Why Set LNG Permitting Deadlines?

Section 3 of the Natural Gas Act prohibits the export of natural gas — including liquefied natural gas (LNG)—to a foreign country without prior approval from the U.S. Department of Energy (DOE):

Applications to export U.S. LNG to nations with Free Trade Agreements with the United States that “include the national treatment of natural gas” must be granted “without modification or delay.”

However, applications to export U.S. LNG to nations without FTAs are subject to a “public interest” review and are approved by DOE if judged “not to be inconsistent with the public interest.”

Under a policy change adopted in August 2014, DOE now waits to complete the non-FTA public interest review until after the lead agency responsible for facility licensing — usually the Federal Energy Regulatory Commission (FERC) — has rendered its final “order” and after any “requests for rehearing” of that order have been substantively addressed.

While DOE has been approving non-FTA applications reasonably quickly after the requests for rehearing have been resolved, in almost all cases DOE has sufficient data to complete its non-FTA public interest review at an earlier date, such as when the environmental studies pursuant to the National Environmental Policy Act of 1969 (NEPA) have been finalized.

Legislation which passed the House of Representatives in 2015 (H.R. 8) and a bill now being debated on the Senate floor (S. 2012) would expedite DOE action on non-FTA permit applications by setting a new statutory time limit. The House bill would set a 60-day and the Senate bill a 45-day deadline.

In Jan. 2015, at a Senate Energy and Natural Resources Committee hearing on an earlier bill (S. 33), Christopher A. Smith, DOE’s Assistant Secretary for Fossil Energy, indicated that DOE could and would comply with a statutory deadline if Congress passed one.

Why enact such a deadline? If a 45-day deadline had been in force a year ago, the last major non-FTA applications might have been approved five to eleven months faster:

  • Cheniere Energy’s Corpus Christi LNG project could have received its non-FTA license on/about Nov. 22, 2014, instead of May 12, 2015, 171 days faster.
  • Dominion’s Cove Point project could have had its non-FTA license on/about Jun. 29, 2014, instead of May 7, 2015, 332 days faster.
  • Cheniere Energy’s Sabine Pass (Trains 5 and 6) project could have received its non-FTA license on/about Jan. 26, 2015, instead of Jun. 26, 2015, 151 days faster.

While 151 to 332 days (five to eleven months) may not seem so long, setting a deadline on DOE non-FTA decisions could make a difference for many U.S. LNG export projects that are completing the regulatory review process while trying to secure customers, finalize engineering, and arrange project financing.

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