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Office of Fossil Energy of the Department of Energy Issues Notice of Proposed Rulemaking That Will Automatically Authorize Certain Applications To Export Small Volumes of Natural Gas

On Sept. 1, the Office of Fossil Energy of the Department of Energy (DOE/FE) issued a notice inviting public comment on a proposal which, if adopted, will authorize automatically applications to export small volumes of natural gas to non-Free Trade Agreement nations.  82 Fed. Reg. 41,570 (Notice).  As DOE/FE describes its proposal:

[T]he 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 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.

82 Fed. Reg. at 41,572-73.  DOE/FE will not issue notice of nor receive public comment on any such application.

In its Notice, DOE/FE noted the development of a “small-scale export market” consisting chiefly of South American, Central American, and Caribbean nations.  While there is a demand in this market for American-produced natural gas, this demand is not sufficient to support exports from large-scale LNG terminals using conventional LNG tankers.  According to DOE/FE, the participants involved in this market typically view “small-scale” to be exports of less than 1.0 million metric tons per annum.  This computes to the 0.14 Bcf per day chosen by DOE/FE as the cutoff.  In support of its conclusion that these “small-scale” exports are in the public interest and may be automatically authorized, DOE/FE referred to a series of studies that the agency has commissioned since 2011 which show generally that increased exports of natural gas will likely generate economic benefits for the United States (e.g., job creation, enhanced tax revenues, and improved balance of trade) and that domestic supplies will be adequate to meet increased domestic demand and increased exports.  Further, increased exports into this small-scale market will enable electric generation to move from diesel and heavy fuel oil to natural gas with reduced GHG emissions and possible stronger demand for American-origin generating equipment.

Comments on DOE/FE’s proposal are due on Oct. 16.  Note also that DOE/FE’s proposal does not address whether the facilities involved in small-scale LNG projects are within the jurisdiction of the Federal Energy Regulatory Commission (FERC) and require FERC approval, which involves a separate, fact-specific analysis.

©2018 Greenberg Traurig, LLP. All rights reserved.


About this Author

Kenneth Minesinger, Greenberg Traurig Law Firm, Washington DC, Energy and Litigation Attorney

Ken Minesinger is Co-Chair of GT’s Energy & Natural Resources Practice group. Ken represents clients in the development of their oil and gas resources, and on energy regulatory issues. Ken has represented clients in commercial and fiscal negotiations; joint venture negotiations; complex ratemaking and restructuring proceedings; certificate/licensing proceedings and related project development matters; complaint proceedings; and investigations into allegations of market manipulation, the exercise of market power, and alleged violations of agency rules and policy....

Howard Nelson, Greenberg Traurig Law Firm, Washington DC, Energy and Litigation Attorney

Howard L. Nelson has more than 30 years of regulatory and litigation experience, the majority of which has been related to energy matters before the Federal Energy Regulatory Commission (FERC), state public utility commissions and the Court of Appeals. His litigation experience includes representing several major interstate natural gas pipelines in agency hearings involving complex multiparty major rate cases, and in certificate, restructuring, tariff, gas quality, merger and interconnection proceedings. He also advises clients on all aspects of natural gas regulation, including project development, the design of transportation and storage services and rates, negotiating and drafting contracts, strategic planning, and ensuring compliance with regulatory requirements.

Howard has also assisted clients on regulatory authorizations and issues concerning liquefied natural gas facilities, crude oil and petroleum product pipelines and electric matters. Finally, Howard represented customers of both natural gas pipelines and electric utilities and has briefed and argued several cases at the D.C. Circuit and 4th U.S. Circuit Court of Appeals.

Gus Howard, Greenberg Traurig Law Firm, Washington DC, Energy and Litigation Attorney

James "Gus" Howard focuses his practice on federal regulation of the interstate natural gas industry. He is experienced in natural gas pipeline rate and certificate matters under the Natural Gas Act (NGA) before the U.S. Federal Energy Regulatory Commission (FERC) and before the federal courts of appeals on review of orders of the FERC.

While at the firm, Gus has advised clients in matters involving the exportation of natural gas at FERC and at the Office of Fossil Energy of the Department of Energy.  He has assisted in several interstate...