Power & Pipes

FERC, CFTC, and State Energy Law Developments

On July 25, the Department of Energy (DOE) issued a final rule, effective August 24, to provide expedited authorization of applications to export liquefied natural gas (LNG) to non–Free Trade Agreement (FTA) countries (i.e., those countries with which the United States has not entered into an FTA) using “small-scale” natural gas export facilities. To qualify for expedited treatment, applicants must satisfy two criteria:

  1. The application must propose to export a volume of natural gas that does not exceed 51.75 Bcf/yr
  2. The application will not require DOE to issue an environmental impact statement (EIS) or an environment assessment (EA) pursuant to the National Environmental Policy Act of 1969 (NEPA)

Any non-FTA application that satisfies these two criteria will qualify as a “small-scale natural gas export” and therefore will be deemed to automatically satisfy DOE’s Natural Gas Act (NGA) Section 3 public interest standard. Additionally, DOE will not provide a public notice and comment period for qualifying small-scale natural gas export applications, nor will it apply other procedures typically used during its review of large-scale LNG export applications to non-FTA countries.

Pursuant to Section 3 of the NGA, applications to export natural gas or LNG to FTA countries are automatically deemed to be in the public interest and do not require DOE to conduct a detailed review process. Thus, DOE’s final rule will significantly streamline the review process for qualifying small-scale applications by putting them on equal footing with large-scale and small-scale FTA applications.

In the final rule, DOE agreed that small-scale exports will provide a variety of benefits both to the United States and to importing countries primarily located in the Caribbean, Central America, and South America. For the United States, some of the anticipated benefits include stimulating the natural gas market, generating economic growth, strengthening the global natural gas market, and enhancing US national security interests abroad. Additionally, DOE determined that small-scale exports will not adversely affect the availability of natural gas supplies to domestic consumers.

DOE welcomes suggestions, data, and information on additional deregulatory efforts that it could undertake with respect to its NGA Section 3 authority.