DOE Proposes "Environment First" Prioritization for LNG Export Review

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On May 29, 2014, the Department of Energy proposed a new approach to conducting its reviews of proposed projects to export liquefied natural gas (LNG) to non-FTA countries. [1] The new approach could slow the approval process at a time of increasing political pressure to speed it up. DOE's existing approach is to review proposals "first come-first served" and issue approval conditioned on satisfactory completion of review under the National Environmental Policy Act (NEPA). Now, projects will not enter DOE's queue until they have received NEPA approval from FERC.

To "assist" FERC in its NEPA work, DOE also issued two reports: a Draft Addendum to Environmental Review Documents Concerning Exports of Natural Gas from the United States,[2] and a Life Cycle Greenhouse Gas Perspective on Exporting Liquefied Natural Gas from the United States.[3] These reports appear to respond to repeated calls for DOE to assess the environmental impacts of LNG export more broadly. However, linking them to the proposed prioritization approach retains FERC as the locus of environmental review.

While prioritizing the NEPA review certainly declares an environmental focus, it has several clear economic implications. The NEPA process is lengthy and expensive – a year or more and six to seven figures in costs. Projects well on their way at FERC now have a better story to tell potential investors and customers, particularly if they were well down the existing DOE list. In contrast, project proponents without the financing to navigate the NEPA hurdles may never reach DOE.

Stakeholders may submit comments to DOE on the proposed approach by July 21, 2014. Comments on the two environmental reports have the same deadline.
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[1] energy.gov/articles/proposed-change-energy-departments-lng-export-decision-making-procedures.
[2] energy.gov/fe/downloads/federal-register-notice-draft-addendum-environmental-review-documents-concerning.
[3] energy.gov/fe/downloads/federal-register-notice-life-cycle-greenhouse-gas-perspective-exporting-liquefied.

Cynthia AM Stroman
Washington, D.C.
+1 202 626 2381
cstroman@kslaw.com
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Topics:  DOE, FERC, Free Trade Agreement, Liquid Natural Gas, NEPA

Published In: General Business Updates, Energy & Utilities Updates, Environmental Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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