See infra (identifying 
seven non-FTA export authorizations for which the LCA GHG Report was 
not considered in the application proceeding, and discussing 
transportation of small-scale exports).
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C. DOE's Non-FTA Export Authorizations Since 2012

    To date, DOE has issued 28 final export authorizations to non-FTA 
countries, bringing the cumulative total of approved non-FTA exports of 
LNG and compressed natural gas (CNG) to 21.33 Bcf/d of natural gas, or 
7.79 trillion cubic feet per year.\17\ These non-FTA authorizations are 
available online at the DOE/FE E-Docket Room.\18\
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    \17\ See Lake Charles LNG Export Co., LLC, DOE/FE Order No. 
4010, FE Docket No. 16-109-LNG, Opinion and Order Granting Long-
Term, Multi-Contract Authorization to Export Liquefied Natural Gas 
by Vessel from the Lake Charles Terminal in Calcasieu Parish, 
Louisiana, to Non-Free Trade Agreement Nations, at 43-46 (June 29, 
2017).
    \18\ Dep't of Energy, Office of Fossil Energy, Electronic Docket 
Room (E-Docket Room), https://www.energy.gov/fe/downloads/electronic-docket-room-e-docket-room.
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    Of these 28 non-FTA authorizations, seven authorize exports in 
volumes below 0.14 Bcf/d of natural gas--the volume limitation set 
forth in the criteria for this proposed rulemaking. These seven 
authorizations include: Carib Energy (USA) LLC (0.04 Bcf/d), American 
Marketing LLC (0.008 Bcf/d), Emera CNG, LLC (0.008 Bcf/d), Floridian 
Natural Gas Storage Company, LLC (0.04 Bcf/d), Air Flow North American 
Corp. (0.002 Bcf/d), Flint Hills Resources, LP (0.01 Bcf/d), and Carib 
Energy (USA), LLC (0.004).\19\ Together, these authorizations approve 
exports of LNG and CNG in a combined volume of 0.112 Bcf/d--less than 
0.6% of the cumulative volume of non-FTA exports approved by DOE to 
date.
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    \19\ See Lake Charles LNG Export Co., DOE/FE Order No. 4010, at 
43-46 (citing these authorizations).
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    In each of the 28 non-FTA export authorizations issued to date, and 
on the basis of the record evidence presented in those proceedings, DOE 
has reached the following conclusions as part of its public interest 
determination for each application:
     Substantial domestic natural gas supplies exist to meet 
domestic natural gas demand and increased natural gas exports;
     While increased natural gas exports will result in higher 
U.S. natural gas prices, these price changes remain in a relatively 
narrow range across the scenarios studied and the domestic natural gas 
market is capable of accommodating increased natural gas exports 
without significant negative price or other economic impacts;
     Even with these estimated price increases, increased 
natural gas exports are likely to generate net economic benefits for 
the United States;
     Increased natural gas exports stimulate local, regional, 
and national economies through direct and indirect job creation, 
increased economic activity, and tax revenues; and
     Increased natural gas exports increase diversity of supply 
in the global natural gas market, in turn benefiting international 
trade and relations as well as global energy security.

DOE also has observed that it is far from certain that all or even most 
of the proposed natural gas export projects will be realized because of 
the time, difficulty, and expense of commercializing, financing, and 
constructing such projects, as well as the uncertainties inherent in 
the global market demand for natural gas.\20\
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    \20\ See, e.g., Golden Pass Products, DOE/FE Order No. 3978, at 
Section XII and 161.
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II. Discussion of Proposed Rule

A. Summary of and Reasons for Proposed Rule

    The emerging small-scale export market involves exports of small 
volumes of natural gas from the United States to countries primarily 
in, but not limited to, the Caribbean, Central America, and South 
America. Many of these countries do not generate enough natural gas 
demand to support the economies of scale required to justify large 
volumes of LNG imports from large-scale LNG terminals via conventional 
LNG tankers. The small-scale natural gas export market has developed as 
a solution to the practical and economic constraints limiting natural 
gas exports to these countries.
    DOE is proposing to revise its regulations to expedite the 
application and approval process for small-scale exports of natural 
gas. Specifically, the proposed rule provides that DOE, upon receipt of 
any complete application to export natural gas (including LNG) to non-
FTA countries, will grant the application provided that it satisfies 
the following two criteria: (1) The application proposes to export 
natural gas in a volume up to and including

[[Page 41573]]

0.14 Bcf/d; and (2) DOE's approval of the application does not require 
an EIS or EA under NEPA--that is, the application is eligible for a 
categorical exclusion under DOE's NEPA regulations.
    For each small-scale application submitted to DOE, DOE will first 
determine if the application is complete under DOE's regulations. If 
the application is complete, DOE will post the application on DOE's Web 
site, consistent with DOE practice. Next, DOE will determine if the 
application meets the criteria for a small-scale natural gas export. If 
the application meets the criteria, DOE will issue a non-FTA 
authorization granting the application on an expedited basis, without 
providing notice of application and other procedures typically required 
for non-FTA export applications under DOE's regulations, 10 CFR 590.205 
and 10 CFR part 590, subpart C (10 CFR 590.303-10 CFR 590.317). All 
small-scale natural gas export authorizations issued pursuant to these 
regulations will be posted on DOE's Web site, and will contain 
appropriate terms and conditions consistent with DOE's regulations and 
practice.
    DOE notes that entities involved in this emerging market typically 
define ``small-scale'' natural gas exports as exports of 1.0 million 
metric tons per annum (mtpa) or lower.\21\ When converting from million 
metric tons to billion cubic feet, DOE uses a conversion factor of 
51.75 Bcf per million metric tons of dry natural gas.\22\ Based on this 
conversion factor, 1 million metric tons per annum equates to 
approximately 0.14 Bcf/d of natural gas. Consequently, as the first 
criterion for the proposed rule, DOE proposes to define small-scale 
natural gas exports as any export of natural gas up to and including a 
volume of 0.14 Bcf/d. DOE believes this volume limitation is consistent 
with industry practice, but invites comment on any other appropriate 
small-scale volume limitation.
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    \21\ See, e.g., Int'l Gas Union, IGU World Gas LNG Report 59 
(2016 ed.), available at: www.igu.org/download/file/fid/2123 (``IGU 
defines the large-scale LNG industry as every LNG business above 1 
million MTPA of LNG production and/or consumption. Conversely, 
small-scale LNG is any business under 1 million MTPA.''); Int'l Gas 
Union, Small Scale LNG 11 (June 2015), available at: http://www.igu.org/sites/default/files/node-page-field_file/SmallScaleLNG.pdf (``For the purpose of this report, the [small-
scale LNG] production installed capacity has been defined as below 1 
million metric tons per annum (mtpa).''); C[eacute]dric Andrieu, Gas 
Tech. Inst., Et Al., Small Scale LNG Import Terminal: Not As Simple 
As A Reduced One 2, 4 (Conference Paper, LNG 17 International 
Conference & Exhibition on Liquefied Natural Gas, 2013), available 
at: http://www.gastechnology.org/Training/Documents/LNG17-proceedings/Storage-6-Cedric_Andrieu.pdf (``Typically, the send-out 
rate of . . . small LNG terminals is ranging from 0.2 to 1 mtpa.'').
    \22\ See, e.g., Southern LNG Company, L.L.C., DOE/FE Order No. 
3956, FE Docket No. 12-100-LNG, Opinion and Order Granting Long-
Term, Multi-Contract Authorization to Export Liquefied Natural Gas 
by Vessel from the Elba Island Terminal in Chatham County, Georgia, 
to Non-Free Trade Agreement Nations (Dec. 16, 2016), at Ordering 
Para. H.
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    As the second criterion for this proposed rule, DOE must determine 
that its approval of the application does not require an EIS or an EA 
under NEPA, because it qualifies for a categorical exclusion. For 
example, pursuant to DOE's categorical exclusion B5.7, a small-scale 
natural gas export that involves only existing facilities and/or minor 
operational changes is an action that does not involve new 
construction.
    Any application that satisfies these two criteria would qualify as 
a ``small-scale natural gas export'' as that term is defined under this 
proposed rule, and would be deemed to be consistent with the public 
interest under NGA section 3(a). As noted above, DOE's regulations 
regarding notice of applications, 10 CFR 590.205, and procedures 
applicable to application proceedings, 10 CFR 590 subpart C (10 CFR 
590.301 to 10 CFR 590.317), would not apply to applications that 
satisfy these criteria. Rather, this proposed rule, and the 45-day 
comment period for this proposed rule, would constitute the notice and 
opportunity for hearing on all prospective small-scale natural gas 
export applications.
    This proposed rule is limited to qualifying small-scale exports of 
natural gas. If adopted, this proposed rule would not affect either 
existing DOE authorizations or DOE's evaluation of any non-FTA 
application that does not meet the criteria for small-scale natural gas 
exports. In expediting the application and approval process for these 
exports, DOE recognizes the unique characteristics and minimal adverse 
impacts of the small-scale natural gas market emerging primarily in the 
United States, the Caribbean, Central America, and South America. As 
discussed below, the proposed rule is in accordance with section 3 of 
the NGA, DOE's interpretation of the public interest standard set forth 
in NGA section 3(a), and DOE's long-standing policy of minimizing 
federal control and involvement in energy markets and promoting a 
balanced and mixed energy resource system.

B. Consistency With Section 3(a) of the Natural Gas Act

    Under section 3(a) of the NGA, the Secretary of Energy is required 
to issue an order upon application unless, after opportunity for 
hearing, DOE finds that the proposed export ``will not be consistent 
with the public interest.'' \23\ DOE has long interpreted section 3(a) 
as creating a rebuttable presumption that a proposed export of natural 
gas is in the public interest, such that DOE must grant an application 
under section 3(a) unless opponents of the application overcome that 
presumption by making an affirmative showing of inconsistency with the 
public interest.\24\ The statute, however, does not define ``public 
interest'' or identify criteria that DOE must consider when determining 
whether a proposed export of natural gas is consistent with the public 
interest under section 3(a). The statute affords DOE broad discretion 
in determining whether proposed exports to non-FTA countries are 
``consistent with the public interest'' (15 U.S.C. 717b(a)). In this 
proposed rule, DOE is interpreting NGA section 3(a) to determine that 
small-scale natural gas exports are consistent with the public interest 
after considering all relevant factors, including the domestic need for 
the small volumes of natural gas to be exported and the security of 
domestic natural gas supplies.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 717b(a).
    \24\ See id.; see, e.g., Golden Pass Products, DOE/FE Order No. 
3978, at 18, 162.
---------------------------------------------------------------------------

C. Consistency With the Public Interest

    In determining that small-scale natural gas exports are consistent 
with the public interest, DOE has considered the economic studies and 
the Addendum discussed in Section I.B, as well as the public comments 
received on these studies. DOE has also considered the 28 final non-FTA 
export authorizations issued to date, including the seven non-FTA 
authorizations approving exports at volumes below 0.14 Bcf/d of natural 
gas (identified in section I.C), as well as the most recent 
authoritative projections for natural gas supply, demand, and prices 
set forth in the Annual Energy Outlook 2017 (AEO 2017).\25\ Based on 
this evidence, and for the reasons described in Section II.A, DOE has 
determined that small-scale natural gas exports are consistent with the 
public interest under NGA section 3(a).
---------------------------------------------------------------------------

    \25\ U.S. Energy Information Administration, Annual Energy 
Outlook 2017 (Jan. 2017), available at: http://www.eia.gov/outlooks/aeo.
---------------------------------------------------------------------------

    In reaching this conclusion, DOE has considered the economic 
impacts of higher natural gas prices and potential increases in natural 
gas price volatility and, as noted earlier, has reviewed the economic 
impacts of natural gas exports. Recent advancements in natural

[[Page 41574]]

gas exploration and production technology have changed the outlook for 
the U.S. natural gas market, such that the increase in domestic 
supplies of natural gas will outpace increases in domestic demand.
    The 2015 Study considered export volumes ranging from 12 to 20 Bcf/
d of natural gas, as well as a high resource recovery case examining 
export volumes up to 28 Bcf/d of natural gas. By comparison, to date 
DOE has issued final non-FTA authorizations in a cumulative volume of 
exports totaling 21.33 Bcf/d of natural gas--well below the 28 Bcf/d 
case considered in the 2015 Study. As DOE has explained in recent 
orders,\26\ the authors of the 2015 Study had to include several 
unlikely assumptions about the global natural gas market for U.S. LNG 
exports to exceed 12 Bcf/d, much less to reach the high resource 
recovery case of 28 Bcf/d of exports. Based on this evidence and the 
small volumes at issue in this proposed rule, DOE believes that 
domestic supplies will be adequate both to meet domestic needs and to 
supply small-scale exports of natural gas.
---------------------------------------------------------------------------

    \26\ See, e.g., Delfin LNG LLC, DOE/FE Order No. 4028, FE Docket 
No. 13-147-LNG, Opinion and Order Granting Long-Term, Multi-Contract 
Authorization to Export Liquefied Natural Gas by Vessel from a 
Proposed Floating Liquefaction Project and Deepwater Port 30 Miles 
Offshore of Louisiana to Non-Free Trade Agreement Nations, at 62-63 
(June 1, 2017).
---------------------------------------------------------------------------

    DOE finds that small-scale natural gas exports meeting the criteria 
set forth in this proposed rulemaking will not interfere with the 
domestic need for natural gas. Likewise, small-scale exports will not 
have a detectable impact on domestic natural gas prices, and will not 
pose a risk to the security of domestic natural gas supplies. While 
small-scale natural gas exports are unlikely to generate negative 
economic or supply impacts in the United States, these exports are 
expected to have positive impacts. Specifically, small-scale natural 
gas exports are expected to generate positive economic benefits in the 
United States through direct and indirect job creation, increased 
economic activity, tax revenues, and improved U.S. balance of trade.
    To countries that do not otherwise have access to natural gas, 
small-scale natural gas exports represent an important change in their 
ability to generate electricity. Small-scale exports also will enable 
electric generation facilities in the importing countries to switch 
from heavy fuel oil and diesel to natural gas, providing positive 
environmental benefits through the reduction of emissions at fuel oil 
and diesel burning electric generators. The availability of a reliable 
supply of natural gas to customers outside of the United States who are 
currently burning diesel or fuel oil for power generation may encourage 
conversion to natural gas-based power generation equipment. Companies 
in the United States would be well positioned to provide and support 
this type of power generation equipment, thus providing secondary 
economic benefits from the small-scale exports.
    Additionally, small-scale natural gas exports will enable importing 
countries to diversify their fuel supplies, while contributing to 
greater overall transparency, efficiency, and liquidity of natural gas 
markets outside the United States. To the extent small-scale natural 
gas exports will diversify global natural gas supplies, and increase 
the volumes of natural gas available globally, small-scale natural 
exports will improve energy security for many U.S. allies and trading 
partners. As such, the proposed rule will advance the public interest 
by fostering international relations, trade, and security.

D. Consistency With Free Market Principles

    DOE has consistently subscribed to the principles set forth in the 
1984 Policy Guidelines that the market, not the government, is the most 
efficient means of allocating natural gas supplies. The United States 
has an abundant supply of affordable natural gas that studies have 
shown will significantly exceed domestic demand. Meanwhile, foreign 
demand for natural gas imports from the United States has increased as 
many countries, such as those in the Caribbean, Central America, and 
South America, seek to import cleaner sources of energy.
    The conventional, large-scale natural gas import/export market is 
extremely capital-intensive. Companies must achieve sufficient 
economies of scale to justify their multi-billion dollar investments in 
large-scale LNG terminals and in large-volume LNG tanker fleets. 
However, many of the countries in the Caribbean, Central America, and 
South America simply do not generate enough demand to import the large 
volumes of natural gas supplied by the large-scale natural gas import/
export market. Given these diseconomies of scale, a gap has emerged in 
the regional natural gas import/export market. Small-scale natural gas 
exports represent a market-driven response to fill this gap. In 
contrast to large-scale natural gas exports, small-scale natural gas 
exports typically originate from existing facilities in the United 
States, are transported shorter distances, and rely on a variety of 
transportation modes (such as ISO containers loaded onto container 
ships and barges). DOE believes that facilitating small-scale natural 
gas exports will allow for greater diversity and competition in the 
natural gas market.

III. Regulatory Review

A. Executive Orders 12866 and 13563

    This regulatory action has been determined to not be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 1993). 
Accordingly, this action was not subject to review under that Executive 
Order by the Office of Information and Regulatory Affairs of the Office 
of Management and Budget.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011.) EO 
13563 is supplemental to and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, agencies are 
required by Executive Order 13563 to: (1) Propose or adopt a regulation 
only upon a reasoned determination that its benefits justify its costs 
(recognizing that some benefits and costs are difficult to quantify); 
(2) tailor regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, taking into account, 
among other things, and to the extent practicable, the costs of 
cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE concludes that this proposed rule is consistent with these 
principles. Specifically, this proposed rule provides that DOE will 
issue an export authorization upon receipt of any complete application 
that seeks to export natural gas, including LNG, to non-FTA countries, 
provided that the

[[Page 41575]]

application satisfies the following two criteria: (1) The application 
proposes to export natural gas in a volume up to and including 0.14 
Bcf/d, and (2) DOE's approval of the application does not require an 
EIS or EA under NEPA. DOE's regulations regarding notice of 
applications, 10 CFR 590.205, and procedures applicable to application 
proceedings, 10 CFR part 590, subpart C (10 CFR 590.303 to 10 CFR 
590.317), would not apply to small-scale natural gas exports. The 
proposed regulation is intended to expedite DOE's processing of these 
applications, thereby reducing administrative burdens for the small-
scale natural gas export market.

B. Executive Orders 13771, 13777, and 13783

    On January 30, 2017, the President issued Executive Order 13771, 
``Reducing Regulation and Controlling Regulatory Costs.'' That Order 
stated the policy of the executive branch is to be prudent and 
financially responsible in the expenditure of funds, from both public 
and private sources. The Order stated it is essential to manage the 
costs associated with the governmental imposition of private 
expenditures required to comply with Federal regulations. This proposed 
rule is expected to be an EO 13771 deregulatory action.
    Additionally, on February 24, 2017, the President issued Executive 
Order 13777, ``Enforcing the Regulatory Reform Agenda.'' The Order 
required the head of each agency designate an agency official as its 
Regulatory Reform Officer (RRO). Each RRO oversees the implementation 
of regulatory reform initiatives and policies to ensure that agencies 
effectively carry out regulatory reforms, consistent with applicable 
law. Further, EO 13777 requires the establishment of a regulatory task 
force at each agency. The regulatory task force is required to make 
recommendations to the agency head regarding the repeal, replacement, 
or modification of existing regulations, consistent with applicable 
law. At a minimum, each regulatory reform task force must attempt to 
identify regulations that:
    (i) Eliminate jobs, or inhibit job creation;
    (ii) Are outdated, unnecessary, or ineffective;
    (iii) Impose costs that exceed benefits;
    (iv) Create a serious inconsistency or otherwise interfere with 
regulatory reform initiatives and policies;
    (v) Are inconsistent with the requirements of Information Quality 
Act, or the guidance issued pursuant to that Act, in particular those 
regulations that rely in whole or in part on data, information, or 
methods that are not publicly available or that are insufficiently 
transparent to meet the standard for reproducibility; or
    (vi) Derive from or implement Executive Orders or other 
Presidential directives that have been subsequently rescinded or 
substantially modified.
    Finally, on March 28, 2017, the President signed Executive Order 
13783, entitled ``Promoting Energy Independence and Economic Growth.'' 
Among other things, EO 13783 requires the heads of agencies to review 
all existing regulations, orders, guidance documents, policies, and any 
other similar agency actions (collectively, agency actions) that 
potentially burden the development or use of domestically produced 
energy resources, with particular attention to oil, natural gas, coal, 
and nuclear energy resources. Such review does not include agency 
actions that are mandated by law, necessary for the public interest, 
and consistent with the policy set forth elsewhere in that order.
    Executive Order 13783 defined burden for purposes of the review of 
existing regulations to mean to unnecessarily obstruct, delay, curtail, 
or otherwise impose significant costs on the siting, permitting, 
production, utilization, transmission, or delivery of energy resources.
    DOE concludes that this proposed rule is consistent with the 
directives set forth in these executive orders. Specifically, this 
proposed rule would require DOE to issue an export authorization upon 
receipt of any complete application that seeks to export natural gas, 
including LNG, to non-FTA countries, provided that the application 
satisfies the following two criteria: (1) The application proposes to 
export natural gas in a volume up to and including 0.14 Bcf/d, and (2) 
DOE's approval of the application does not require an EIS or an EA 
under NEPA. DOE proposes that applications that satisfy these criteria 
are requesting authorization for ``small-scale natural gas exports'' 
and, as such, the exports are deemed to be consistent with the public 
interest under NGA section 3(a). DOE's regulations regarding notice of 
applications and procedures conducted on applications would no longer 
apply to applications that satisfy these criteria. The proposed 
regulation would expedite DOE's processing of these applications, 
thereby reducing administrative burdens for the small-scale natural gas 
export market.

C. National Environmental Policy Act

    DOE has determined that promulgation of these regulations fall into 
a class of actions that does not individually or cumulatively have a 
significant impact on the human environment as set forth under DOE's 
regulations implementing the National Environmental Policy Act of 1969 
(42 U.S.C. 4321 et seq). Specifically, this rulemaking is covered under 
the Categorical Exclusion found in the DOE's National Environmental 
Policy Act regulations at paragraph A6 of appendix A to subpart D, 10 
CFR part 1021, which applies to rulemakings that are strictly 
procedural. Accordingly, neither an EIS nor an EA is required.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process (68 FR 7990). DOE has made its 
procedures and policies available on the Office of General Counsel's 
Web site: http://www.gc.doe.gov.
    DOE has reviewed this proposed rule under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. As discussed in the preamble, this proposed rule 
would require DOE to issue an export authorization upon receipt of any 
complete application that seeks to export natural gas, including LNG, 
to non-FTA countries, provided that the application satisfies the 
following two criteria: (1) The application proposes to export natural 
gas in a volume up to and including 0.14 Bcf/d, and (2) DOE's approval 
of the application does not require an EIS or an EA under NEPA. DOE's 
regulations regarding notice of applications and procedures conducted 
on applications would no longer apply to applications that satisfy 
these criteria.
    To date, DOE has received--and granted--seven applications to 
export LNG in volumes below 0.14 Bcf/d of natural gas to non-FTA 
countries (identified in section I.C). Of these seven applicants, two 
qualify as small businesses under the Small Business Administration's 
size standards under NAICS 221210, Natural Gas

[[Page 41576]]

Distribution, of 1,000 employees or less. Because it would streamline 
the application and approval process for small-scale natural gas 
exports, the proposed rule would not result in a significant economic 
impact on a substantial number of small entities. The proposed rule 
would, however, provide greater regulatory certainty for applicants by 
eliminating the individual application proceeding and public interest 
evaluation for qualifying applications. This, in turn, will both reduce 
the administrative burden associated with the application process and 
expedite authorization of qualifying applications, removing (at a 
minimum) the opportunity cost of receiving an application delayed by 
the current procedures.
    Therefore, DOE certifies that this rulemaking will not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, DOE did not prepare an IRFA for this rulemaking. DOE's 
certification and supporting statement of factual basis will be 
provided to the Chief Counsel for Advocacy of the Small Business 
Administration for review under 5 U.S.C. 605(b).

E. Paperwork Reduction Act

    The proposed rule does not change any requirements subject to 
review and approval by OMB pursuant to the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.) and the procedures implementing that Act, 
5 CFR 1320.1 et seq. Current natural gas import and export 
authorization holders, including any approved under this proposed rule, 
would be subject to the information collection requirements approved by 
the Office of Management and Budget under OMB Control No. 1901-0294. 
Public reporting burden for the certification is estimated to average 3 
hours per response, including the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

F. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally 
requires Federal agencies to examine closely the impacts of regulatory 
actions on tribal, state, and local governments. Subsection 101(5) of 
title I of that law defines a Federal intergovernmental mandate to 
include any regulation that would impose upon tribal, state, or local 
governments an enforceable duty, except a condition of Federal 
assistance or a duty arising from participating in a voluntary Federal 
program. Title II of that law requires each Federal agency to assess 
the effects of Federal regulatory actions on tribal, state, and local 
governments, in the aggregate, or to the private sector, other than to 
the extent such actions merely incorporate requirements specifically 
set forth in a statute. Section 202 of that title requires a Federal 
agency to perform a detailed assessment of the anticipated costs and 
benefits of any rule that includes a Federal mandate which may result 
in costs to tribal, state, or local governments, or to the private 
sector, of $100 million or more in any one year (adjusted annually for 
inflation). 2 U.S.C. 1532(a) and (b). Section 204 of that title 
requires each agency that proposes a rule containing a significant 
Federal intergovernmental mandate to develop an effective process for 
obtaining meaningful and timely input from elected officers of tribal, 
state, and local governments. 2 U.S.C. 1534.
    This proposed rule would streamline procedures for small-scale 
natural gas exports. DOE has determined that the proposed rule would 
not result in the expenditure by tribal, state, and local governments 
in the aggregate, or by the private sector, of $100 million or more in 
any one year. Accordingly, no assessment or analysis is required under 
the Unfunded Mandates Reform Act of 1995.

G. Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any proposed rule that may affect family 
well-being. The proposed rule would not have any impact on the autonomy 
or integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

H. Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt state law or that have Federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the states and carefully assess the 
necessity for such actions. DOE has examined this proposed rule and has 
determined that it would not preempt state law and would not have a 
substantial direct effect on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

I. Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
the proposed rule meets the relevant standards of Executive Order 
12988.

J. Treasury and General Government Appropriations Act, 2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516 note) provides for agencies to review most disseminations 
of information to the public under guidelines established by each 
agency

[[Page 41577]]

pursuant to general guidelines issued by OMB.
    OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed this proposed rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

K. Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to the 
OMB, a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgated or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use. For the reasons 
discussed in section II.C, this regulatory action would not have a 
significant adverse effect on the supply, distribution, or use of 
energy, and therefore is not a significant energy action. Accordingly, 
DOE has not prepared a Statement of Energy Effects.

IV. Approval of the Office of the Secretary

    The Secretary of Energy has approved the publication of this 
proposed rule.

List of Subjects in 10 CFR Part 590

    Administrative practice and procedure, Exports, Natural gas, 
Reporting and recordkeeping requirements.

    Issued in Washington, DC, on August 25, 2017.
Robert J. Smith,
Acting Assistant Secretary, Office of Fossil Energy.

    For the reasons stated in the preamble, DOE proposes to amend part 
590, chapter II of title 10, subchapter G, Code of Federal Regulations 
as set forth below:

PART 590--ADMINISTRATIVE PROCEDURES WITH RESPECT TO THE IMPORT AND 
EXPORT OF NATURAL GAS

0
1. The authority citation for part 590 continues to read as follows:

    Authority: Secs. 301(b), 402(f), and 644, Pub. L. 95-91, 91 
Stat. 578, 585, and 599 (42 U.S.C. 7151(b), 7172(f), and 7254), Sec. 
3, Act of June 21, 1938, c. 556, 52 Stat. 822 (15 U.S.C. 717b); E.O. 
12009 (42 FR 46267, September 15, 1977); DOE Delegation Order Nos. 
0204-111 and 0204-127 (49 FR 6684, February 22, 1984; 54 FR 11437, 
March 20, 1989).

0
2. Section 590.102 is amended by:
0
a. Redesignating paragraph (p) as paragraph (q), respectively;
0
b. Adding new paragraph (p).
    The revisions to read as follows:


Sec.  590.102  Definitions.

* * * * *
    (p) Small-scale natural gas export means an export of natural gas 
to nations with which there is not in effect a free trade agreement 
with the United States requiring national treatment for trade in 
natural gas and with which trade is not prohibited by U.S. law or 
policy, provided that the application for such export authority 
satisfies the following two criteria:
    (1) The application proposes to export natural gas in a volume up 
to and including 0.14 billion cubic feet per day, and
    (2) DOE's approval of the application does not require an 
environmental impact statement or an environmental assessment under the 
National Environmental Policy Act, 42 U.S.C. 4321 et seq.
* * * * *
0
3. Section 590.208 is revised to read as follows:


Sec.  590.208  Small volume exports.

    (a) Small-scale natural gas exports. Small-scale natural gas 
exports are deemed to be consistent with the public interest under 
section 3(a) of the Natural Gas Act, 15 U.S.C. 717b(a). DOE will issue 
an export authorization upon receipt of any complete application to 
conduct small-scale natural gas exports. DOE's regulations regarding 
notice of applications, 10 CFR 590.205, and procedures applicable to 
application proceedings, 10 CFR part 590, subpart C (10 CFR 590.303 to 
10 CFR 590.317), are not applicable to small-scale natural gas exports.
    (b) Scientific, experimental, or other non-utility natural gas 
exports. Any person may export up to 100,000 cubic feet of natural gas 
(14.73 pounds per square inch at 60 degrees Fahrenheit) or the 
liquefied or compressed equivalent thereof, in a single shipment for 
scientific, experimental, or other non-utility gas use without prior 
authorization of the Assistant Secretary.

[FR Doc. 2017-18580 Filed 8-31-17; 8:45 am]
BILLING CODE 6450-01-P



                                                  41570

                                                  Proposed Rules                                                                                                Federal Register
                                                                                                                                                                Vol. 82, No. 169

                                                                                                                                                                Friday, September 1, 2017



                                                  This section of the FEDERAL REGISTER                    DATES:  Public comment on this                        FOR FURTHER INFORMATION CONTACT:
                                                  contains notices to the public of the proposed          proposed rule will be accepted until                  Amy Sweeney, U.S. Department of
                                                  issuance of rules and regulations. The                  October 16, 2017.                                     Energy (FE–34), Office of Regulation
                                                  purpose of these notices is to give interested                                                                and International Engagement, Office of
                                                  persons an opportunity to participate in the            ADDRESSES: You may submit comments
                                                                                                          identified by Regulation Identifier                   Fossil Energy Forrestal Building, Room
                                                  rule making prior to the adoption of the final
                                                                                                          Number (RIN) 1901–AB43 and FE                         3E–042, 1000 Independence Avenue
                                                  rules.
                                                                                                          Docket No. 17–86–R. Use any of the                    SW., Washington, DC 20585; (202) 586–
                                                                                                          following methods, although the                       2627; or Cassandra Bernstein or Ronald
                                                  DEPARTMENT OF ENERGY                                    eRulemaking Portal is preferred:                      (R.J.) Colwell, U.S. Department of
                                                                                                                                                                Energy (GC–76), Office of the Assistant
                                                                                                             1. Federal eRulemaking Portal (the
                                                  10 CFR Part 590                                                                                               General Counsel for Electricity and
                                                                                                          preferred method): Follow the
                                                                                                                                                                Fossil Energy, Forrestal Building, Room
                                                                                                          instructions for submitting comments
                                                  [FE Docket No. 17–86–R]                                                                                       6D–033, 1000 Independence Ave. SW.,
                                                                                                          on the Federal eRulemaking Portal at
                                                                                                                                                                Washington, DC 20585; (202) 586–9793
                                                  RIN 1901–AB43                                           http://www.regulations.gov.
                                                                                                                                                                or (202) 586–8499.
                                                                                                             2. Email: Send email to fergas@
                                                                                                                                                                SUPPLEMENTARY INFORMATION:
                                                  Small-Scale Natural Gas Exports                         hq.doe.gov. Include RIN 1901–AB43 and
                                                                                                          FE Docket No. 17–86–R in the subject                  I. Background
                                                  AGENCY: Office of Fossil Energy,                                                                                 A. Statutory Background
                                                                                                          line of the email. Please include the full
                                                  Department of Energy.                                                                                            B. DOE’s Public Interest Analysis
                                                                                                          body of your comments in the text of the                 C. DOE’s Non-FTA Export Authorization
                                                  ACTION: Notice of proposed rulemaking.                  message or as an attachment.                                Orders Since 2012
                                                  SUMMARY:    The Department of Energy                       3. Regular Mail: U.S. Department of                II. Discussion of Proposed Rule
                                                                                                          Energy (FE–34), Office of Regulation                     A. Summary of and Reasons for Proposed
                                                  (DOE or Department) proposes to revise
                                                                                                          and International Engagement, Office of                     Rule
                                                  its regulations to provide that DOE will                                                                         B. Consistency With Section 3 of the
                                                  issue an export authorization upon                      Fossil Energy, P.O. Box 44375,
                                                                                                                                                                      Natural Gas Act
                                                  receipt of any complete application that                Washington, DC 20026–4375.                               C. Consistency With the Public Interest
                                                  seeks to export natural gas, including                     4. Hand Delivery or Private Delivery                  D. Consistency With Free Market
                                                  liquefied natural gas (LNG), to countries               Services (e.g., FedEx, UPS, etc.): U.S.                     Principles
                                                  with which the United States has not                    Department of Energy (FE–34), Office of               III. Regulatory Review
                                                  entered into a free trade agreement                     Regulation and International                             A. Executive Orders 12866 and 13563
                                                                                                          Engagement, Office of Fossil Energy,                     B. National Environmental Policy Act
                                                  (FTA) requiring national treatment for                                                                           C. Regulatory Flexibility Act
                                                  trade in natural gas and with which                     Forrestal Building, Room 3E–042, 1000
                                                                                                                                                                   D. Paperwork Reduction Act
                                                  trade is not prohibited by U.S. law or                  Independence Avenue SW.,                                 E. Unfunded Mandates Reform Act of 1995
                                                  policy (non-FTA countries), provided                    Washington, DC 20585. Telephone:                         F. Treasury and General Government
                                                  that the application satisfies the                      202–586–9478.                                               Appropriations Act, 1999
                                                  following two criteria: The application                    Due to potential delays in the delivery               G. Executive Order 13132
                                                  proposes to export natural gas in a                     of postal mail, we encourage                             H. Executive Order 12988
                                                                                                          respondents to submit comments                           I. Treasury and General Government
                                                  volume up to and including 0.14 billion                                                                             Appropriations Act, 2001
                                                  cubic feet (Bcf) per day (Bcf/d), and                   electronically to ensure timely receipt.                 J. Executive Order 13211
                                                  DOE’s approval of the application does                  Please Note: If submitting a filing via               IV. Approval of the Office of the Secretary
                                                  not require an environmental impact                     email, please include all related
                                                  statement (EIS) or an environmental                     documents and attachments (e.g.,                      I. Background
                                                  assessment (EA) under the National                      exhibits) in the original email                       A. Statutory Background
                                                  Environmental Policy Act of 1969                        correspondence. Please do not include
                                                                                                          any active hyperlinks or password                       The Department of Energy is
                                                  (NEPA). In proposing this revision, DOE
                                                                                                          protection in any of the documents or                 responsible for authorizing exports of
                                                  is interpreting the phrase ‘‘public
                                                                                                          attachments related to the filing. All                natural gas to foreign nations pursuant
                                                  interest’’ set forth in the Natural Gas Act
                                                                                                          electronic filings submitted to DOE                   to section 3 of the NGA, 15 U.S.C. 717b.
                                                  (NGA). DOE proposes that applications
                                                                                                          must follow these guidelines to ensure                For applications to export natural gas to
                                                  that satisfy these criteria are requesting
                                                                                                          that all documents are filed in a timely              non-FTA countries under NGA section
                                                  authorization for ‘‘small-scale natural
                                                                                                          manner. Any hardcopy filing submitted                 3(a), 15 U.S.C. 717b(a),1 DOE has
                                                  gas exports’’ and, as such, the exports
                                                                                                          greater in length than 50 pages must                  consistently interpreted section 3 of the
                                                  are deemed to be consistent with the
                                                                                                          also include, at the time of the filing, a            NGA as creating a rebuttable
                                                  public interest under the NGA. DOE’s
                                                                                                          digital copy on disk of the entire                    presumption that a proposed export of
                                                  regulations regarding notice of
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                                                                                                          submission.                                           natural gas is in the public interest.
                                                  applications and procedures conducted
                                                                                                                                                                Accordingly, DOE conducts an informal
                                                  on applications would no longer apply                      Docket: This notice of proposed
                                                                                                                                                                adjudication and grants the application
                                                  to applications that satisfy these criteria.            rulemaking and any comments that DOE
                                                                                                                                                                unless DOE finds that the proposed
                                                  The proposed regulation is intended to                  receives will be made available on the
                                                                                                                                                                exportation will not be consistent with
                                                  expedite DOE’s processing of these                      Federal eRulemaking Portal at http://
                                                  applications, thereby reducing                          www.regulations.gov, and also on DOE’s                  1 This notice of proposed rulemaking does not
                                                  administrative burdens for the small-                   Web site at: https://www.energy.gov/fe/               apply to exports to FTA countries under section
                                                  scale natural gas export market.                        services/natural-gas-regulation.                      3(c) of the NGA, 15 U.S.C. 717b(c).



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                                                                        Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules                                                      41571

                                                  the public interest.2 Before reaching a                 of natural gas supply, and                              need for the natural gas proposed to be
                                                  final decision on any non-FTA                           environmental impacts, among others.                    exported, (ii) whether the proposed
                                                  application, DOE must also comply with                  To conduct this review, DOE looks to                    exports pose a threat to the security of
                                                  NEPA, 42 U.S.C. 4321 et seq.                            record evidence developed in the                        domestic natural gas supplies, (iii)
                                                     Typically, the federal agency                        application proceeding.3                                whether the arrangement is consistent
                                                  responsible for permitting the export                     DOE’s prior decisions have also                       with DOE’s policy of promoting market
                                                  facility serves as the lead agency in the               looked to certain principles established                competition, and (iv) any other factors
                                                  NEPA review process, and DOE serves                     in its 1984 Policy Guidelines.4 The goals               bearing on the public interest, as
                                                  as a cooperating agency within the                      of the Policy Guidelines are to minimize                determined by DOE.
                                                  meaning of the Council on                               federal control and involvement in                        Additionally, since 2011, DOE has
                                                  Environmental Quality’s (CEQ)                           energy markets and to promote a                         commissioned several studies to
                                                  regulations, 40 CFR 1501.4, 1501.5. For                 balanced and mixed energy resource                      evaluate the reasonably foreseeable
                                                  LNG terminals located onshore or in                     system. The Guidelines provide that:                    economic and environmental impacts of
                                                  state waters, the agency responsible for                  The market, not government, should
                                                                                                                                                                  natural gas exports, and to respond to
                                                  permitting the export facilities is the                 determine the price and other contract terms            concerns about exports submitted to
                                                  Federal Energy Regulatory Commission                    of imported [or exported] natural gas. . . .            DOE in various proceedings. These
                                                  (FERC) pursuant to authority delegated                  The federal government’s primary                        studies include: Effect of Increased
                                                  by DOE under section 3(e) of the Natural                responsibility in authorizing imports [or               Natural Gas Exports on Domestic
                                                  Gas Act, 15 U.S.C. 717b(e). For LNG                     exports] will be to evaluate the need for the           Energy Markets (2012 EIA 9 Study) and
                                                  terminals located offshore beyond state                 gas and whether the import [or export]                  Macroeconomic Impacts of LNG Exports
                                                                                                          arrangement will provide the gas on a                   from the United States (NERA Study)
                                                  waters, the responsible agency is the
                                                                                                          competitively priced basis for the duration of          (collectively, 2012 LNG Export
                                                  Maritime Administration (MARAD)                         the contract while minimizing regulatory
                                                  within the Department of                                                                                        Study); 10 Effect of Increased Levels of
                                                                                                          impediments to a freely operating market.5
                                                  Transportation pursuant to section 3(9)                                                                         Liquefied Natural Gas Exports on U.S.
                                                  of the Deepwater Ports Act, as amended                  While the Policy Guidelines are                         Energy Markets (2014 EIA LNG Export
                                                  by section 312 of the Coast Guard and                   nominally applicable to natural gas                     Study); 11 The Macroeconomic Impact of
                                                  Maritime Transportation Act of 2012                     import cases, DOE subsequently held in                  Increasing U.S. LNG Exports (2015 LNG
                                                  (Pub. L. 112–213).                                      Order No. 1473 that the same Policy                     Export Study); 12 the Addendum to
                                                     DOE’s environmental review process                   Guidelines should be applied to natural                 Environmental Review Documents
                                                  under NEPA usually results in the                       gas export applications.6                               Concerning Exports of Natural Gas from
                                                  preparation or adoption of an EIS or EA                    In Order No. 1473, DOE stated that it                the United States (Addendum); 13 and
                                                  describing the potential environmental                  was further guided by DOE Delegation                    the Life Cycle Greenhouse Gas
                                                  impacts associated with the application.                Order No. 0204–111. That delegation                     Perspective on Exporting Liquefied
                                                  In some cases, DOE may determine that                   order, which authorized the                             Natural Gas from the United States
                                                  an application is eligible for a                        Administrator of the Economic                           (LCA GHG Report).14 DOE published
                                                  categorical exclusion from the                          Regulatory Administration to exercise                   these studies in the Federal Register
                                                  preparation or adoption of an EIS or EA                 the agency’s review authority under                     and has responded to the public
                                                  pursuant to DOE’s regulations                           NGA section 3, directed the                             comments received on each study.15
                                                  implementing NEPA, 10 CFR 1021.410,                     Administrator to regulate exports
                                                  appendices A & B. For example,                          ‘‘based on a consideration of the                          9 ‘‘EIA’’ refers to the U.S. Energy Information


                                                  categorical exclusion B5.7 of DOE’s                     domestic need for the gas to be exported                Administration.

                                                  regulations (10 CFR part 1021, subpart                  and such other matters as the                              10 See 2012 LNG Export Study, 77 FR 73,627 (Dec.

                                                                                                          Administrator finds in the                              11, 2012), available at: http://energy.gov/sites/prod/
                                                  D, appendix B5.7) applies to natural gas                                                                        files/2013/04/f0/fr_notice_two_part_study.pdf.
                                                  import or export activities requiring                   circumstances of a particular case to be                   11 U.S. Energy Info. Admin., Effect of Increased

                                                  minor operational changes to existing                   appropriate.’’ 7 (In February 1989, the                 Levels of Liquefied Natural Gas Exports on U.S.
                                                  projects, but no new construction.                      Assistant Secretary for Fossil Energy                   Energy Markets (Oct. 2014), available at: https://
                                                                                                          assumed the delegated responsibilities                  www.eia.gov/analysis/requests/fe/pdf/lng.pdf.
                                                                                                                                                                     12 Center for Energy Studies at Rice University
                                                  B. DOE’s Public Interest Analysis Under                 of the Administrator of ERA.8)
                                                                                                                                                                  Baker Institute and Oxford Economics, The
                                                  Section 3(a) of the Natural Gas Act                        Although DOE Delegation Order No.                    Macroeconomic Impact of Increasing U.S. LNG
                                                    Although NGA section 3(a)                             0204–111 is no longer in effect, DOE’s                  Exports (Oct. 29, 2015), available at: http://
                                                  establishes a broad public interest                     review of export applications has                       energy.gov/sites/prod/files/2015/12/f27/20151113_
                                                                                                          continued to focus on: (i) The domestic                 macro_impact_of_lng_exports_0.pdf.
                                                  standard and a presumption favoring                                                                                13 Dep’t of Energy, Addendum to Environmental
                                                  export authorizations, the statute does                                                                         Review Documents Concerning Exports of Natural
                                                                                                             3 See, e.g., Golden Pass Products, DOE/FE Order
                                                  not define ‘‘public interest’’ or identify              No. 3978, at 135–66.
                                                                                                                                                                  Gas From the United States, 79 FR 48,132 (Aug. 15,
                                                  criteria that must be considered in                                                                             2014), available at: http://energy.gov/fe/addendum-
                                                                                                             4 New Policy Guidelines and Delegations Order
                                                                                                                                                                  environmental-review-documents-concerning-
                                                  evaluating the public interest. In prior                Relating to Regulation of Imported Natural Gas, 49      exports-natural-gas-united-states.
                                                  decisions, DOE has identified a range of                FR 6684 (Feb. 22, 1984) [hereinafter 1984 Policy           14 Dep’t of Energy, Life Cycle Greenhouse Gas

                                                  factors that it evaluates when reviewing                Guidelines].                                            Perspective on Exporting Liquefied Natural Gas
                                                                                                             5 Id. at 6685.
                                                  an application for export authorization.                                                                        From the United States, 79 FR 32,260 (June 4,
                                                                                                             6 Phillips Alaska Natural Gas, DOE/FE Order No.
                                                                                                                                                                  2014). DOE/FE announced the availability of the
                                                  These factors include economic                          1473, at 14 (citing Yukon Pacific Corp., DOE/FE         LCA GHG Report on its Web site on May 29, 2014.
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                                                  impacts, international impacts, security                Order No. 350, Order Granting Authorization to             15 See, e.g. Cheniere Marketing, LLC and Corpus
                                                                                                          Export Liquefied Natural Gas from Alaska, 1 FE ¶        Christi Liquefaction, LLC, DOE/FE Order No. 3638,
                                                    2 15 U.S.C. 717b(a); see, e.g., Golden Pass           70,259, at 71,128 (1989)).                              FE Docket No. 12–97–LNG, Final Order and
                                                                                                             7 DOE Delegation Order No. 0204–111, at 1; see
                                                  Products LLC, DOE/FE Order No. 3978, FE Docket                                                                  Opinion Granting Long-Term, Multi-Contract
                                                  No. 12–156–LNG, Opinion and Order Granting              also 1984 Policy Guidelines, 49 FR at 6690.             Authorization to Export Liquefied Natural Gas by
                                                  Long-Term, Multi-Contract Authorization to Export          8 See Applications for Authorization to Construct,   Vessel from the Proposed Corpus Christi
                                                  Liquefied Natural Gas by Vessel from the Golden         Operate, or Modify Facilities Used for the Export or    Liquefaction Project to Be Located in Corpus
                                                  Pass LNG Terminal Located in Jefferson County,          Import of Natural Gas, 62 FR 30,435, 30,437 n.15        Christi, Texas, to Non-Free Trade Agreement
                                                  Texas, to Non-Free Trade Agreement Nations, at 18,      (June 4, 1997) (citing DOE Delegation Order No.         Nations, at 94–148, 167–83 (May 12, 2015); Golden
                                                  162 (Apr. 25, 2017).                                    0204–127, 54 FR 11,436 (Mar. 20, 1989)).                Pass Products, DOE/FE Order No. 3978, at 71–92.



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                                                  41572                  Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules

                                                    The 2012 EIA Study generally found                    Report reached conclusions regarding                     • While increased natural gas exports
                                                  that natural gas exports will lead to                   the use of U.S. natural gas exports to                will result in higher U.S. natural gas
                                                  higher domestic natural gas prices,                     produce electricity in European and                   prices, these price changes remain in a
                                                  increased domestic natural gas                          Asian markets, as well as the life cycle              relatively narrow range across the
                                                  production, reduced domestic natural                    greenhouse gas emissions of exported                  scenarios studied and the domestic
                                                  gas consumption, and increased natural                  U.S. natural gas as compared to other                 natural gas market is capable of
                                                  gas imports from Canada via pipeline.                   sources of natural gas in those markets.              accommodating increased natural gas
                                                  Among the key findings of the NERA                                                                            exports without significant negative
                                                                                                          C. DOE’s Non-FTA Export
                                                  Study (the second part of the 2012 LNG                                                                        price or other economic impacts;
                                                                                                          Authorizations Since 2012
                                                  Export Study), NERA projected that the                                                                           • Even with these estimated price
                                                  United States would gain net economic                      To date, DOE has issued 28 final                   increases, increased natural gas exports
                                                  benefits from allowing LNG exports. For                 export authorizations to non-FTA                      are likely to generate net economic
                                                  every market scenario examined, the                     countries, bringing the cumulative total              benefits for the United States;
                                                  NERA Study determined that economic                     of approved non-FTA exports of LNG                       • Increased natural gas exports
                                                  benefits increased as the level of natural              and compressed natural gas (CNG) to                   stimulate local, regional, and national
                                                  gas exports increased.                                  21.33 Bcf/d of natural gas, or 7.79                   economies through direct and indirect
                                                    The 2014 EIA LNG Export Study                         trillion cubic feet per year.17 These non-            job creation, increased economic
                                                  found that natural gas exports will                     FTA authorizations are available online               activity, and tax revenues; and
                                                  generally lead to relatively modest                     at the DOE/FE E-Docket Room.18                           • Increased natural gas exports
                                                  domestic natural gas price increases,                      Of these 28 non-FTA authorizations,                increase diversity of supply in the
                                                  increased domestic natural gas                          seven authorize exports in volumes                    global natural gas market, in turn
                                                  production, reduced domestic natural                    below 0.14 Bcf/d of natural gas—the                   benefiting international trade and
                                                  gas consumption, and higher levels of                   volume limitation set forth in the                    relations as well as global energy
                                                  economic output (as measured by real                    criteria for this proposed rulemaking.                security.
                                                  gross domestic product).                                These seven authorizations include:                   DOE also has observed that it is far from
                                                    The 2015 LNG Export Study                             Carib Energy (USA) LLC (0.04 Bcf/d),                  certain that all or even most of the
                                                  considered export volumes ranging from                  American Marketing LLC (0.008 Bcf/d),                 proposed natural gas export projects
                                                  12 to 20 Bcf/d of natural gas, as well as               Emera CNG, LLC (0.008 Bcf/d),                         will be realized because of the time,
                                                  a high resource recovery case examining                 Floridian Natural Gas Storage Company,                difficulty, and expense of
                                                  export volumes up to 28 Bcf/d of natural                LLC (0.04 Bcf/d), Air Flow North                      commercializing, financing, and
                                                  gas. The analysis covered the 2015 to                   American Corp. (0.002 Bcf/d), Flint                   constructing such projects, as well as
                                                  2040 time period. The 2015 Study made                   Hills Resources, LP (0.01 Bcf/d), and                 the uncertainties inherent in the global
                                                  the following key findings:                             Carib Energy (USA), LLC (0.004).19                    market demand for natural gas.20
                                                    • Rising natural gas exports are                      Together, these authorizations approve
                                                  associated with a net increase in                       exports of LNG and CNG in a combined                  II. Discussion of Proposed Rule
                                                  domestic natural gas production;                        volume of 0.112 Bcf/d—less than 0.6%                  A. Summary of and Reasons for
                                                    • As exports increase, the spread                     of the cumulative volume of non-FTA                   Proposed Rule
                                                  between U.S. domestic prices and                        exports approved by DOE to date.
                                                  international benchmarks narrows;                                                                               The emerging small-scale export
                                                                                                             In each of the 28 non-FTA export
                                                    • The overall macroeconomic impacts                   authorizations issued to date, and on the
                                                                                                                                                                market involves exports of small
                                                  of higher natural gas exports are                                                                             volumes of natural gas from the United
                                                                                                          basis of the record evidence presented
                                                  marginally positive—a result that is                                                                          States to countries primarily in, but not
                                                                                                          in those proceedings, DOE has reached
                                                  robust to alternative assumptions for the                                                                     limited to, the Caribbean, Central
                                                                                                          the following conclusions as part of its
                                                  U.S. natural gas market;                                                                                      America, and South America. Many of
                                                                                                          public interest determination for each
                                                    • An increase in U.S. natural gas                                                                           these countries do not generate enough
                                                                                                          application:
                                                  exports will generate small declines in                                                                       natural gas demand to support the
                                                                                                             • Substantial domestic natural gas
                                                  output at the margin for some energy-                                                                         economies of scale required to justify
                                                                                                          supplies exist to meet domestic natural
                                                  intensive, trade-exposed industries; and                                                                      large volumes of LNG imports from
                                                    • Negative impacts in energy-                         gas demand and increased natural gas
                                                                                                                                                                large-scale LNG terminals via
                                                  intensive sectors are offset by positive                exports;
                                                                                                                                                                conventional LNG tankers. The small-
                                                  impacts elsewhere.                                                                                            scale natural gas export market has
                                                    The Addendum evaluated                                distances using other transportation methods, such
                                                                                                          as ISO containers loaded onto container ships. DOE
                                                                                                                                                                developed as a solution to the practical
                                                  environmental impacts including water                   therefore does not consider the LCA GHG Report as     and economic constraints limiting
                                                  resources, air quality, greenhouse gas                  part of the record in those proceedings. See infra    natural gas exports to these countries.
                                                  emissions, induced seismicity, and land                 (identifying seven non-FTA export authorizations        DOE is proposing to revise its
                                                  use impacts. The DOE Addendum                           for which the LCA GHG Report was not considered
                                                                                                          in the application proceeding, and discussing
                                                                                                                                                                regulations to expedite the application
                                                  concluded that DOE cannot                               transportation of small-scale exports).               and approval process for small-scale
                                                  meaningfully estimate where, when, or                      17 See Lake Charles LNG Export Co., LLC, DOE/      exports of natural gas. Specifically, the
                                                  by what particular method additional                    FE Order No. 4010, FE Docket No. 16–109–LNG,          proposed rule provides that DOE, upon
                                                  natural gas would be produced in                        Opinion and Order Granting Long-Term, Multi-          receipt of any complete application to
                                                                                                          Contract Authorization to Export Liquefied Natural
                                                  response to non-FTA export demand.
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                                                                                                          Gas by Vessel from the Lake Charles Terminal in       export natural gas (including LNG) to
                                                    Finally, although not directly relevant               Calcasieu Parish, Louisiana, to Non-Free Trade        non-FTA countries, will grant the
                                                  to this proposed rule,16 the LCA GHG                    Agreement Nations, at 43–46 (June 29, 2017).          application provided that it satisfies the
                                                                                                             18 Dep’t of Energy, Office of Fossil Energy,
                                                                                                                                                                following two criteria: (1) The
                                                     16 DOE considers the LCA GHG Report in non-          Electronic Docket Room (E-Docket Room), https://
                                                                                                          www.energy.gov/fe/downloads/electronic-docket-
                                                                                                                                                                application proposes to export natural
                                                  FTA export proceedings whenever an application
                                                  seeks to transport LNG by LNG tanker from large-        room-e-docket-room.                                   gas in a volume up to and including
                                                  scale liquefaction facilities to non-FTA countries.        19 See Lake Charles LNG Export Co., DOE/FE

                                                  By contrast, small-scale exports of natural gas         Order No. 4010, at 43–46 (citing these                 20 See, e.g., Golden Pass Products, DOE/FE Order

                                                  (including LNG) typically are transported shorter       authorizations).                                      No. 3978, at Section XII and 161.



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                                                                        Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules                                                   41573

                                                  0.14 Bcf/d; and (2) DOE’s approval of                   gas. Consequently, as the first criterion             an order upon application unless, after
                                                  the application does not require an EIS                 for the proposed rule, DOE proposes to                opportunity for hearing, DOE finds that
                                                  or EA under NEPA—that is, the                           define small-scale natural gas exports as             the proposed export ‘‘will not be
                                                  application is eligible for a categorical               any export of natural gas up to and                   consistent with the public interest.’’ 23
                                                  exclusion under DOE’s NEPA                              including a volume of 0.14 Bcf/d. DOE                 DOE has long interpreted section 3(a) as
                                                  regulations.                                            believes this volume limitation is                    creating a rebuttable presumption that a
                                                     For each small-scale application                     consistent with industry practice, but                proposed export of natural gas is in the
                                                  submitted to DOE, DOE will first                        invites comment on any other                          public interest, such that DOE must
                                                  determine if the application is complete                appropriate small-scale volume                        grant an application under section 3(a)
                                                  under DOE’s regulations. If the                         limitation.                                           unless opponents of the application
                                                  application is complete, DOE will post                     As the second criterion for this                   overcome that presumption by making
                                                  the application on DOE’s Web site,                      proposed rule, DOE must determine that                an affirmative showing of inconsistency
                                                  consistent with DOE practice. Next,                     its approval of the application does not              with the public interest.24 The statute,
                                                  DOE will determine if the application                   require an EIS or an EA under NEPA,                   however, does not define ‘‘public
                                                  meets the criteria for a small-scale                    because it qualifies for a categorical                interest’’ or identify criteria that DOE
                                                  natural gas export. If the application                  exclusion. For example, pursuant to                   must consider when determining
                                                  meets the criteria, DOE will issue a non-               DOE’s categorical exclusion B5.7, a                   whether a proposed export of natural
                                                  FTA authorization granting the                          small-scale natural gas export that                   gas is consistent with the public interest
                                                  application on an expedited basis,                      involves only existing facilities and/or              under section 3(a). The statute affords
                                                  without providing notice of application                 minor operational changes is an action                DOE broad discretion in determining
                                                  and other procedures typically required                 that does not involve new construction.               whether proposed exports to non-FTA
                                                  for non-FTA export applications under                      Any application that satisfies these               countries are ‘‘consistent with the
                                                  DOE’s regulations, 10 CFR 590.205 and                   two criteria would qualify as a ‘‘small-              public interest’’ (15 U.S.C. 717b(a)). In
                                                  10 CFR part 590, subpart C (10 CFR                      scale natural gas export’’ as that term is            this proposed rule, DOE is interpreting
                                                  590.303–10 CFR 590.317). All small-                     defined under this proposed rule, and                 NGA section 3(a) to determine that
                                                  scale natural gas export authorizations                 would be deemed to be consistent with                 small-scale natural gas exports are
                                                  issued pursuant to these regulations will               the public interest under NGA section                 consistent with the public interest after
                                                  be posted on DOE’s Web site, and will                   3(a). As noted above, DOE’s regulations               considering all relevant factors,
                                                  contain appropriate terms and                           regarding notice of applications, 10 CFR              including the domestic need for the
                                                  conditions consistent with DOE’s                        590.205, and procedures applicable to                 small volumes of natural gas to be
                                                  regulations and practice.                               application proceedings, 10 CFR 590                   exported and the security of domestic
                                                     DOE notes that entities involved in                  subpart C (10 CFR 590.301 to 10 CFR                   natural gas supplies.
                                                                                                          590.317), would not apply to
                                                  this emerging market typically define                                                                         C. Consistency With the Public Interest
                                                                                                          applications that satisfy these criteria.
                                                  ‘‘small-scale’’ natural gas exports as
                                                                                                          Rather, this proposed rule, and the 45-                 In determining that small-scale
                                                  exports of 1.0 million metric tons per
                                                                                                          day comment period for this proposed                  natural gas exports are consistent with
                                                  annum (mtpa) or lower.21 When
                                                                                                          rule, would constitute the notice and                 the public interest, DOE has considered
                                                  converting from million metric tons to
                                                                                                          opportunity for hearing on all                        the economic studies and the
                                                  billion cubic feet, DOE uses a
                                                                                                          prospective small-scale natural gas                   Addendum discussed in Section I.B, as
                                                  conversion factor of 51.75 Bcf per                                                                            well as the public comments received
                                                                                                          export applications.
                                                  million metric tons of dry natural gas.22                  This proposed rule is limited to                   on these studies. DOE has also
                                                  Based on this conversion factor, 1                      qualifying small-scale exports of natural             considered the 28 final non-FTA export
                                                  million metric tons per annum equates                   gas. If adopted, this proposed rule                   authorizations issued to date, including
                                                  to approximately 0.14 Bcf/d of natural                  would not affect either existing DOE                  the seven non-FTA authorizations
                                                     21 See, e.g., Int’l Gas Union, IGU World Gas LNG
                                                                                                          authorizations or DOE’s evaluation of                 approving exports at volumes below
                                                  Report 59 (2016 ed.), available at: www.igu.org/        any non-FTA application that does not                 0.14 Bcf/d of natural gas (identified in
                                                  download/file/fid/2123 (‘‘IGU defines the large-        meet the criteria for small-scale natural             section I.C), as well as the most recent
                                                  scale LNG industry as every LNG business above 1        gas exports. In expediting the                        authoritative projections for natural gas
                                                  million MTPA of LNG production and/or                   application and approval process for                  supply, demand, and prices set forth in
                                                  consumption. Conversely, small-scale LNG is any
                                                  business under 1 million MTPA.’’); Int’l Gas Union,     these exports, DOE recognizes the                     the Annual Energy Outlook 2017 (AEO
                                                  Small Scale LNG 11 (June 2015), available at:           unique characteristics and minimal                    2017).25 Based on this evidence, and for
                                                  http://www.igu.org/sites/default/files/node-page-       adverse impacts of the small-scale                    the reasons described in Section II.A,
                                                  field_file/SmallScaleLNG.pdf (‘‘For the purpose of      natural gas market emerging primarily                 DOE has determined that small-scale
                                                  this report, the [small-scale LNG] production
                                                  installed capacity has been defined as below 1          in the United States, the Caribbean,                  natural gas exports are consistent with
                                                  million metric tons per annum (mtpa).’’); Cédric       Central America, and South America.                   the public interest under NGA section
                                                  Andrieu, Gas Tech. Inst., Et Al., Small Scale LNG       As discussed below, the proposed rule                 3(a).
                                                  Import Terminal: Not As Simple As A Reduced One         is in accordance with section 3 of the                  In reaching this conclusion, DOE has
                                                  2, 4 (Conference Paper, LNG 17 International                                                                  considered the economic impacts of
                                                  Conference & Exhibition on Liquefied Natural Gas,       NGA, DOE’s interpretation of the public
                                                  2013), available at: http://www.gastechnology.org/      interest standard set forth in NGA                    higher natural gas prices and potential
                                                  Training/Documents/LNG17-proceedings/Storage-6-         section 3(a), and DOE’s long-standing                 increases in natural gas price volatility
                                                  Cedric_Andrieu.pdf (‘‘Typically, the send-out rate                                                            and, as noted earlier, has reviewed the
sradovich on DSK3GMQ082PROD with PROPOSALS




                                                                                                          policy of minimizing federal control and
                                                  of . . . small LNG terminals is ranging from 0.2 to                                                           economic impacts of natural gas
                                                  1 mtpa.’’).                                             involvement in energy markets and
                                                     22 See, e.g., Southern LNG Company, L.L.C., DOE/     promoting a balanced and mixed energy                 exports. Recent advancements in natural
                                                  FE Order No. 3956, FE Docket No. 12–100–LNG,            resource system.
                                                                                                                                                                  23 15 U.S.C. 717b(a).
                                                  Opinion and Order Granting Long-Term, Multi-
                                                  Contract Authorization to Export Liquefied Natural      B. Consistency With Section 3(a) of the                 24 See  id.; see, e.g., Golden Pass Products, DOE/
                                                  Gas by Vessel from the Elba Island Terminal in          Natural Gas Act                                       FE Order No. 3978, at 18, 162.
                                                  Chatham County, Georgia, to Non-Free Trade                                                                      25 U.S. Energy Information Administration,

                                                  Agreement Nations (Dec. 16, 2016), at Ordering            Under section 3(a) of the NGA, the                  Annual Energy Outlook 2017 (Jan. 2017), available
                                                  Para. H.                                                Secretary of Energy is required to issue              at: http://www.eia.gov/outlooks/aeo.



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                                                  41574                 Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules

                                                  gas exploration and production                          availability of a reliable supply of                  transported shorter distances, and rely
                                                  technology have changed the outlook for                 natural gas to customers outside of the               on a variety of transportation modes
                                                  the U.S. natural gas market, such that                  United States who are currently burning               (such as ISO containers loaded onto
                                                  the increase in domestic supplies of                    diesel or fuel oil for power generation               container ships and barges). DOE
                                                  natural gas will outpace increases in                   may encourage conversion to natural                   believes that facilitating small-scale
                                                  domestic demand.                                        gas-based power generation equipment.                 natural gas exports will allow for greater
                                                     The 2015 Study considered export                     Companies in the United States would                  diversity and competition in the natural
                                                  volumes ranging from 12 to 20 Bcf/d of                  be well positioned to provide and                     gas market.
                                                  natural gas, as well as a high resource                 support this type of power generation
                                                  recovery case examining export volumes                  equipment, thus providing secondary                   III. Regulatory Review
                                                  up to 28 Bcf/d of natural gas. By                       economic benefits from the small-scale                A. Executive Orders 12866 and 13563
                                                  comparison, to date DOE has issued                      exports.                                                 This regulatory action has been
                                                  final non-FTA authorizations in a                          Additionally, small-scale natural gas
                                                                                                                                                                determined to not be a ‘‘significant
                                                  cumulative volume of exports totaling                   exports will enable importing countries
                                                                                                                                                                regulatory action’’ under Executive
                                                  21.33 Bcf/d of natural gas—well below                   to diversify their fuel supplies, while
                                                                                                                                                                Order 12866, ‘‘Regulatory Planning and
                                                  the 28 Bcf/d case considered in the 2015                contributing to greater overall
                                                                                                          transparency, efficiency, and liquidity               Review,’’ 58 FR 51735 (October 4, 1993).
                                                  Study. As DOE has explained in recent
                                                                                                          of natural gas markets outside the                    Accordingly, this action was not subject
                                                  orders,26 the authors of the 2015 Study
                                                                                                          United States. To the extent small-scale              to review under that Executive Order by
                                                  had to include several unlikely
                                                                                                          natural gas exports will diversify global             the Office of Information and Regulatory
                                                  assumptions about the global natural gas
                                                                                                          natural gas supplies, and increase the                Affairs of the Office of Management and
                                                  market for U.S. LNG exports to exceed
                                                                                                          volumes of natural gas available                      Budget.
                                                  12 Bcf/d, much less to reach the high                                                                            DOE has also reviewed this regulation
                                                  resource recovery case of 28 Bcf/d of                   globally, small-scale natural exports will
                                                                                                          improve energy security for many U.S.                 pursuant to Executive Order 13563,
                                                  exports. Based on this evidence and the                                                                       issued on January 18, 2011. (76 FR 3281,
                                                  small volumes at issue in this proposed                 allies and trading partners. As such, the
                                                                                                          proposed rule will advance the public                 Jan. 21, 2011.) EO 13563 is
                                                  rule, DOE believes that domestic                                                                              supplemental to and explicitly reaffirms
                                                  supplies will be adequate both to meet                  interest by fostering international
                                                                                                          relations, trade, and security.                       the principles, structures, and
                                                  domestic needs and to supply small-                                                                           definitions governing regulatory review
                                                  scale exports of natural gas.                           D. Consistency With Free Market                       established in Executive Order 12866.
                                                     DOE finds that small-scale natural gas               Principles                                            To the extent permitted by law, agencies
                                                  exports meeting the criteria set forth in
                                                                                                            DOE has consistently subscribed to                  are required by Executive Order 13563
                                                  this proposed rulemaking will not
                                                                                                          the principles set forth in the 1984                  to: (1) Propose or adopt a regulation
                                                  interfere with the domestic need for
                                                                                                          Policy Guidelines that the market, not                only upon a reasoned determination
                                                  natural gas. Likewise, small-scale
                                                                                                          the government, is the most efficient                 that its benefits justify its costs
                                                  exports will not have a detectable
                                                                                                          means of allocating natural gas supplies.             (recognizing that some benefits and
                                                  impact on domestic natural gas prices,
                                                                                                          The United States has an abundant                     costs are difficult to quantify); (2) tailor
                                                  and will not pose a risk to the security
                                                                                                          supply of affordable natural gas that                 regulations to impose the least burden
                                                  of domestic natural gas supplies. While
                                                                                                          studies have shown will significantly                 on society, consistent with obtaining
                                                  small-scale natural gas exports are
                                                                                                          exceed domestic demand. Meanwhile,                    regulatory objectives, taking into
                                                  unlikely to generate negative economic
                                                                                                          foreign demand for natural gas imports                account, among other things, and to the
                                                  or supply impacts in the United States,
                                                                                                          from the United States has increased as               extent practicable, the costs of
                                                  these exports are expected to have
                                                                                                          many countries, such as those in the                  cumulative regulations; (3) select, in
                                                  positive impacts. Specifically, small-
                                                                                                          Caribbean, Central America, and South                 choosing among alternative regulatory
                                                  scale natural gas exports are expected to
                                                                                                          America, seek to import cleaner sources               approaches, those approaches that
                                                  generate positive economic benefits in
                                                                                                          of energy.                                            maximize net benefits (including
                                                  the United States through direct and
                                                                                                            The conventional, large-scale natural               potential economic, environmental,
                                                  indirect job creation, increased
                                                                                                          gas import/export market is extremely                 public health and safety, and other
                                                  economic activity, tax revenues, and
                                                                                                          capital-intensive. Companies must                     advantages; distributive impacts; and
                                                  improved U.S. balance of trade.
                                                                                                          achieve sufficient economies of scale to              equity); (4) to the extent feasible, specify
                                                     To countries that do not otherwise
                                                                                                          justify their multi-billion dollar                    performance objectives, rather than
                                                  have access to natural gas, small-scale
                                                                                                          investments in large-scale LNG                        specifying the behavior or manner of
                                                  natural gas exports represent an
                                                                                                          terminals and in large-volume LNG                     compliance that regulated entities must
                                                  important change in their ability to
                                                                                                          tanker fleets. However, many of the                   adopt; and (5) identify and assess
                                                  generate electricity. Small-scale exports
                                                                                                          countries in the Caribbean, Central                   available alternatives to direct
                                                  also will enable electric generation
                                                                                                          America, and South America simply do                  regulation, including providing
                                                  facilities in the importing countries to
                                                                                                          not generate enough demand to import                  economic incentives to encourage the
                                                  switch from heavy fuel oil and diesel to
                                                                                                          the large volumes of natural gas                      desired behavior, such as user fees or
                                                  natural gas, providing positive
                                                                                                          supplied by the large-scale natural gas               marketable permits, or providing
                                                  environmental benefits through the
                                                                                                          import/export market. Given these                     information upon which choices can be
                                                  reduction of emissions at fuel oil and
                                                                                                          diseconomies of scale, a gap has                      made by the public.
sradovich on DSK3GMQ082PROD with PROPOSALS




                                                  diesel burning electric generators. The
                                                                                                          emerged in the regional natural gas                      DOE concludes that this proposed
                                                    26 See, e.g., Delfin LNG LLC, DOE/FE Order No.        import/export market. Small-scale                     rule is consistent with these principles.
                                                  4028, FE Docket No. 13–147–LNG, Opinion and             natural gas exports represent a market-               Specifically, this proposed rule provides
                                                  Order Granting Long-Term, Multi-Contract                driven response to fill this gap. In                  that DOE will issue an export
                                                  Authorization to Export Liquefied Natural Gas by        contrast to large-scale natural gas                   authorization upon receipt of any
                                                  Vessel from a Proposed Floating Liquefaction
                                                  Project and Deepwater Port 30 Miles Offshore of
                                                                                                          exports, small-scale natural gas exports              complete application that seeks to
                                                  Louisiana to Non-Free Trade Agreement Nations, at       typically originate from existing                     export natural gas, including LNG, to
                                                  62–63 (June 1, 2017).                                   facilities in the United States, are                  non-FTA countries, provided that the


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                                                                        Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules                                            41575

                                                  application satisfies the following two                 information, or methods that are not                  into a class of actions that does not
                                                  criteria: (1) The application proposes to               publicly available or that are                        individually or cumulatively have a
                                                  export natural gas in a volume up to and                insufficiently transparent to meet the                significant impact on the human
                                                  including 0.14 Bcf/d, and (2) DOE’s                     standard for reproducibility; or                      environment as set forth under DOE’s
                                                  approval of the application does not                      (vi) Derive from or implement                       regulations implementing the National
                                                  require an EIS or EA under NEPA.                        Executive Orders or other Presidential                Environmental Policy Act of 1969 (42
                                                  DOE’s regulations regarding notice of                   directives that have been subsequently                U.S.C. 4321 et seq). Specifically, this
                                                  applications, 10 CFR 590.205, and                       rescinded or substantially modified.                  rulemaking is covered under the
                                                  procedures applicable to application                      Finally, on March 28, 2017, the                     Categorical Exclusion found in the
                                                  proceedings, 10 CFR part 590, subpart C                 President signed Executive Order 13783,               DOE’s National Environmental Policy
                                                  (10 CFR 590.303 to 10 CFR 590.317),                     entitled ‘‘Promoting Energy                           Act regulations at paragraph A6 of
                                                  would not apply to small-scale natural                  Independence and Economic Growth.’’                   appendix A to subpart D, 10 CFR part
                                                  gas exports. The proposed regulation is                 Among other things, EO 13783 requires                 1021, which applies to rulemakings that
                                                  intended to expedite DOE’s processing                   the heads of agencies to review all                   are strictly procedural. Accordingly,
                                                  of these applications, thereby reducing                 existing regulations, orders, guidance                neither an EIS nor an EA is required.
                                                  administrative burdens for the small-                   documents, policies, and any other
                                                                                                          similar agency actions (collectively,                 D. Regulatory Flexibility Act
                                                  scale natural gas export market.
                                                                                                          agency actions) that potentially burden                  The Regulatory Flexibility Act (5
                                                  B. Executive Orders 13771, 13777, and                   the development or use of domestically                U.S.C. 601 et seq.) requires preparation
                                                  13783                                                   produced energy resources, with                       of an initial regulatory flexibility
                                                     On January 30, 2017, the President                   particular attention to oil, natural gas,             analysis for any rule that by law must
                                                  issued Executive Order 13771,                           coal, and nuclear energy resources.                   be proposed for public comment, unless
                                                  ‘‘Reducing Regulation and Controlling                   Such review does not include agency                   the agency certifies that the rule, if
                                                  Regulatory Costs.’’ That Order stated the               actions that are mandated by law,                     promulgated, will not have a significant
                                                  policy of the executive branch is to be                 necessary for the public interest, and                economic impact on a substantial
                                                  prudent and financially responsible in                  consistent with the policy set forth                  number of small entities. As required by
                                                  the expenditure of funds, from both                     elsewhere in that order.                              Executive Order 13272, ‘‘Proper
                                                  public and private sources. The Order                     Executive Order 13783 defined                       Consideration of Small Entities in
                                                  stated it is essential to manage the costs              burden for purposes of the review of                  Agency Rulemaking,’’ 67 FR 53461
                                                  associated with the governmental                        existing regulations to mean to                       (August 16, 2002), DOE published
                                                  imposition of private expenditures                      unnecessarily obstruct, delay, curtail, or            procedures and policies on February 19,
                                                  required to comply with Federal                         otherwise impose significant costs on                 2003, to ensure that the potential
                                                  regulations. This proposed rule is                      the siting, permitting, production,                   impacts of its rules on small entities are
                                                  expected to be an EO 13771                              utilization, transmission, or delivery of             properly considered during the
                                                  deregulatory action.                                    energy resources.                                     rulemaking process (68 FR 7990). DOE
                                                     Additionally, on February 24, 2017,                    DOE concludes that this proposed                    has made its procedures and policies
                                                  the President issued Executive Order                    rule is consistent with the directives set            available on the Office of General
                                                  13777, ‘‘Enforcing the Regulatory                       forth in these executive orders.                      Counsel’s Web site: http://
                                                  Reform Agenda.’’ The Order required                     Specifically, this proposed rule would                www.gc.doe.gov.
                                                  the head of each agency designate an                    require DOE to issue an export                           DOE has reviewed this proposed rule
                                                  agency official as its Regulatory Reform                authorization upon receipt of any                     under the provisions of the Regulatory
                                                  Officer (RRO). Each RRO oversees the                    complete application that seeks to                    Flexibility Act and the procedures and
                                                  implementation of regulatory reform                     export natural gas, including LNG, to                 policies published on February 19,
                                                  initiatives and policies to ensure that                 non-FTA countries, provided that the                  2003. As discussed in the preamble, this
                                                  agencies effectively carry out regulatory               application satisfies the following two               proposed rule would require DOE to
                                                  reforms, consistent with applicable law.                criteria: (1) The application proposes to             issue an export authorization upon
                                                  Further, EO 13777 requires the                          export natural gas in a volume up to and              receipt of any complete application that
                                                  establishment of a regulatory task force                including 0.14 Bcf/d, and (2) DOE’s                   seeks to export natural gas, including
                                                  at each agency. The regulatory task force               approval of the application does not                  LNG, to non-FTA countries, provided
                                                  is required to make recommendations to                  require an EIS or an EA under NEPA.                   that the application satisfies the
                                                  the agency head regarding the repeal,                   DOE proposes that applications that                   following two criteria: (1) The
                                                  replacement, or modification of existing                satisfy these criteria are requesting                 application proposes to export natural
                                                  regulations, consistent with applicable                 authorization for ‘‘small-scale natural               gas in a volume up to and including
                                                  law. At a minimum, each regulatory                      gas exports’’ and, as such, the exports               0.14 Bcf/d, and (2) DOE’s approval of
                                                  reform task force must attempt to                       are deemed to be consistent with the                  the application does not require an EIS
                                                  identify regulations that:                              public interest under NGA section 3(a).               or an EA under NEPA. DOE’s
                                                     (i) Eliminate jobs, or inhibit job                   DOE’s regulations regarding notice of                 regulations regarding notice of
                                                  creation;                                               applications and procedures conducted                 applications and procedures conducted
                                                     (ii) Are outdated, unnecessary, or                   on applications would no longer apply                 on applications would no longer apply
                                                  ineffective;                                            to applications that satisfy these criteria.          to applications that satisfy these criteria.
                                                     (iii) Impose costs that exceed benefits;                                                                      To date, DOE has received—and
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                                                                                                          The proposed regulation would
                                                     (iv) Create a serious inconsistency or               expedite DOE’s processing of these                    granted—seven applications to export
                                                  otherwise interfere with regulatory                     applications, thereby reducing                        LNG in volumes below 0.14 Bcf/d of
                                                  reform initiatives and policies;                        administrative burdens for the small-                 natural gas to non-FTA countries
                                                     (v) Are inconsistent with the                        scale natural gas export market.                      (identified in section I.C). Of these
                                                  requirements of Information Quality                                                                           seven applicants, two qualify as small
                                                  Act, or the guidance issued pursuant to                 C. National Environmental Policy Act                  businesses under the Small Business
                                                  that Act, in particular those regulations                 DOE has determined that                             Administration’s size standards under
                                                  that rely in whole or in part on data,                  promulgation of these regulations fall                NAICS 221210, Natural Gas


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                                                  41576                 Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules

                                                  Distribution, of 1,000 employees or less.               on tribal, state, and local governments.              constitutional and statutory authority
                                                  Because it would streamline the                         Subsection 101(5) of title I of that law              supporting any action that would limit
                                                  application and approval process for                    defines a Federal intergovernmental                   the policymaking discretion of the states
                                                  small-scale natural gas exports, the                    mandate to include any regulation that                and carefully assess the necessity for
                                                  proposed rule would not result in a                     would impose upon tribal, state, or local             such actions. DOE has examined this
                                                  significant economic impact on a                        governments an enforceable duty,                      proposed rule and has determined that
                                                  substantial number of small entities.                   except a condition of Federal assistance              it would not preempt state law and
                                                  The proposed rule would, however,                       or a duty arising from participating in a             would not have a substantial direct
                                                  provide greater regulatory certainty for                voluntary Federal program. Title II of                effect on the states, on the relationship
                                                  applicants by eliminating the individual                that law requires each Federal agency to              between the national government and
                                                  application proceeding and public                       assess the effects of Federal regulatory              the states, or on the distribution of
                                                  interest evaluation for qualifying                      actions on tribal, state, and local                   power and responsibilities among the
                                                  applications. This, in turn, will both                  governments, in the aggregate, or to the              various levels of government. No further
                                                  reduce the administrative burden                        private sector, other than to the extent              action is required by Executive Order
                                                  associated with the application process                 such actions merely incorporate                       13132.
                                                  and expedite authorization of qualifying                requirements specifically set forth in a
                                                  applications, removing (at a minimum)                   statute. Section 202 of that title requires           I. Executive Order 12988
                                                  the opportunity cost of receiving an                    a Federal agency to perform a detailed                   With respect to the review of existing
                                                  application delayed by the current                      assessment of the anticipated costs and               regulations and the promulgation of
                                                  procedures.                                             benefits of any rule that includes a                  new regulations, section 3(a) of
                                                    Therefore, DOE certifies that this                    Federal mandate which may result in                   Executive Order 12988, ‘‘Civil Justice
                                                  rulemaking will not have a significant                  costs to tribal, state, or local                      Reform,’’ 61 FR 4729 (February 7, 1996),
                                                  economic impact on a substantial                        governments, or to the private sector, of             imposes on Executive agencies the
                                                  number of small entities. Accordingly,                  $100 million or more in any one year                  general duty to adhere to the following
                                                  DOE did not prepare an IRFA for this                    (adjusted annually for inflation). 2                  requirements: (1) Eliminate drafting
                                                  rulemaking. DOE’s certification and                     U.S.C. 1532(a) and (b). Section 204 of                errors and ambiguity; (2) write
                                                  supporting statement of factual basis                   that title requires each agency that                  regulations to minimize litigation; and
                                                  will be provided to the Chief Counsel                   proposes a rule containing a significant              (3) provide a clear legal standard for
                                                  for Advocacy of the Small Business                      Federal intergovernmental mandate to                  affected conduct rather than a general
                                                  Administration for review under 5                       develop an effective process for                      standard and promote simplification
                                                  U.S.C. 605(b).                                          obtaining meaningful and timely input                 and burden reduction. With regard to
                                                                                                          from elected officers of tribal, state, and           the review required by section 3(a),
                                                  E. Paperwork Reduction Act
                                                                                                          local governments. 2 U.S.C. 1534.                     section 3(b) of Executive Order 12988
                                                    The proposed rule does not change                       This proposed rule would streamline
                                                  any requirements subject to review and                                                                        specifically requires that Executive
                                                                                                          procedures for small-scale natural gas
                                                  approval by OMB pursuant to the                                                                               agencies make every reasonable effort to
                                                                                                          exports. DOE has determined that the
                                                  Paperwork Reduction Act of 1995 (44                                                                           ensure that the regulation: (1) Clearly
                                                                                                          proposed rule would not result in the
                                                  U.S.C. 3501 et seq.) and the procedures                                                                       specifies the preemptive effect, if any;
                                                                                                          expenditure by tribal, state, and local
                                                  implementing that Act, 5 CFR 1320.1 et                                                                        (2) clearly specifies any effect on
                                                                                                          governments in the aggregate, or by the
                                                  seq. Current natural gas import and                                                                           existing Federal law or regulation; (3)
                                                                                                          private sector, of $100 million or more
                                                  export authorization holders, including                                                                       provides a clear legal standard for
                                                                                                          in any one year. Accordingly, no
                                                  any approved under this proposed rule,                                                                        affected conduct while promoting
                                                                                                          assessment or analysis is required under
                                                  would be subject to the information                                                                           simplification and burden reduction; (4)
                                                                                                          the Unfunded Mandates Reform Act of
                                                  collection requirements approved by the                                                                       specifies the retroactive effect, if any; (5)
                                                                                                          1995.
                                                  Office of Management and Budget under                                                                         adequately defines key terms; and (6)
                                                  OMB Control No. 1901–0294. Public                       G. Treasury and General Government                    addresses other important issues
                                                  reporting burden for the certification is               Appropriations Act, 1999                              affecting clarity and general
                                                  estimated to average 3 hours per                          Section 654 of the Treasury and                     draftsmanship under any guidelines
                                                  response, including the time for                        General Government Appropriations                     issued by the Attorney General. Section
                                                  reviewing instructions, searching                       Act, 1999 (Pub. L. 105–277) requires                  3(c) of Executive Order 12988 requires
                                                  existing data sources, gathering and                    Federal agencies to issue a Family                    Executive agencies to review regulations
                                                  maintaining the data needed, and                        Policymaking Assessment for any                       in light of applicable standards in
                                                  completing and reviewing the collection                 proposed rule that may affect family                  section 3(a) and section 3(b) to
                                                  of information.                                         well-being. The proposed rule would                   determine whether they are met or it is
                                                    Notwithstanding any other provision                   not have any impact on the autonomy                   unreasonable to meet one or more of
                                                  of the law, no person is required to                    or integrity of the family as an                      them. DOE has completed the required
                                                  respond to, nor shall any person be                     institution. Accordingly, DOE has                     review and determined that, to the
                                                  subject to a penalty for failure to comply              concluded that it is not necessary to                 extent permitted by law, the proposed
                                                  with, a collection of information subject               prepare a Family Policymaking                         rule meets the relevant standards of
                                                  to the requirements of the PRA, unless                  Assessment.                                           Executive Order 12988.
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                                                  that collection of information displays a                                                                     J. Treasury and General Government
                                                                                                          H. Executive Order 13132
                                                  currently valid OMB Control Number.                                                                           Appropriations Act, 2001
                                                                                                            Executive Order 13132, ‘‘Federalism,’’
                                                  F. Unfunded Mandates Reform Act of                      64 FR 43255 (August 4, 1999) imposes                    The Treasury and General
                                                  1995                                                    certain requirements on agencies                      Government Appropriations Act, 2001
                                                    The Unfunded Mandates Reform Act                      formulating and implementing policies                 (44 U.S.C. 3516 note) provides for
                                                  of 1995 (Pub. L. 104–4) generally                       or regulations that preempt state law or              agencies to review most disseminations
                                                  requires Federal agencies to examine                    that have Federalism implications.                    of information to the public under
                                                  closely the impacts of regulatory actions               Agencies are required to examine the                  guidelines established by each agency


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                                                                        Federal Register / Vol. 82, No. 169 / Friday, September 1, 2017 / Proposed Rules                                                41577

                                                  pursuant to general guidelines issued by                PART 590—ADMINISTRATIVE                               the liquefied or compressed equivalent
                                                  OMB.                                                    PROCEDURES WITH RESPECT TO                            thereof, in a single shipment for
                                                    OMB’s guidelines were published at                    THE IMPORT AND EXPORT OF                              scientific, experimental, or other non-
                                                  67 FR 8452 (February 22, 2002), and                     NATURAL GAS                                           utility gas use without prior
                                                  DOE’s guidelines were published at 67                                                                         authorization of the Assistant Secretary.
                                                  FR 62446 (October 7, 2002). DOE has                     ■ 1. The authority citation for part 590              [FR Doc. 2017–18580 Filed 8–31–17; 8:45 am]
                                                  reviewed this proposed rule under the                   continues to read as follows:                         BILLING CODE 6450–01–P
                                                  OMB and DOE guidelines and has                            Authority: Secs. 301(b), 402(f), and 644,
                                                  concluded that it is consistent with                    Pub. L. 95–91, 91 Stat. 578, 585, and 599 (42
                                                  applicable policies in those guidelines.                U.S.C. 7151(b), 7172(f), and 7254), Sec. 3, Act
                                                                                                                                                                DEPARTMENT OF TRANSPORTATION
                                                                                                          of June 21, 1938, c. 556, 52 Stat. 822 (15
                                                  K. Executive Order 13211                                U.S.C. 717b); E.O. 12009 (42 FR 46267,
                                                                                                                                                                Federal Aviation Administration
                                                                                                          September 15, 1977); DOE Delegation Order
                                                     Executive Order 13211, ‘‘Actions                     Nos. 0204–111 and 0204–127 (49 FR 6684,
                                                  Concerning Regulations That                             February 22, 1984; 54 FR 11437, March 20,             14 CFR Part 39
                                                  Significantly Affect Energy Supply,                     1989).                                                [Docket No. FAA–2017–0660; Product
                                                  Distribution, or Use,’’ 66 FR 28355 (May                                                                      Identifier 2017–NE–21–AD]
                                                                                                          ■ 2. Section 590.102 is amended by:
                                                  22, 2001) requires Federal agencies to                  ■ a. Redesignating paragraph (p) as
                                                  prepare and submit to the OMB, a                                                                              RIN 2120–AA64
                                                                                                          paragraph (q), respectively;
                                                  Statement of Energy Effects for any                     ■ b. Adding new paragraph (p).                        Airworthiness Directives; General
                                                  proposed significant energy action. A                     The revisions to read as follows:                   Electric Company Turbofan Engines
                                                  ‘‘significant energy action’’ is defined as
                                                  any action by an agency that                            § 590.102    Definitions.                             AGENCY: Federal Aviation
                                                  promulgated or is expected to lead to                   *      *    *     *    *                              Administration (FAA), DOT.
                                                  promulgation of a final rule, and that:                    (p) Small-scale natural gas export                 ACTION: Notice of proposed rulemaking
                                                  (1) Is a significant regulatory action                  means an export of natural gas to                     (NPRM).
                                                  under Executive Order 12866, or any                     nations with which there is not in effect
                                                  successor order; and (2) is likely to have              a free trade agreement with the United                SUMMARY:   We propose to adopt a new
                                                  a significant adverse effect on the                     States requiring national treatment for               airworthiness directive (AD) for certain
                                                  supply, distribution, or use of energy, or              trade in natural gas and with which                   General Electric Company (GE) GEnx–
                                                  (3) is designated by the Administrator of               trade is not prohibited by U.S. law or                1B64/P2, –1B67/P2, –1B70/P2, –1B70/
                                                  OIRA as a significant energy action. For                policy, provided that the application for             75/P2, –1B70C/P2, and –1B74/75/P2
                                                  any proposed significant energy action,                 such export authority satisfies the                   turbofan engines. This proposed AD was
                                                  the agency must give a detailed                         following two criteria:                               prompted by a report of the failure of
                                                  statement of any adverse effects on                        (1) The application proposes to export             the high-pressure turbine (HPT) stage 1
                                                  energy supply, distribution, or use                     natural gas in a volume up to and                     blade retainer and subsequent in-flight
                                                  should the proposal be implemented,                     including 0.14 billion cubic feet per                 shutdown of the engine. This proposed
                                                  and of reasonable alternatives to the                   day, and                                              AD would require inspection of the HPT
                                                  action and their expected benefits on                      (2) DOE’s approval of the application              stage 1 blade retainer. We are proposing
                                                  energy supply, distribution, and use.                   does not require an environmental                     this AD to address the unsafe condition
                                                  For the reasons discussed in section                    impact statement or an environmental                  on these products.
                                                  II.C, this regulatory action would not                  assessment under the National                         DATES: We must receive comments on
                                                  have a significant adverse effect on the                Environmental Policy Act, 42 U.S.C.                   this proposed AD by October 16, 2017.
                                                  supply, distribution, or use of energy,                 4321 et seq.                                          ADDRESSES: You may send comments,
                                                  and therefore is not a significant energy               *      *    *     *    *                              using the procedures found in 14 CFR
                                                  action. Accordingly, DOE has not                        ■ 3. Section 590.208 is revised to read               11.43 and 11.45, by any of the following
                                                  prepared a Statement of Energy Effects.                 as follows:                                           methods:
                                                  IV. Approval of the Office of the                                                                               • Federal eRulemaking Portal: Go to
                                                                                                          § 590.208    Small volume exports.                    http://www.regulations.gov. Follow the
                                                  Secretary
                                                                                                             (a) Small-scale natural gas exports.               instructions for submitting comments.
                                                    The Secretary of Energy has approved                  Small-scale natural gas exports are                     • Fax: 202–493–2251.
                                                  the publication of this proposed rule.                  deemed to be consistent with the public                 • Mail: U.S. Department of
                                                                                                          interest under section 3(a) of the Natural            Transportation, Docket Operations, M–
                                                  List of Subjects in 10 CFR Part 590                     Gas Act, 15 U.S.C. 717b(a). DOE will                  30, West Building Ground Floor, Room
                                                    Administrative practice and                           issue an export authorization upon                    W12–140, 1200 New Jersey Avenue SE.,
                                                  procedure, Exports, Natural gas,                        receipt of any complete application to                Washington, DC 20590.
                                                  Reporting and recordkeeping                             conduct small-scale natural gas exports.                • Hand Delivery: Deliver to Mail
                                                  requirements.                                           DOE’s regulations regarding notice of                 address above between 9 a.m. and 5
                                                                                                          applications, 10 CFR 590.205, and                     p.m., Monday through Friday, except
                                                    Issued in Washington, DC, on August 25,
                                                  2017.                                                   procedures applicable to application                  Federal holidays.
                                                                                                          proceedings, 10 CFR part 590, subpart C                 For service information identified in
sradovich on DSK3GMQ082PROD with PROPOSALS




                                                  Robert J. Smith,
                                                                                                          (10 CFR 590.303 to 10 CFR 590.317), are               this NPRM, contact General Electric
                                                  Acting Assistant Secretary, Office of Fossil                                                                  Company, GE-Aviation, Room 285, 1
                                                                                                          not applicable to small-scale natural gas
                                                  Energy.
                                                                                                          exports.                                              Neumann Way, Cincinnati, OH 45215,
                                                    For the reasons stated in the                            (b) Scientific, experimental, or other             phone: 513–552–3272; fax: 513–552–
                                                  preamble, DOE proposes to amend part                    non-utility natural gas exports. Any                  3329; email: geae.aoc@ge.com. You may
                                                  590, chapter II of title 10, subchapter G,              person may export up to 100,000 cubic                 view this service information at the
                                                  Code of Federal Regulations as set forth                feet of natural gas (14.73 pounds per                 FAA, Engine and Propeller Standards
                                                  below:                                                  square inch at 60 degrees Fahrenheit) or              Branch, Policy and Innovation Division,


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Document Created: 2017-09-01 01:50:51
Document Modified: 2017-09-01 01:50:51
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking.
DatesPublic comment on this proposed rule will be accepted until October 16, 2017.
ContactAmy Sweeney, U.S. Department of Energy (FE-34), Office of Regulation and International Engagement, Office of Fossil Energy Forrestal Building, Room 3E-042, 1000 Independence Avenue SW., Washington, DC 20585; (202) 586-2627; or Cassandra Bernstein or Ronald (R.J.) Colwell, U.S. Department of Energy (GC-76), Office of the Assistant General Counsel for Electricity and Fossil Energy, Forrestal Building, Room 6D-033, 1000 Independence Ave. SW., Washington, DC 20585; (202) 586-9793 or (202) 586-8499.
FR Citation82 FR 41570 
RIN Number1901-AB43
CFR AssociatedAdministrative Practice and Procedure; Exports; Natural Gas and Reporting and Recordkeeping Requirements

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