Last week, House and Senate leaders convened to discuss President Biden’s current liquefied natural gas (“LNG”) export permit freeze, which opponents contend will have a significant impact on domestic energy security, jobs, and the economy, as well as energy security for U.S. allies.
In January, President Biden announced1 a temporary pause on pending permits for new LNG export projects while his administration investigates the impact of those projects on the environment and the economy. Ordinarily, the Department of Energy is required to approve LNG permits for exports to countries with which the United States does not have free-trade agreements if the permit is in “public interest.” Before the authorization process can resume, however, the Biden administration has mandated that the Department of Energy adjust the “public interest” analysis2 to apply newly developed factors reflecting the economic and environmental impact of LNG exports, with a particular emphasis on the climate.
Opponents of the pause forewarn of the widespread effects of a moratorium, both domestically and internationally. The United States is the world’s leading exporter of LNG,3 and a single LNG project generates hundreds of billions of dollars in revenue and thousands of jobs. Further, this pause — especially in combination with the Department of Energy’s April 2023 Policy Statement4 requiring pending LNG projects to either commence exports within seven years after permit approval or reapply — could have a significant impact on more than a dozen LNG projects. While the White House has assured the public5 that this temporary freeze will not impact the United States’s ability to supply its allies with LNG in the short term, opponents contend that the uncertainty surrounding permit approvals will chill investment, discourage foreign governments from signing long term contracts, and potentially threaten our relationships with European allies who depend on the United States for natural gas.
Following the President’s announcement, Congress quickly sprang into action. On February 6, 2024, the House's Committee on Energy and Commerce Committee and and Subcommittee on Energy, Climate, and Grid Security Subcommittee held a hearing6 to discuss President Biden’s efforts to halt LNG exports. During his opening remarks,7 Subcommittee Chair Jeff Duncan outlined the benefits of U.S.’s participation in the international LNG market and how the presidential administration decision to pause permit approvals could negatively impact the American economy, energy security, and national security. The Committee also discussed proposed legislation, HR 7176 (the “Unlocking our Domestic LNG Potential Act”),8 which would lift all Department of Energy restrictions on the import and export of LNGs and cease consideration of the Biden administration’s new “public interest” test. A few days later, on February 8, 2024, the Senate Energy Committee also held a hearing9 on the LNG export permit moratorium, which featured disagreement between the Department of Energy and several Senators regarding the national and global interests implicated by the United States’ participation in the LNG market.
In addition to these political developments, the debate over how to address new LNG export applications is also overshadowed by the Supreme Court’s anticipated decision regarding the Chevron doctrine,10 which currently requires courts to defer to agency interpretations of ambiguous statutes. If the Court overrules Chevron, the Department of Energy’s eventual interpretation of the term “public interest” may no longer receive deference, but instead will be critically examined by courts — thereby lowering hurdles to success for challenges against unfavorable LNG export permit decisions.
Regardless, it remains to be seen what actions the House and Senate will take to respond to President Biden’s announcement, or how long this pause will endure. Additionally, Department of Energy officials remain uncertain about how to define “public interest” while the status of several critical permits worth billions of dollars hangs in the balance. As such, entities and governments participating in the LNG market may wish to remain apprised of imminent developments and prepare for how a new “public interest” definition will impact the export permit application processes.
Footnotes
1. Statement from President Joe Biden on Decision to Pause Pending Approvals of Liquefied Natural Gas Exports, The White House (Jan. 26, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/26/statement-from-president-joe-biden-on-decision-to-pause-pending-approvals-of-liquefied-natural-gas-exports/.
2. DOE to Update Public Interest Analysis to Enhance National Security, Achieve Clean Energy Goals and Continue Support for Global Allies, Energy.gov (Jan. 26, 2024), https://www.energy.gov/articles/doe-update-public-interest-analysis-enhance-national-security-achieve-clean-energy-goals.
3. Curtis Williams, US Was Top LNG Exporter in 2023 as Hit Record Levels, Reuters (Jan. 3, 2024, 9:28 AM), https://www.reuters.com/business/energy/us-was-top-lng-exporter-2023-hit-record-levels-2024-01-02/#:~:text=HOUSTON%2C%20Jan%202%20(Reuters),exporter%20of%20LNG%20in%202023.
4. Policy Statement on Export Commencement Deadlines in Natural Gas Export Authorizations, Energy.gov (Dec. 11, 2023), https://www.energy.gov/fecm/articles/policy-statement-export-commencement-deadlines-natural-gas-export-authorizations.
5. FACT SHEET: Biden-Harris Administration Announces Temporary Pause on Pending Approvals of Liquefied Natural Gas Exports, The White House (Jan. 26, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/26/fact-sheet-biden-harris-administration-announces-temporary-pause-on-pending-approvals-of-liquefied-natural-gas-exports/.
6. Energy, Climate, and Grid Security Subcommittee Hearing: “Politics Over People: How Biden’s LNG Export Ban Threatens America’s Energy and Economic Security,” House Committee on Energy & Commerce (Feb. 6, 2024, 8:00 AM), https://energycommerce.house.gov/events/energy-climate-and-grid-security-subcommittee-hearing-politics-over-people-how-biden-s-lng-export-ban-threatens-america-s-energy-and-economic-security.
7. Subcommittee Chair Duncan Opening Remarks on President Biden’s LNG Export Ban, House Committee on Energy & Commerce (Feb. 6, 2024), https://energycommerce.house.gov/posts/subcommittee-chair-duncan-opening-remarks-on-president-biden-s-lng-export-ban.
8. Unlocking our Domestic LNG Potential Act of 2024, H.R. 7176, 118th Cong. (2d Sess. 2024), https://pfluger.house.gov/uploadedfiles/hr_7176_lng_pfluger.pdf.
9. Full Committee Hearing to Examine the Administration’s Pause on LNG Export Approvals and the Department of Energy’s Process for Assessing LNH Export Applications, Senate Committee on Energy & Natural Resources (Feb. 8, 2024, 9:30 AM), https://www.energy.senate.gov/hearings/2024/2/full-committee-hearing-to-examine#:~:text=and%20Business%20Meetings
10. Brett W. Johnson et al., Gone Fishing: Will a Group of Fisheries Spell the End of the Chevron Doctrine?, Snell & Wilmer (Jan. 16, 2024), https://www.swlaw.com/publications/legal-alerts/gone-fishing-will-fisheries-spell-end-of-the-chevron-doctrine.
