Power & Pipes

FERC, CFTC, and State Energy Law Developments

In response to concerns raised by authorization holders, potential liquefied natural gas (LNG) importers, and companies financing LNG export projects, the US Department of Energy’s Office of Fossil Energy (DOE/FE) issued a policy statement affirming its commitment to the non–free trade agreement (FTA) export authorizations it has granted and any export authorizations it grants in the future.

To date, DOE/FE has issued 29 final authorizations to export LNG to non-FTA countries. In each of the orders granting these authorizations, DOE/FE included a statement that it has the authority under Section 16 of the Natural Gas Act (NGA) to “make, amend, and rescind such [export] orders . . . as it may find necessary or appropriate.”

Commenters have asked DOE/FE to clarify the circumstances under which DOE/FE would exercise its authority to revoke an LNG export authorization. In response, DOE/FE has stated that it cannot identify all of the circumstances in which it would take such action but that it is authorized to exercise its authority to protect the public interest. DOE/FE noted that it has vacated one FTA order but that it was due to prolonged inaction by the authorization holder.

DOE/FE states the following in its policy statement:

DOE understands the far-ranging economic investments and natural gas supply commitments associated with these authorizations over their full term—affecting both U.S. and global interests. DOE emphasizes that it remains committed to the durability and stability of the export authorizations it has granted under the NGA, as well as to supporting the approved export of U.S. natural gas around the world.

To provide additional comfort, DOE/FE added that it does not foresee a scenario where it would rescind one or more non-FTA export authorizations. Although this policy statement does not implement a new policy, it sends a clear message that parties should be confident in the validity of export authorizations for the full term authorized in each order.