83 FR 28841 - Policy Statement Regarding Long-Term Authorizations To Export Natural Gas to Non-Free Trade Agreement Countries

DEPARTMENT OF ENERGY

Federal Register Volume 83, Issue 120 (June 21, 2018)

The Department of Energy (DOE) stands behind the long-term authorizations it has issued under the Natural Gas Act, approving the export of natural gas (including liquefied natural gas) to non-free trade agreement countries. DOE is firmly committed to the durability and stability of the non-FTA export authorizations it has granted to date, and to any export authorizations issued by DOE in the future.

[Federal Register Volume 83, Number 120 (Thursday, June 21, 2018)]
[Notices]
[Pages 28841-28843]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13427]


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DEPARTMENT OF ENERGY


Policy Statement Regarding Long-Term Authorizations To Export 
Natural Gas to Non-Free Trade Agreement Countries

AGENCY: Office of Fossil Energy, Department of Energy.

ACTION: Policy statement.

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SUMMARY: The Department of Energy (DOE) stands behind the long-term 
authorizations it has issued under the Natural Gas Act, approving the 
export of natural gas (including liquefied natural

[[Page 28842]]

gas) to non-free trade agreement countries. DOE is firmly committed to 
the durability and stability of the non-FTA export authorizations it 
has granted to date, and to any export authorizations issued by DOE in 
the future.

DATES: This policy statement is applicable on June 21, 2018.

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

    The Department of Energy (DOE), Office of Fossil Energy (FE), is 
responsible for authorizing exports of domestically produced natural 
gas, including liquefied natural gas (LNG), to foreign nations pursuant 
to section 3 of the Natural Gas Act (NGA).\1\ Under section 3(a) of the 
NGA, DOE/FE reviews applications to export natural gas 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).\2\ NGA section 3(a) states that DOE ``shall issue such 
order upon application, unless, after opportunity for hearing, it finds 
that the proposed exportation or importation will not be consistent 
with the public interest.'' \3\ DOE has consistently interpreted this 
provision as creating a rebuttable presumption that a proposed export 
of natural gas is in the public interest.\4\ Accordingly, DOE will 
conduct an informal adjudication and grant an application to export LNG 
to non-FTA countries under NGA section 3(a) unless DOE finds that the 
proposed exportation will not be consistent with the public 
interest.\5\ Additionally, under section 16 of the NGA, DOE is 
authorized to ``prescribe, issue, make, amend, and rescind such 
[export] orders . . . as it may find necessary or appropriate . . .'' 
to satisfy its statutory responsibilities.\6\
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    \1\ 15 U.S.C. 717b.
    \2\ This policy statement applies to authorizations to export 
natural gas to non-FTA countries under section 3(a) of the NGA, 15 
U.S.C. 717b(a) (non-FTA authorizations). With regard to exports to 
FTA countries, NGA section 3(c) was amended by section 201 of the 
Energy Policy Act of 1992 (Pub. L. 102-486) to require that FTA 
applications ``shall be deemed to be consistent with the public 
interest'' and granted ``without modification or delay.'' 15 U.S.C. 
717b(c).
    \3\ 15 U.S.C. 717b(a).
    \4\ See Sierra Club v. U.S. Dep't of Energy, 867 F.3d 189, 203 
(D.C. Cir. 2017) (``We have construed [NGA section 3(a)] as 
containing a `general presumption favoring [export] authorization.' 
'') (quoting W. Va. Pub. Servs. Comm'n v. U.S. Dep't of Energy, 681 
F.2d 847, 856 (D.C. Cir. 1982)).
    \5\ Before reaching a final decision on any non-FTA application, 
DOE must also comply with the National Environmental Policy Act of 
1969 (NEPA), 42 U.S.C. 4321 et seq. See, e.g., Eagle LNG Partners 
Jacksonville II LLC, DOE/FE Order No. 4078, FE Docket No FE Docket 
No. 17-79-LNG, Opinion and Order Granting Long-Term, Multi-Contract 
Authorization to Export Liquefied Natural Gas in ISO Containers 
Loaded at the Eagle Maxville Facility in Jacksonville, Florida, and 
Exported by Vessel to Free Trade Agreement and Non-Free Trade 
Agreement Nations, at 34-37 (Sept. 15, 2017).
    \6\ 15 U.S.C. 717o.
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B. Regulatory Background

    To date, DOE/FE has issued 29 final long-term authorizations to 
export LNG and compressed natural gas to non-FTA countries in a 
cumulative volume totaling 21.35 billion cubic feet per day of natural 
gas (approximately 7.79 trillion cubic feet per year).\7\ Each of these 
authorizations has a term of 20 years, with additional time provided 
for LNG export operations to commence. In each authorization, DOE/FE 
has included a statement acknowledging its authority under NGA section 
16 to ``make, amend, and rescind such [export] orders . . . as it may 
find necessary or appropriate . . . .'' to satisfy its statutory 
responsibilities.\8\
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    \7\ 15 U.S.C. 717b(a); see Eagle LNG Partners Jacksonville II 
LLC, DOE/FE Order No. 4078, at 34-37.
    \8\ Eagle LNG Partners Jacksonville II LLC, DOE/FE Order No. 
4078, at 33 n.98 (quoting 15 U.S.C. 717o); see also Sabine Pass 
Liquefaction, LLC, DOE/FE Order No. 2961, FE Docket No. 10-111-LNG, 
Opinion and Order Conditionally Granting Long-Term Authorization to 
Export Liquefied Natural Gas from Sabine Pass LNG Terminal to Non-
Free Trade Agreement Nations, at 33 n.45 (quoting 15 U.S.C. 717o) 
(May 20, 2011).
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    In these authorizations, DOE has stated that ``[s]ome commenters 
[have] asked DOE to clarify the circumstances under which the agency 
would exercise its authority to revoke (in whole or in part) previously 
issued LNG export authorizations.'' \9\ In response, DOE has stated 
that it ``cannot precisely identify all the circumstances under which 
such action would be taken.'' \10\ DOE has maintained, however, that `` 
`[i]n the event of any unforeseen developments of such significant 
consequence as to put the public interest at risk, DOE/FE is fully 
authorized to take action as necessary to protect the public interest.' 
'' \11\
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    \9\ Eagle LNG Partners Jacksonville II LLC, DOE/FE Order No. 
4078, at 33 n.98.
    \10\ Id.
    \11\ Id. (quoting Sabine Pass Liquefaction, LLC, DOE/FE Order 
No. 2961, at 33 n.45).
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    DOE/FE has never rescinded a long-term non-FTA export authorization 
for any reason. Further, DOE has no record of ever having vacated or 
rescinded an authorization to import or export natural gas over the 
objections of the authorization holder.\12\
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    \12\ See Ltr. from Paula Gant, U.S. Dep't of Energy, to Sen. 
Lisa Murkowski, at 1 (Oct. 17, 2013), available at: https://www.energy.senate.gov/public/index.cfm/files/serve?File_id=9E99E412-CE05-449D-8893-DC8D64C32D02 (last viewed June 8, 2018).
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    DOE has rescinded (or ``vacated'') one long-term LNG export 
authorization to FTA countries (see supra note 2)--DOE/FE Order No. 
3482, issued to Louisiana LNG Energy LLC (LLNG) on August 28, 2014.\13\ 
DOE/FE vacated this order in 2017 on the basis of LLNG's own prolonged 
inaction, after LLNG effectively self-terminated its proposed LNG 
export project.\14\ Specifically, LLNG: (i) Failed to participate in 
its on-going FERC process, such that FERC terminated LLNG's pre-filing 
review process; \15\ and (ii) failed to comply with its DOE/FE 
reporting obligations under the terms of its FTA order, for a period of 
more than 18 months.\16\ Throughout this 18-month time period, DOE/FE 
made repeated efforts to contact LLNG, with no success.\17\ Even after 
DOE/FE issued an Order to Show Cause--inviting LLNG to respond and 
explain the circumstances--LLNG took no action.\18\ The evidence 
clearly showed

[[Page 28843]]

that LLNG neither wished to move forward with its proposed LNG export 
facility nor to maintain its FTA authorization.\19\ DOE/FE therefore 
vacated LLNG's FTA authorization under NGA section 16, but it did so 
without objection by LLNG and without prejudice to LLNG, should LLNG 
wish to seek an export LNG authorization in the future.\20\
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    \13\ Louisiana LNG Energy LLC, DOE/FE Order No. 3482, FE Docket 
No. 14-19-LNG, Order Granting Long-Term, Multi-Contract 
Authorization to Export Liquefied Natural Gas by Vessel from the 
Proposed Louisiana LNG Energy Project in Plaquemines Parish, 
Louisiana, to Free Trade Agreement Nations (Aug. 28, 2014).
    \14\ See Louisiana LNG Energy LLC, DOE/FE Order No. 3482-A, FE 
Docket Nos. 14-19-LNG & 14-29-LNG, Order Vacating Long-Term, Multi-
Contract Authorization to Export Liquefied Natural Gas by Vessel to 
Free Trade Agreement Nations and Dismissing Application to Export 
Liquefied Natural Gas by Vessel to Non-Free Trade Agreement Nations, 
at 2-4 (July 24, 2017); see also Louisiana LNG Energy LLC, FE Docket 
Nos. 14-19-LNG & 14-29-LNG, Order to Show Cause, at 2-5 (June 12, 
2017).
    \15\ See Letter from Ann Miles, Director of FERC's Office of 
Energy Projects, to Martin Houston, Chairman of LLNG, Re: Pre-Filing 
Review Termination of the Mississippi River LNG Project, FERC Docket 
No. PF14-17-000 (Dec. 13, 2016) (FERC observing that LLNG ``has not 
filed the application needed for staff to continue the environmental 
review of [the] project''), cited in Louisiana LNG Energy LLC, DOE/
FE Order No. 3482-A, at 3 n.9.
    \16\ See Louisiana LNG Energy LLC, DOE/FE Order No. 3482-A, at 
2-3.
    \17\ See id. at 3.
    \18\ See Louisiana LNG Energy LLC, Order to Show Cause, at 5 
(providing 30 days for LLNG to show cause, in writing, why its 
authorization should not be vacated--to which LLNG never responded); 
Louisiana LNG Energy LLC, DOE/FE Order No. 3482-A, at 3.
    \19\ See Louisiana LNG Energy LLC, DOE/FE Order No. 3482-A, at 
3-4.
    \20\ See id. at 4 (also dismissing LLNG's pending non-FTA 
application without prejudice).
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    The LLNG proceeding was a highly unusual scenario where all 
evidence indicated that the company was no longer pursuing its proposed 
LNG export project and had, in fact, ceased to exist as a commercial 
operation. In vacating LLNG's FTA order without prejudice, DOE 
responded appropriately in both implementing its statutory authority 
under NGA section 16 and in upholding the integrity of its natural gas 
regulatory program under 10 CFR part 590.

II. DOE/FE Policy on Non-FTA Export Authorizations

    Potential importers of U.S. LNG and financiers of LNG export 
projects (collectively, interested stakeholders) have expressed concern 
about DOE/FE rescinding one or more non-FTA export authorizations in 
the future. In raising this concern, they point to the language in the 
existing non-FTA authorizations (quoted above) in which DOE/FE has 
observed its authority under NGA section 16 to ``make, amend, and 
rescind such [export] orders . . . as it may find necessary or 
appropriate . . . .'' Citing DOE/FE's language, they have asked what 
potential ``developments'' in the U.S. LNG market could rise to the 
level of ``such significant consequence as to put the public interest 
at risk''--such that DOE would unilaterally rescind one or more non-FTA 
export authorizations or take other action to protect the public 
interest under NGA section 3(a).
    As a preliminary matter, DOE/FE wishes to allay concerns about the 
security of existing (or future) non-FTA export authorizations. In this 
policy statement, DOE/FE affirms its commitment to all export 
authorizations issued under the NGA, including long-term authorizations 
approving the export of LNG to non-FTA countries. As indicated above, 
DOE/FE currently has issued 29 final non-FTA export authorizations, 
based on a thorough consideration of the public interest under section 
3(a) of the NGA. In each of these proceedings, DOE/FE reviewed a 
substantial administrative record addressing factors including economic 
impacts, international impacts, security of natural gas supply, and 
environmental impacts, among others. In granting each application, DOE/
FE concluded that exports of U.S. LNG will generate net economic 
benefits to the broader U.S. economy and will provide energy security 
and environmental benefits to the global community (including emerging 
economies presently reliant upon more carbon intensive fuels).\21\
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    \21\ See, e.g., Eagle LNG Partners Jacksonville II LLC, DOE/FE 
Order No. 4078, at 23-38.
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    DOE/FE stands firmly behind these factual findings and legal 
conclusions--many of which have been challenged and upheld in federal 
court.\22\ Authorization holders, as well as any interested 
stakeholders, thus should have the utmost confidence in the validity of 
DOE/FE's LNG export authorizations for the full term of each non-FTA 
order. Indeed, as noted above, DOE has never rescinded a non-FTA export 
authorization for any reason. DOE has vacated one FTA order under NGA 
section 16, but the circumstances of that proceeding were based solely 
on the inaction of the authorization holder.\23\
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    \22\ In 2017, the U.S. Court of Appeals for the District of 
Columbia Circuit issued four decisions upholding non-FTA export 
authorizations issued by DOE/FE under NGA section 3(a). See, e.g., 
Sierra Club vs. U.S. Dep't of Energy, 867 F.3d 189; Sierra Club v. 
U.S. Dep't of Energy, Nos. 16-1186, 16-1252, 16-1253, 703 Fed. Appx. 
1 (D.C. Cir. Nov. 1, 2017).
    \23\ See supra at 4-5.
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    As a matter of law, DOE preserves its authority to take action as 
necessary or appropriate to carry out its duties under the NGA.\24\ 
However, DOE does not foresee a scenario where it would rescind one or 
more non-FTA authorizations. The United States government takes very 
seriously the investment-backed expectations of private parties subject 
to its regulatory jurisdiction. In particular, DOE understands the far-
ranging economic investments and natural gas supply commitments 
associated with these authorizations over their full term--affecting 
both U.S. and global interests. DOE emphasizes that it remains 
committed to the durability and stability of the export authorizations 
it has granted under the NGA, as well as to supporting the approved 
export of U.S. natural gas around the world.
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    \24\ 15 U.S.C. 717o.

    Issued in Washington, DC, on June 15, 2018.
Steven E. Winberg,
Assistant Secretary, Office of Fossil Energy.
[FR Doc. 2018-13427 Filed 6-19-18; 4:15 pm]
BILLING CODE 6450-01-P