[Federal Register Volume 85, Number 28 (Tuesday, February 11, 2020)]
[Proposed Rules]
[Pages 7672-7681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02358]
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DEPARTMENT OF ENERGY
10 CFR Part 590
Extending Natural Gas Export Authorizations to Non-Free Trade
Agreement Countries Through the Year 2050
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FE Docket Nos.
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Sabine Pass Liquefaction, LLC................... [FE Docket No. 10-111-LNG].
Carib Energy (USA), LLC......................... [FE Docket No. 11-141-LNG].
Freeport LNG Expansion, L.P. et al.............. [FE Docket No. 10-161-LNG].
Lake Charles Exports, LLC....................... [FE Docket No. 11-59-LNG].
[[Page 7673]]
Dominion Cove Point LNG, LP..................... [FE Docket No. 11-128-LNG].
Freeport LNG Expansion, L.P. et al.............. [FE Docket No. 11-161-LNG].
Cameron LNG, LLC................................ [FE Docket No. 11-162-LNG].
Southern LNG Company, LLC....................... [FE Docket No. 12-100-LNG].
Gulf LNG Liquefaction Company, LLC.............. [FE Docket No. 12-101-LNG].
Jordan Cove Energy Project, L.P................. [FE Docket No. 12-32-LNG].
CE FLNG, LLC.................................... [FE Docket No. 12-123-LNG].
Golden Pass Products, LLC....................... [FE Docket No. 12-156-LNG].
Lake Charles LNG Export Co...................... [FE Docket No. 13-04-LNG].
MPEH LLC........................................ [FE Docket No. 13-26-LNG].
Cheniere Marketing LLC and Corpus Christi [FE Docket Nos. 13-30-LNG], 13-42 LNG, & 13-121-LNG].
Liquefaction, LLC.
Venture Global Calcasieu Pass................... [FE Docket Nos. 13-69-LNG, 14-88-LNG, & 15-25 LNG].
Eos LNG LLC..................................... [FE Docket No. 13-116-LNG].
Barca LNG LLC................................... [FE Docket No. 13-118-LNG].
Magnolia LNG, LLC............................... [FE Docket No. 13-132-LNG].
Delfin LNG, LLC................................. [FE Docket No. 13-147-LNG].
Emera CNG, LLC.................................. [FE Docket No. 13-157-CNG].
SCT&E LNG, LLC.................................. [FE Docket No. 14-98-LNG].
Pieridae Energy (USA) Ltd....................... [FE Docket No. 14-179-LNG].
American LNG Marketing, LLC..................... [FE Docket No. 14-209-LNG].
Bear Head LNG Corporation and Bear Head LNG [FE Docket No. 15-33-LNG].
(USA).
Floridian Natural Gas Storage Co., LLC.......... [FE Docket No. 15-38-LNG].
G2 LNG LLC...................................... [FE Docket No. 15-45-LNG].
Texas LNG Brownsville LLC....................... [FE Docket No. 15-62-LNG].
Sabine Pass Liquefaction, LLC................... [FE Docket No. 15-63-LNG].
Strom Inc....................................... [FE Docket No. 15-78-LNG].
Cameron LNG, LLC................................ [FE Docket No. 15-90-LNG].
Port Arthur LNG, LLC............................ [FE Docket No. 15-96-LNG].
Cameron LNG, LLC................................ [FE Docket No. 15-167-LNG].
Rio Grande LNG, LLC............................. [FE Docket No. 15-190-LNG].
Air Flow North American Corp.................... [FE Docket No. 15-206-LNG].
Eagle LNG Partners Jacksonville, LLC............ [FE Docket No. 16-15-LNG].
SeaOne Gulfport, LLC............................ [FE Docket No. 16-22-CGL].
Venture Global Plaquemines LNG, LLC............. [FE Docket No. 16-28-LNG].
Carib Energy (USA) LLC,......................... [FE Docket No. 16-98-LNG].
Freeport LNG Expansion, L.P., et al............. [FE Docket No. 16-108-LNG].
Lake Charles LNG Export Co...................... [FE Docket No. 16-109-LNG].
Lake Charles Exports, LLC....................... [FE Docket No. 16-110-LNG].
Driftwood LNG LLC............................... [FE Docket No. 16-144-LNG].
Eagle LNG Partners Jacksonville II, LLC......... [FE Docekt No. 17-79-LNG].
Fourchon LNG, LLC............................... [FE Docket No. 17-105-LNG].
Galveston Bay LNG, LLC.......................... [FE Docket No. 17-167-LNG].
Freeport LNG Expansion, L.P., et al............. [FE Docket No. 18-26-LNG].
Corpus Christi Liquefaction Stage III, LLC...... [FE Docket No. 18-78-LNG].
Mexico Pacific Limited LLC...................... [FE Docket No. 18-70-LNG].
Energ[iacute]a Liquefaction, S. de R.L. de C.V.. [FE Docket No. 18-144-LNG].
Energ[iacute]a Costa Azul, S. de R.L. de C.V.... [FE Docket No. 18-145-LNG].
Annova LNG Common Infrastructure, LLC........... [FE Docket No. 19-34-LNG].
Cheniere Marketing LLC and Corpus Christi [FE Docket No. 19-124-LNG].
Liquefaction, LLC.
Sabine Pass Liquefaction, LLC................... [FE Docket No. 19-125-LNG].
Commonwealth LNG, LLC........................... [FE Docket No. 19-134-LNG].
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AGENCY: Office of Fossil Energy, Department of Energy.
ACTION: Notice of proposed policy statement and request for comments.
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SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy
(DOE) gives notice (Notice) of a proposed policy statement (Proposed
Policy Statement or Proposal). DOE is proposing to extend the standard
20-year term for authorizations to export natural gas from the lower-48
states--including domestically produced liquefied natural gas (LNG),
compressed natural gas, and compressed gas liquid--to countries with
which the United States does not have a free trade agreement (FTA)
requiring national treatment for trade in natural gas, and with which
trade is not prohibited by U.S. law or policy (non-FTA countries).
Under the Proposal, existing non-FTA authorization holders could apply
to extend their export term through December 31, 2050, on a voluntary
opt-in basis; existing applicants could amend their pending non-FTA
application to request an export term through December 31, 2050, on a
voluntary opt-in basis; and DOE would issue all future non-FTA export
authorizations with a standard export term lasting through December 31,
2050, unless a shorter term is requested by the applicant. In this
document, DOE discusses the Proposed Policy Statement and invites
comments on the Proposal. DOE is proposing this policy change under
section 3(a) of the Natural Gas Act (NGA) and DOE's implementing
regulations.
DATES: Comments are to be filed using procedures detailed in the Public
Comment Procedures section no later than 4:30 p.m., Eastern time, March
12, 2020.
[[Page 7674]]
ADDRESSES:
Electronic Filing of Comments Using Online Form: https://fossil.energy.gov/app/docketindex/docket/index/22.
Regular Mail: U.S. Department of Energy (FE-34), Attn: Term
Extension--Proposed Policy Statement, Office of Regulation, Analysis,
and Engagement, Office of Fossil Energy, P.O. Box 44375, Washington, DC
20026-4375.
Hand Delivery or Private Delivery Services (e.g., FedEx, UPS,
etc.): U.S. Department of Energy (FE-34), Attn: Term Extension--
Proposed Policy Statement, Office of Regulation, Analysis, and
Engagement, Office of Fossil Energy, Forrestal Building, Room 3E-042,
1000 Independence Avenue SW, Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT: Amy Sweeney, U.S. Department of Energy
(FE-34), Office of Regulation, Analysis, and Engagement, Office of
Fossil Energy, Forrestal Building, Room 3E-042, 1000 Independence
Avenue SW, Washington, DC 20585; (202) 586-2627;
[email protected]; Cassandra Bernstein or Kari Twaite, U.S.
Department of Energy (GC-76), Office of the Assistant General Counsel
for Electricity and Fossil Energy, Forrestal Building, Room 6D-033,
1000 Independence Ave. SW, Washington, DC 20585; (202) 586-9793 or
(202) 586-6978; [email protected] or
[email protected].
SUPPLEMENTARY INFORMATION:
Acronyms and Abbreviations. Acronyms and abbreviations used in this
document are set forth below for reference.
Bcf/d Billion Cubic Feet per Day
Bcf/yr Billion Cubic Feet per Year
CGL Compressed Gas Liquid
CNG Compressed Natural Gas
DOE U.S. Department of Energy
EIA U.S. Energy Information Administration
FE Office of Fossil Energy, U.S. Department of Energy
FTA Free Trade Agreement
GHG Greenhouse Gas
GWP Global Warming Potential
LCA Life Cycle Analysis
LNG Liquefied Natural Gas
NETL National Energy Technology Laboratory
NEPA National Environmental Policy Act of 1969
NGA Natural Gas Act of 1938
Table of Contents
I. Background
A. DOE Export Authorizations Under Section 3 of the Natural Gas
Act
B. Regulatory Background
1. Public Interest Review for Non-FTA Export Authorizations
2. DOE's Economic Studies Through 2017
3. DOE's Environmental Studies
4. DOE's Standard 20-Year Export Term for Non-FTA Authorizations
C. Judicial Decisions Upholding DOE's Non-FTA Authorizations
D. Recent Regulatory Developments
1. 2018 LNG Export Study
2. 2019 Life Cycle Greenhouse Gas Update
E. Existing Non-FTA Authorizations and Pending Applications
II. Proposed Policy Statement
A. Proposal To Extend Standard Term of Non-FTA Authorizations
1. Basis for Proposal and Effect on Export Volume
2. Comments of Cheniere Energy, Inc. Requesting Term Extension
3. Canadian Export Term for LNG
4. Summary of Proposal
5. Potential Impact on FTA Authorizations and Applications
B. Proposed Implementation Process
III. Invitation To Comment
IV. Public Comment Procedures
V. Administrative Benefits
VI. Approval of the Office of the Secretary
I. Background
A. DOE Export Authorizations Under Section 3 of the Natural Gas Act
DOE is responsible for authorizing exports of domestically produced
natural gas to foreign countries under section 3 of the Natural Gas Act
(NGA), 15 U.S.C. 717b.\1\ In relevant part, section 3(c) of the NGA
applies to applications for exports of natural gas, including LNG,\2\
to countries with which the United States has entered into a free trade
agreement (FTA) requiring national treatment for trade in natural gas
(FTA countries).\3\ Section 3(c) was amended by section 201 of the
Energy Policy Act of 1992 (Pub. L. 102-486) to require that FTA
applications ``shall be deemed to be consistent with the public
interest'' and granted ``without modification or delay.'' \4\
Accordingly, this Proposed Policy Statement does not apply to existing
or future FTA applications and authorizations. As discussed in Section
II.A.5, however, DOE anticipates that, if this Proposal is adopted, FTA
authorization holders likely will request a comparable extension in the
export term of their existing FTA orders.
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\1\ The authority to regulate the imports and exports of natural
gas, including liquefied natural gas, under section 3 of the NGA (15
U.S.C. 717b) has been delegated to the Assistant Secretary for FE in
Redelegation Order No. 00-002.04G issued on June 4, 2019.
\2\ In referring to natural gas in this Proposal, DOE refers
primarily, but not exclusively, to LNG. To date, two non-FTA
proceedings have involved other types of natural gas: Compressed
natural gas (CNG) in FE Docket No. 13-157-CNG, and compressed gas
liquid (CGL) in FE Docket No. 16-22-CGL. See 15 U.S.C. 717a(5)
(definition of natural gas); 10 CFR 590.102(i) (same).
\3\ 15 U.S.C. 717b(c). The United States currently has FTAs
requiring national treatment for trade in natural gas with
Australia, Bahrain, Canada, Chile, Colombia, Dominican Republic, El
Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua,
Oman, Panama, Peru, Republic of Korea, and Singapore. FTAs with
Israel and Costa Rica do not require national treatment for trade in
natural gas.
\4\ 15 U.S.C. 717b(c).
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For applications to export natural gas to non-FTA countries,
section 3(a) of the NGA sets forth the following standard of review:
[N]o person shall export any natural gas from the United States
to a foreign country or import any natural gas from a foreign
country without first having secured an order of the [Secretary of
Energy \5\] authorizing it to do so. The [Secretary] shall issue
such order upon application, unless after opportunity for hearing,
[he] finds that the proposed exportation or importation will not be
consistent with the public interest. The [Secretary] may by [the
Secretary's] order grant such application, in whole or part, with
such modification and upon such terms and conditions as the
[Secretary] may find necessary or appropriate.\6\
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\5\ The Secretary's authority was established by the Department
of Energy Organization Act, 42 U.S.C. 7172, which transferred
jurisdiction over imports and export authorizations from the Federal
Power Commission to the Secretary of Energy.
\6\ 15 U.S.C. 717b(a) (emphasis added).
DOE, as affirmed by the D.C. Circuit, has consistently interpreted
NGA section 3(a) as creating a rebuttable presumption that a proposed
export of natural gas is in the public interest.\7\ Accordingly, DOE
will conduct an informal adjudication and grant a non-FTA application
unless DOE finds that the proposed exportation will not be consistent
with the public interest.\8\
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\7\ See Sierra Club v. U.S. Dep't of Energy, 867 F.3d 189, 203
(D.C. Cir. 2017) (``We have construed [NGA section 3(a)] as
containing a `general presumption favoring [export]
authorization.''') (quoting W. Va. Pub. Serv. Comm'n v. U.S. Dep't
of Energy, 681 F.2d 847, 856 (D.C. Cir. 1982)).
\8\ See id. (``there must be `an affirmative showing of
inconsistency with the public interest' to deny the application''
under NGA section 3(a)) (quoting Panhandle Producers & Royalty
Owners Ass'n v. Econ. Regulatory Admin., 822 F.2d 1105, 1111 (D.C.
Cir. 1987)). As of August 24, 2018, qualifying small-scale exports
of natural gas to non-FTA countries are deemed to be consistent with
the public interest under NGA section 3(a). See 10 CFR 590.102(p);
10 CFR 590.208(a); see also U.S. Dep't of Energy, Small-Scale
Natural Gas Exports; Final Rule, 83 FR 35106 (July 25, 2018).
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Before reaching a final decision, DOE must also comply with the
National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et
seq. DOE's environmental review process under NEPA may result in the
preparation or adoption of an environmental impact statement (EIS) or
environmental assessment (EA) describing the potential environmental
impacts associated with the application.\9\ In other cases, DOE
[[Page 7675]]
may determine that an application is eligible for a categorical
exclusion from the preparation or adoption of an EIS or EA, pursuant to
DOE's regulations implementing NEPA.
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\9\ Typically, the Federal agency responsible for permitting the
export facility--either the Federal Energy Regulatory Commission or
the U.S. Department of Transportation (DOT) Maritime Administration
(MARAD)--serves as the lead agency in the NEPA review process, and
DOE serves as a cooperating agency. Where no other Federal agency is
responsible for permitting the export facility, DOE serves as the
lead agency in the NEPA review process.
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B. Regulatory Background
1. Public Interest Review for Non-FTA Export Authorizations
Although NGA section 3(a) establishes a broad public interest
standard and a presumption favoring export authorizations, the statute
does not define ``public interest'' or identify criteria that must be
considered. In prior decisions, DOE has identified a range of factors
that it evaluates when reviewing an application to export LNG to non-
FTA countries. These factors include economic impacts, international
impacts, security of natural gas supply, and environmental impacts,
among others. To conduct this review, DOE looks to record evidence
developed in the application proceeding.
DOE's prior decisions have also looked to certain principles
established in its 1984 Policy Guidelines.\10\ The goals of the 1984
Policy Guidelines are to minimize Federal control and involvement in
energy markets and to promote a balanced and mixed energy resource
system. Specifically, the 1984 Policy Guidelines state that ``[t]he
market, not government, should determine the price and other contract
terms of imported [or exported] gas,'' and that DOE's ``primary
responsibility in authorizing imports [or exports] should be to
evaluate the need for the [natural] gas and whether the import [or
export] arrangement will provide the gas on a competitively priced
basis for the duration of the contract while minimizing regulatory
impediments to a freely operating market.'' \11\ Although the Policy
Guidelines are nominally applicable to natural gas import cases, DOE
held in DOE/FE Order No. 1473 that the 1984 Policy Guidelines should be
applied to natural gas export applications.\12\
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\10\ New Policy Guidelines and Delegations Order Relating to
Regulation of Imported Natural Gas, 49 FR 6684 (Feb. 22, 1984)
[hereinafter 1984 Policy Guidelines].
\11\ Id. at 49 FR 6685.
\12\ Phillips Alaska Natural Gas Corp., et al., DOE/FE Order No.
1473, FE Docket No. 96-99-LNG, Order Extending Authorization to
Export Liquefied Natural Gas from Alaska (Apr. 2, 1999), at 14
(citing Yukon Pacific Corp., DOE/FE Order No. 350, Order Granting
Authorization to Export Liquefied Natural Gas from Alaska, 1 FE ]
70,259, 71,128 (1989)).
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In Order No. 1473, DOE stated that it was guided by DOE Delegation
Order No. 0204-111. That delegation order directed the regulation of
exports of natural gas ``based on a consideration of the domestic need
for the gas to be exported and such other matters as the Administrator
[of the Economic Regulatory Administration] finds in the circumstances
of a particular case to be appropriate.'' \13\
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\13\ DOE Delegation Order No. 0204-111 (Feb. 22, 1984), at 1 (]
(b)); see also 1984 Policy Guidelines, 49 FR 6690 (incorporating DOE
Delegation Order No. 0204-111). In February 1989, the Assistant
Secretary for Fossil Energy assumed the delegated responsibilities
of the Administrator of the Economic Regulatory Administration. See
Applications for Authorization to Construct, Operate, or Modify
Facilities Used for the Export or Import of Natural Gas, 62 FR
30435, 30437 n.15 (June 4, 1997) (citing DOE Delegation Order No.
0204-127, 54 FR 11436 (Mar. 20, 1989)).
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Although DOE Delegation Order No. 0204-111 is no longer in
effect,\14\ DOE's review of export applications has continued to focus
on: (i) The domestic need for the natural gas proposed to be exported,
(ii) whether the proposed exports pose a threat to the security of
domestic natural gas supplies, (iii) whether the arrangement is
consistent with DOE's policy of promoting market competition, and (iv)
any other factors bearing on the public interest described herein.
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\14\ DOE Delegation Order No. 0204-111 was later rescinded by
DOE Delegation Order No. 00-002.00 (] 2) (Dec. 6, 2001), and DOE
Redelegation Order No. 00-002.04 (] 2) (Jan. 8, 2002).
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2. DOE's Economic Studies Through 2017
Between 2011 and 2017, DOE commissioned four studies to examine the
effects of U.S. LNG exports on the U.S. economy and energy markets.\15\
The first study, Effect of Increased Natural Gas Exports on Domestic
Energy Markets, was performed by the U.S. Energy Information
Administration (EIA) and published in January 2012 (EIA Study).\16\ The
second study, Macroeconomic Impacts of LNG Exports from the United
States, was performed by NERA Economic Consulting (NERA) and published
in December 2012 (NERA Study and, together with the EIA Study, the 2012
LNG Export Study).\17\ The third study, Effect of Increased Levels of
Liquefied Natural Gas Exports on U.S. Energy Markets, was performed by
EIA and published in October 2014 (2014 LNG Export Study).\18\ The
fourth study, The Macroeconomic Impact of Increasing U.S. LNG Exports,
was performed jointly by the Center for Energy Studies at Rice
University's Baker Institute and Oxford Economics and published in
October 2015 (2015 LNG Export Study).\19\ As relevant here, the 2015
LNG Export Study included a case examining export volumes up to 28 Bcf/
d of natural gas, and the analysis covered through the year 2040.
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\15\ Because there is no natural gas pipeline interconnection
between Alaska and the lower 48 states, DOE generally views those
LNG export markets as distinct.
\16\ See 2012 LNG Export Study, 77 FR 73627 (Dec. 11, 2012),
available at: http://energy.gov/sites/prod/files/2013/04/f0/fr_notice_two_part_study.pdf (notice of availability of the 2012 LNG
Export Study).
\17\ See id.
\18\ U.S. Energy Info. Admin., Effect of Increased Levels of
Liquefied Natural Gas Exports on U.S. Energy Markets (Oct. 2014),
available at: https://www.eia.gov/analysis/requests/fe/pdf/lng.pdf.
\19\ Center for Energy Studies at Rice University Baker
Institute and Oxford Economics, The Macroeconomic Impact of
Increasing U.S. LNG Exports (Oct. 29, 2015), available at: http://energy.gov/sites/prod/files/2015/12/f27/20151113_macro_impact_of_lng_exports_0.pdf; see also U.S. Dep't of
Energy, Macroeconomic Impacts of LNG Exports Studies; Notice of
Availability and Request for Comments, 80 F R 81300 (Dec. 29, 2015)
(notice of availability of the 2014 and 2015 LNG Export Studies).
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DOE relied on these studies, and the public comments received on
each study, to better inform its public interest review under NGA
section 3(a).\20\
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\20\ For more information about the 2012, 2014, and 2015 LNG
Export Studies, see U.S. Dep't of Energy, Study on Macroeconomic
Outcomes of LNG Exports; Response to Comments Received on Study, 83
FR 67251 (Dec. 28, 2018) [hereinafter 2018 Study Response to
Comments].
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3. DOE's Environmental Studies
On June 4, 2014, DOE issued two notices in the Federal Register
proposing to evaluate different environmental aspects of the LNG
production and export chain. First, DOE announced that it had conducted
a review of existing literature on potential environmental issues
associated with unconventional natural gas production in the lower-48
states. The purpose of this review was to provide additional
information to the public concerning the potential environmental
impacts of unconventional natural gas exploration and production
activities, including hydraulic fracturing. DOE published its draft
report for public review and comment, entitled Draft Addendum to
Environmental Review Documents Concerning Exports of Natural Gas from
the United States (Draft Addendum).\21\ DOE received public comments on
the Draft Addendum, and on August 15, 2014, issued the final Addendum
with
[[Page 7676]]
its response to the public comments contained in Appendix B.\22\
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\21\ Dep't of Energy, Draft Addendum to Environmental Review
Documents Concerning Exports of Natural Gas From the United States,
79 FR 32258 (June 4, 2014). DOE announced the availability of the
Draft Addendum on its website on May 29, 2014.
\22\ Dep't of Energy, Addendum to Environmental Review Documents
Concerning Exports of Natural Gas From the United States, 79 FR
48132 (Aug. 15, 2014) [hereinafter Addendum]; see also http://energy.gov/fe/addendum-environmental-review-documents-concerning-exports-natural-gas-united-states.
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Second, DOE commissioned the National Energy Technology Laboratory
(NETL), a DOE applied research laboratory, to conduct an analysis
calculating the life cycle greenhouse gas (GHG) emissions for LNG
exported from the United States. The purpose of this analysis was to
determine: (i) How domestically-produced LNG exported from the United
States compares with regional coal (or other LNG sources) for electric
power generation in Europe and Asia from a life cycle GHG perspective,
and (ii) how those results compare with natural gas sourced from Russia
and delivered to the same markets via pipeline. DOE published the
report entitled, Life Cycle Greenhouse Gas Perspective on Exporting
Liquefied Natural Gas from the United States (LCA GHG Report).\23\ DOE
also received public comments on the LCA GHG Report and responded to
those comments in prior orders.\24\
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\23\ Dep't of Energy, Life Cycle Greenhouse Gas Perspective on
Exporting Liquefied Natural Gas From the United States, 79 FR 32260
(June 4, 2014) [hereinafter LCA GHG Report]. DOE announced the
availability of the LCA GHG Report on its website on May 29, 2014.
\24\ See, e.g., Magnolia LNG, LLC, DOE/FE Order No. 3909, FE
Docket No. 13-132-LNG, Opinion and Order Granting Long-Term, Multi-
Contract Authorization to Export Liquefied Natural Gas by Vessel
From the Proposed Magnolia LNG Terminal to be Constructed in Lake
Charles, Louisiana, to Non-Free Trade Agreement Nations, at 95-121
(Nov. 30, 2016) (description of LCA GHG Report and response to
comments).
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DOE has made the Addendum and the LCA GHG Report, as well as the
public comments received on each study, part of the record of each non-
FTA proceeding since 2014.
4. DOE's Standard 20-Year Export Term for Non-FTA Authorizations
Both the NGA and DOE's regulations provide DOE with broad authority
to attach conditions to non-FTA export authorizations. NGA section 3(a)
states that DOE may grant an application for a non-FTA export
authorization ``upon such terms and conditions as the [Secretary] may
find necessary or appropriate.'' \25\ Similarly, under 10 CFR 590.404,
DOE may ``issue a final opinion and order and attach such conditions
thereto as may be required by the public interest after completion and
review of the final record.'' \26\ However, neither NGA section 3(a)
nor DOE's regulations prescribe a specific time period for a non-FTA
authorization. For this reason, DOE has determined that it has
discretion under 10 CFR 590.404 to impose a suitable term for non-FTA
authorizations as appropriate, in light of the evidence in each
proceeding.
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\25\ 15 U.S.C. 717b(a).
\26\ 10 CFR 590.404.
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In 2011, DOE issued its first conditional long-term export
authorization involving domestically produced LNG from the lower-48
states to Sabine Pass Liquefaction, LLC (Sabine Pass) in DOE/FE Order
No. 2961.\27\ In its application, Sabine Pass had requested an export
term of 20 years. After reviewing the record evidence, DOE determined
that a term of 20 years was consistent with the public interest, and
DOE granted the conditional order for the requested 20-year term.\28\
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\27\ See Sabine Pass Liquefaction, LLC, DOE/FE Order No. 2961,
FE Docket No. 10-111-LNG, Opinion and Order Conditionally Granting
Long-Term Authorization to Export Liquefied Natural Gas from Sabine
Pass LNG Terminal to Non-Free Trade Agreement Nations, at 2, 20
n.26, 42 (May 20, 2011) (Ordering Para. B). DOE later granted Sabine
Pass's final order with a 20-year term (see DOE/FE Order No. 2961-A,
issued on August 7, 2012).
\28\ See Sabine Pass Liquefaction, LLC, DOE/FE Order No. 2961,
at 2.
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In 2013, DOE continued to issue long-term non-FTA authorizations
for a standard 20-year term. DOE chose a 20-year term for two reasons.
First, the economic analysis then-supporting DOE's authorizations--the
2012 LNG Export Study--did not extend past 20 years at the time the
authorizations were issued. In DOE/FE Order No. 3282, for example,
Freeport LNG Expansion, L.P., et al. (Freeport) had requested a 25-year
export term for its non-FTA authorization. DOE declined to authorize a
25-year export term, and instead approved a 20-year term. DOE reasoned
that, ``because the NERA study contains projections over a 20-year
period beginning from the date of first export, . . . caution
recommends limiting this conditional authorization to no longer than a
20-year term beginning from the date of first export.'' \29\
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\29\ See, e.g., Freeport LNG Expansion, L.P., et al., DOE/FE
Order No. 3282, FE Docket No. 10-161-LNG, Order Conditionally
Granting Long-Term, Multi-Contract Authorization to Export Liquefied
Natural Gas by Vessel from the Freeport LNG Terminal on Quintana
Island, Texas, to Non-Free Trade Agreement Nations, at 114 (May 17,
2013) (Para. A, Term of the Authorization).
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Second, in the same Freeport order, DOE recognized that ``LNG
export facilities are capital intensive and that, to obtain financing
for such projects, there must be a reasonable expectation that the
authorization will continue for a term sufficient to support
repayment.'' \30\ DOE found that a 20-year term ``is likely sufficient
to achieve this result.'' \31\ For these reasons, DOE granted
Freeport's conditional non-FTA order--and, later, its final non-FTA
order--for a 20-year term, instead of the requested 25-year term.\32\
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\30\ Id. at 114-15.
\31\ Id. at 115.
\32\ See Freeport LNG Expansion, L.P., et al., DOE/FE Order No.
3282-C, FE Docket No. 10-161-LNG, Final Opinion and Order Granting
Long-Term, Multi-Contract Authorization to Export Liquefied Natural
Gas by Vessel from the Freeport LNG Terminal on Quintana Island,
Texas, to Non-Free Trade Agreement Nations, at 89 (Nov. 14, 2014)
(Para. A, Term of the Authorization).
---------------------------------------------------------------------------
DOE has continued to apply a policy of authorizing a 20-year export
term for every long-term non-FTA order issued to date.\33\ For each
final non-FTA order, the 20-year export term commences when the
authorization holder begins commercial export of LNG from its
facility.\34\
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\33\ The only exception involves a conditional authorization to
export LNG to non-FTA countries from Alaska. DOE conditionally
granted the applicant's request for a 30-year export term, citing
unique aspects of that Alaska-based project. DOE has not yet issued
a final order in that proceeding. See Alaska LNG Project, LLC, DOE/
FE Order No. 3643, FE Docket No. 14-96-LNG, Order Conditionally
Granting Long-Term, Multi-Contract Authorization to Export Liquefied
Natural Gas by Vessel from the Proposed Alaska LNG Terminal in
Nikiski, Alaska, to Non-Free Trade Agreement Nations, at 35 (May 28,
2015).
\34\ DOE also allows: (i) A term for commercial export
operations to commence--typically seven years--set from the date the
order is issued; and (ii) a three-year ``make-up period'' following
the end of the 20-year export term, during which the authorization
holder may continue to export any ``make-up volume'' that it was
unable to export during the 20-year export term. These provisions
are not directly at issue in this Proposal.
---------------------------------------------------------------------------
C. Judicial Decisions Upholding DOE's Non-FTA Authorizations
Beginning in 2015, Sierra Club petitioned the U.S. Court of Appeals
for the District of Columbia Circuit (D.C. Circuit or the Court) for
review of five long-term LNG export authorizations issued by DOE under
the standard of review described above. Sierra Club challenged DOE's
approval of LNG exports to non-FTA countries from projects proposed or
operated by the following authorization holders: Freeport; Dominion
Energy Cove Point LNG, LP (formerly Dominion Cove Point LNG, LP);
Sabine Pass Liquefaction, LLC; and Cheniere Marketing, LLC, et al. The
D.C. Circuit subsequently denied four of the five petitions for review:
one in a published decision issued on August 15, 2017 (Sierra Club
I),\35\ and
[[Page 7677]]
three in a consolidated, unpublished opinion issued on November 1, 2017
(Sierra Club II).\36\ Sierra Club subsequently withdrew its fifth and
remaining petition for review.\37\
---------------------------------------------------------------------------
\35\ Sierra Club vs. U.S. Dep't of Energy, 867 F.3d 189 (D.C.
Cir. 2017) (denying petition of review of the LNG export
authorization issued to Freeport LNG Expansion, L.P., et al.).
\36\ Sierra Club v. U.S. Dep't of Energy, Nos. 16-1186, 16-1252,
16-1253, 703 Fed. Appx. 1 (D.C. Cir. Nov. 1, 2017) (denying
petitions of review of the LNG export authorization issued to
Dominion Cove Point LNG, LP; Sabine Pass Liquefaction, LLC; and
Cheniere Marketing, LLC, et al., respectively).
\37\ See Sierra Club v. U.S. Dep't of Energy, No. 16-1426, Per
Curiam Order (D.C. Cir. Jan. 30, 2018) (granting Sierra Club's
unopposed motion for voluntarily dismissal).
---------------------------------------------------------------------------
In Sierra Club I, the D.C. Circuit concluded that DOE had complied
with both NGA section 3(a) and NEPA in issuing the challenged non-FTA
authorization. Freeport had applied to DOE for authorization to export
LNG to non-FTA countries from the Freeport Terminal located on Quintana
Island, Texas. DOE granted the application in 2014 in a volume
equivalent to 0.4 Bcf/d of natural gas, finding that Freeport's
proposed exports were in the public interest under NGA section 3(a).
DOE also considered and disclosed the potential environmental impacts
of its decision under NEPA. Sierra Club petitioned for review of the
Freeport authorization, arguing that DOE fell short of its obligations
under both the NGA and NEPA. The D.C. Circuit rejected Sierra Club's
arguments in a unanimous decision, holding that, ``Sierra Club has
given us no reason to question the Department's judgment that the
[Freeport] application is not inconsistent with the public interest.''
\38\
---------------------------------------------------------------------------
\38\ Sierra Club I, 867 F.3d at 203.
---------------------------------------------------------------------------
In the consolidated opinion in Sierra Club II issued on November 1,
2017, the D.C. Circuit ruled that ``[t]he court's decision in [Sierra
Club I] largely governs the resolution of the [three] instant cases.''
\39\ Upon its review of the remaining ``narrow issues'' in those cases,
the Court again rejected Sierra Club's arguments under the NGA and
NEPA, and upheld DOE's actions in issuing the non-FTA authorizations in
those proceedings.\40\
---------------------------------------------------------------------------
\39\ Sierra Club, 703 Fed. Appx. 1 at *2.
\40\ Id.
---------------------------------------------------------------------------
The D.C. Circuit's decisions in Sierra Club I and II continue to
guide DOE's review of applications to export LNG to non-FTA countries.
D. Recent Regulatory Developments
1. 2018 LNG Export Study
In 2017, DOE commissioned NERA to conduct a new economic study, now
referred to as the 2018 LNG Export Study.\41\ As with its prior
economic studies, DOE commissioned the 2018 LNG Export Study to inform
its determination of the public interest in pending and future non-FTA
application proceedings. DOE published the 2018 LNG Export Study on its
website on June 7, 2018,\42\ and concurrently provided notice of the
availability of the Study.\43\
---------------------------------------------------------------------------
\41\ See U.S. Dep't of Energy, Study on Macroeconomic Outcomes
of LNG Exports; Notice of Availability of the 2018 LNG Export Study
and Request for Comments, 83 FR 27314 (June 12, 2018) [hereinafter
2018 Study Notice].
\42\ See NERA Economic Consulting, Macroeconomic Outcomes of
Market Determined Levels of U.S. LNG Exports (June 7, 2018),
available at: https://www.energy.gov/sites/prod/files/2018/06/f52/Macroeconomic%20LNG%20Export%20Study%202018.pdf [hereinafter 2018
LNG Export Study or 2018 Study].
\43\ See 2018 Study Notice.
---------------------------------------------------------------------------
Like DOE's prior economic studies, the 2018 Study analyzed the
outcomes of different LNG export levels on the U.S. natural gas markets
and the U.S. economy as a whole. Additionally, for the first time in a
DOE-commissioned macroeconomic study, the 2018 LNG Export Study
assessed the likelihood of different levels of ``unconstrained'' LNG
exports, defined as market-determined levels of exports. The Study
examined the period from the year 2020 through 2050, and was based, in
part, on the projections in EIA's Annual Energy Outlook 2017 \44\
through 2050.\45\
---------------------------------------------------------------------------
\44\ U.S. Energy Info. Admin., Annual Energy Outlook 2017 (with
projections to 2050) (Jan. 5, 2017), available at: https://www.eia.gov/outlooks/aeo/pdf/0383(2017).pdf.
\45\ See 2018 Study Notice, 83 FR 27316.
---------------------------------------------------------------------------
DOE received 19 comments on the 2018 LNG Export Study. DOE
summarized and responded to these comments in the Response to Comments
document, published on December 28, 2018.\46\
---------------------------------------------------------------------------
\46\ See 2018 Study Response to Comments, 83 FR 67260-67272.
---------------------------------------------------------------------------
Based upon the record, DOE determined that the 2018 Study provides
substantial support for non-FTA applications within the export volumes
considered by the 2018 Study--ranging from 0.1 to 52.8 Bcf/d of natural
gas.\47\ The principal conclusion of the 2018 LNG Export Study is that
the United States will experience net economic benefits from the export
of domestically produced LNG through the 30-year study period, i.e.,
from 2020 through 2050.\48\
---------------------------------------------------------------------------
\47\ See id.
\48\ See id. In its Response to Comments document, DOE also
highlighted the key findings of the Study. See id. 83 FR 67273.
---------------------------------------------------------------------------
Overall, DOE found that the 2018 LNG Export Study supports the
proposition that exports of LNG from the lower-48 states, in volumes up
to and including 52.8 Bcf/d of natural gas, will not be inconsistent
with the public interest. DOE also stated that it would consider each
application to export LNG as required under the NGA and NEPA based on
the administrative record compiled in each individual proceeding.\49\
---------------------------------------------------------------------------
\49\ See id.
---------------------------------------------------------------------------
2. 2019 Life Cycle Greenhouse Gas Update
In 2018, DOE commissioned NETL to conduct an update to the 2014 LCA
GHG Report, entitled Life Cycle Greenhouse Gas Perspective on Exporting
Liquefied Natural Gas From the United States: 2019 Update (LCA GHG
Update).\50\ As with the 2014 Report, the LCA GHG Update compared life
cycle GHG emissions of exports of domestically produced LNG to Europe
and Asia, compared with alternative fuel sources (such as regional coal
and other imported natural gas) for electric power generation in the
destination countries. Although core aspects of the analysis--such as
the scenarios investigated--were the same as the 2014 Report, the 2019
LCA GHG Update contained the following three changes:
---------------------------------------------------------------------------
\50\ Nat'l Energy Technology Laboratory, Life Cycle Greenhouse
Gas Perspective on Exporting Liquefied Natural Gas from the United
States: 2019 Update (DOE/NETL 2019/2041) (Sept. 12, 2019), available
at: https://www.energy.gov/sites/prod/files/2019/09/f66/2019%20NETL%20LCA-GHG%20Report.pdf. Although the LCA GHG Update is
dated September 12, 2019, DOE announced the availability of the LCA
GHG Update on its website and in the Federal Register on September
19, 2019.
---------------------------------------------------------------------------
Incorporated NETL's most recent characterization of
upstream natural gas production, set forth in NETL's April 2019 report
entitled, Life Cycle Analysis of Natural Gas Extraction and Power
Generation (April 2019 LCA of Natural Gas Extraction and Power
Generation); \51\
---------------------------------------------------------------------------
\51\ Nat'l Energy Technology Laboratory, Life Cycle Analysis of
Natural Gas Extraction and Power Generation (DOE/NETL-2019/2039)
(Apr. 19, 2019), available at: https://www.netl.doe.gov/energy-analysis/details?id=3198.
---------------------------------------------------------------------------
Updated the unit processes for liquefaction, ocean
transport, and regasification characterization using engineering-based
models and publicly-available data informed and reviewed by existing
LNG export facilities, where possible; and
Updated the 100-year global warming potential (GWP) for
methane (CH4) to reflect the current Intergovernmental Panel
on Climate Change's Fifth Assessment Report.\52\
---------------------------------------------------------------------------
\52\ See U.S. Dep't of Energy, Life Cycle Greenhouse Gas
Perspective on Exporting Liquefied Natural Gas From the United
States; Notice of Availability of Report Entitled Life Cycle
Greenhouse Gas Perspective on Exporting Liquefied Natural Gas From
the United States: 2019 Update and Request for Comments, 84 FR
49278, 49279 (Sept. 19, 2019).
---------------------------------------------------------------------------
[[Page 7678]]
In all other respects, the LCA GHG Update was unchanged from the 2014
Report.
On September 19, 2019, DOE published notice of availability (NOA)
of the LCA GHG Update and a request for comments.\53\ DOE received
seven comments in response to the NOA. In a Response to Comments
document that was effective on December 19, 2019, and published in the
Federal Register on January 2, 2020, DOE responded to the public
comments and summarized its conclusions drawn from the LCA GHG
Update.\54\
---------------------------------------------------------------------------
\53\ See id.
\54\ See U.S. Dep't of Energy, Life Cycle Greenhouse Gas
Perspective on Exporting Liquefied Natural Gas From the United
States: 2019 Update--Response to Comments, 85 FR 72 (Jan. 2, 2020).
---------------------------------------------------------------------------
As DOE explained, the analysis in the LCA GHG Update was based on
the most current available science, methodology, and data from the U.S.
natural gas system to assess the GHGs associated with exports of U.S.
LNG. The Update demonstrated that the conclusions of the 2014 LCA GHG
Report have not changed. Specifically, the Update concluded that the
use of U.S. LNG exports for power production in European and Asian
markets will not increase GHG emissions from a life cycle perspective,
when compared to regional coal extraction and consumption for power
production.\55\
---------------------------------------------------------------------------
\55\ See id. 85 FR 78, 85.
---------------------------------------------------------------------------
The LCA GHG Update estimated the life cycle GHG emissions of U.S.
LNG exports to Europe and Asia, compared with certain other fuels used
to produce electric power in those importing countries. While
acknowledging uncertainty, the LCA GHG Update showed that, to the
extent U.S. LNG exports are preferred over coal in LNG-importing
nations, U.S. LNG exports are likely to reduce global GHG emissions on
per unit of energy consumed basis for power production. Further, to the
extent U.S. LNG exports are preferred over other forms of imported
natural gas, they are likely to have only a small impact on global GHG
emissions.\56\
---------------------------------------------------------------------------
\56\ See id. 85 FR 85.
---------------------------------------------------------------------------
The conclusions of the LCA GHG Update, combined with the
observation that many LNG-importing nations rely heavily on fossil
fuels for electric generation, suggest that exports of U.S. LNG may
decrease global GHG emissions, although there is substantial
uncertainty on this point, as indicated above.\57\ Further, based on
the evidence, DOE saw no reason to conclude that U.S. LNG exports will
increase global GHG emissions in a material or predictable way.\58\
---------------------------------------------------------------------------
\57\ See id. 85 FR 86.
\58\ See id.
---------------------------------------------------------------------------
In sum, DOE found that the LCA GHG Update supports the proposition
that exports of LNG from the lower-48 states will not be inconsistent
with the public interest. DOE stated it will evaluate each pending and
future non-FTA application as required under the NGA and NEPA, based on
the administrative record compiled in each individual proceeding.\59\
---------------------------------------------------------------------------
\59\ See id.
---------------------------------------------------------------------------
E. Existing Non-FTA Authorizations and Pending Applications
To date, DOE has issued 38 final long-term authorizations to export
domestically produced (or U.S.) LNG or compressed natural gas to non-
FTA countries.\60\ The cumulative volume of approved non-FTA exports
under these authorizations is 38.06 billion cubic feet per day (Bcf/d)
of natural gas, or 13.9 trillion cubic feet per year.\61\ As noted
above, each of these final non-FTA orders authorize an export term of
20 years.
---------------------------------------------------------------------------
\60\ See Venture Global Plaquemines LNG, LLC, DOE/FE Order No.
4446, FE Docket No. 16-28-LNG, Opinion and Order Granting Long-Term
Authorization to Export Liquefied Natural Gas to Non-Free Trade
Agreement Nations, at 43 (Oct. 15, 2019).
\61\ See id.
---------------------------------------------------------------------------
Additionally, 18 long-term non-FTA applications requesting to
export domestically produced LNG from the lower-48 states are currently
pending before DOE. These applications represent a cumulative volume of
24.5 Bcf/d of natural gas, or 8.94 trillion cubic feet per year.\62\
---------------------------------------------------------------------------
\62\ U.S. Dep't of Energy, Summary of LNG Export Applications as
of Jan. 8, 2020, available at: https://www.energy.gov/fe/downloads/summary-lng-export-applications-lower-48-states.
---------------------------------------------------------------------------
To date, DOE also has authorized exports to FTA countries in a
volume of 56.24 Bcf/d of natural gas. The volumes authorized for export
to FTA and non-FTA countries, however, are not additive to one another.
Rather, each order grants authority to export the entire volume of a
facility to FTA or non-FTA countries, respectively, to provide the
authorization holder with maximal flexibility in determining its export
destinations.\63\ According to EIA estimates, U.S. domestic dry natural
gas production for the year 2019 averaged a rate of 92.03 Bcf/d, well
in excess of current long-term FTA and non-FTA authorizations (in non-
additive volumes of 56.24 Bcf/d and 38.06 Bcf/d, respectively).\64\
---------------------------------------------------------------------------
\63\ See, e.g., Venture Global Plaquemines LNG, LLC, DOE/FE
Order No. 4446, at 53 (Ordering Para. I) (as a condition of the
order, ``Plaquemines LNG may not treat the FTA and non-FTA export
volumes as additive to one another.'')
\64\ U.S. Energy Info. Admin., ``Short-Term Energy Outlook''
(Jan. 14, 2020), available at: https://www.eia.gov/outlooks/steo/data/browser/#/?v=15&f=A&s=0&maptype=0&ctype=linechart (Table 5a,
U.S. Natural Gas Supply, Consumption, and Inventories, ``Total Dry
Gas Production'').
---------------------------------------------------------------------------
Finally, DOE notes that the amount of U.S. LNG export capacity that
is currently operating or under construction totals 15.54 Bcf/d of
natural gas across eight large-scale export projects in the lower-48
states.\65\
---------------------------------------------------------------------------
\65\ U.S. Energy Info. Admin., U.S. Liquefaction Capacity (Jan.
30, 2020), available at: https://www.eia.gov/naturalgas/U.S.liquefactioncapacity.xlsx (total of 15.54 Bcf/d calculated by
adding Column N in ``Existing & Under Construction'' worksheet).
---------------------------------------------------------------------------
II. Proposed Policy Statement
A. Proposal To Extend Standard Term of Non-FTA Authorizations
1. Basis for Proposal and Effect on Export Volume
Recently, authorization holders have indicated that a 30-year
export term would better match the operational life of their physical
asset--the LNG export facility--allowing them more security in
financing their facility and maximizing their ability to contract for
exports. LNG export terminals are typically designed for a service life
of 30 to 50 years.\66\ Although DOE has limited its non-FTA export
authorizations to a 20-year export term based on the projections in the
2012, 2014, and 2015 LNG Export Studies, that limitation is no longer
required based on the findings of the 2018 LNG Export Study that
included analysis on an expanded time period. Because the 2018 LNG
Export Study considered unconstrained (or market-determined) levels of
LNG exports and included analysis through the year 2050, the 2018 Study
supports export terms lasting through December 31, 2050.\67\
---------------------------------------------------------------------------
\66\ See, e.g., Texas LNG Brownsville LLC, Order Granting
Authorization Under Section 3 of the Natural Gas Act, 169 FERC ]
61,130, at ] 6 (Nov. 22, 2019) (stating that the minimum expected
operational life of the LNG terminal is 25-30 years); Federal Energy
Regulatory Comm'n, Gulf LNG Liquefaction Project Final Environmental
Impact Statement, Docket No. CP15-521-000, at 4-197 (Apr. 17, 2019),
available at: https://www.ferc.gov/industries/gas/enviro/eis/2019/04-17-19-FEIS/FEIS.pdf (the expected physical operational service
life of the LNG terminal is 50 years); International Gas Union, 2019
World LNG Report, at 35 (Apr. 2, 2019) (discussing LNG facilities in
operation for ``35 years or longer'').
\67\ See supra at Sec. I.D.1.
---------------------------------------------------------------------------
A proposed change in export terms through the year 2050 would not
alter the maximum daily rate of export currently approved under each
existing non-FTA authorization. The maximum daily rate of export, set
in billion cubic
[[Page 7679]]
feet per day (Bcf/d), is already based on each facility's maximum
approved liquefaction production capacity as set by the agency
approving the siting and construction of the facility--either the
Federal Energy Regulatory Commission or the U.S. Maritime
Administration (see supra note 9). But, by extending the period over
which these exports would occur, a term extension would provide a
mechanism for existing authorization holders to increase the total
volume of LNG exports over the life of their authorization.
For the non-FTA applications currently pending before DOE
(involving exports from the lower-48 states), the total requested
export volume for each application also would increase if DOE
ultimately were to grant each application for an export term lasting
through the year 2050 (as opposed to the standard 20-year term).
In sum, the Proposed Policy Statement, if adopted, would not
increase the approved rate of exports from a particular facility, but
it would result in an increase in the total approved volume of exports
from each participating facility due to the longer export term. DOE
notes that the 2018 LNG Export Study and the recent EIA Annual Energy
Outlooks assume a steady rate of exports between 2040 and 2050.
2. Comments of Cheniere Energy, Inc. Requesting Term Extension
On July 27, 2018, Cheniere Energy, Inc. (Cheniere) filed comments
in the 2018 LNG Export Study proceeding.\68\ Cheniere is the parent
company of three companies that currently export U.S. LNG under long-
term authorizations: Sabine Pass Liquefaction, LLC; Cheniere Marketing,
LLC; and Corpus Christi Liquefaction, LLC. As part of its comments,
Cheniere asked DOE to: (i) begin issuing export authorizations with a
term of 30 years based on the analysis provided in the 2018 LNG Export
Study, and (ii) provide a procedure whereby authorization holders with
existing 20-year authorizations (such as Cheniere's subsidiaries) could
request such a term extension.\69\
---------------------------------------------------------------------------
\68\ Cheniere Energy, Inc., Comments on the 2018 LNG Export
Study (July 27, 2018), available at: https://fossil.energy.gov/app/DocketIndex/docket/DownloadFile/567 [hereinafter Cheniere Comments].
\69\ Id. at 5.
---------------------------------------------------------------------------
In support of this request, Cheniere first noted that the 2018 LNG
Export Study extends for 30 years and shows macroeconomic benefits to
the United States over the entire period.\70\ Second, Cheniere asserted
that it has received interest from LNG buyers who are seeking contracts
that extend beyond 20 years. Cheniere stated that this interest in U.S.
LNG may be ``inhibited'' if the seller lacks export authority over the
entire contract term.\71\ Cheniere further stated that, once LNG
projects enter operation, the flexibility to extend contracts beyond
the initial 20-year term will be even more important. Cheniere
maintained that, for foreign buyers deciding between U.S. LNG and
alternative long-term sources, a 30-year term may prove decisive.\72\
---------------------------------------------------------------------------
\70\ Id. (citing 2018 LNG Export Study at Appendix F).
\71\ Id. at 5-6.
\72\ Id. at 6.
---------------------------------------------------------------------------
3. Canadian Export Term for LNG
On December 4, 2019, Canada granted its first 40-year LNG export
license, which it issued to Chevron Canada Limited (Chevron) for a
proposed LNG export facility called the Kitimat LNG project.\73\ Under
the terms of that license, Chevron is authorized to export LNG from
Canada in a volume of 996.93 billion cubic feet per year (Bcf/yr) of
natural gas for a term of 40 years beginning on the date of first
export--with a period of 10 years to commence exports.\74\ Canada's
regulatory agency, the Canada Energy Regulator,\75\ approved the
requested 40-year export term over an argument by a commenter that
Canada's existing natural gas forecasts supported an export term of
only 25 years.\76\ In rejecting this argument, the Canada Energy
Regulator found that ``the natural gas resource base in Canada, as well
as North America overall, is large and can accommodate reasonably
foreseeable Canadian demand, including the natural gas exports proposed
in this Application, and a plausible potential increase in demand''
over a 40-year export term.\77\ This recent development underscores the
importance of U.S. LNG export projects being able to offer the same or
similar contract terms as their Canadian counterparts.
---------------------------------------------------------------------------
\73\ See Canada Energy Regulator, Letter Decision, Application
of Chevron Canada Limited for a 40-Year License to Export Natural
Gas as Liquefied Natural Gas (LNG), at 6 & Exh. 1 (Dec. 4, 2019)
[hereinafter Canada Energy Regulator Decision], available at:
https://docs2.cer-rec.gc.ca/ll-eng/llisapi.dll/fetch/2000/90466/94153/552726/3760154/3760155/3893823/C03430-1_CER_%E2%80%93_Letter_Decision_%E2%80%93_Chevron_Application_for_a_40-year_Licence_to_Export_LNG_-_A7A5Z5.pdf?nodeid=3891530&vernum=-2.
\74\ See id. at 1 & Appendix I.
\75\ On August 28, 2019, Canada's National Energy Board became
the Canada Energy Regulator. See id. at 1 n.1.
\76\ See Canada Energy Regulator Decision at 3.
\77\ Id. at 6.
---------------------------------------------------------------------------
4. Summary of Proposal
Based on the 2018 LNG Export Study, the LCA GHG Update, and the
current status of the U.S. LNG export market, DOE believes there is new
evidence to support changing from the standard 20-year export term for
non-FTA orders to an extended export term with an end date of December
31, 2050. This Proposed Policy Statement, if adopted, would effectively
extend the export term for existing authorization holders from 20 to 30
(or more) years, depending on when they commenced (or will commence)
export operations.
For example, Sabine Pass Liquefaction, LLC received DOE's first
final long-term non-FTA authorization (DOE/FE Order No. 2961-A) on
August 7, 2012, and began exporting LNG in February 2016.\78\ In
addition to Sabine Pass, seven other non-FTA authorization holders are
exporting LNG to date (Dominion Energy Cove Point LNG, LP; Cheniere
Marketing, LLC; Corpus Christi Liquefaction, LLC; Cameron LNG, LLC;
Freeport LNG Expansion, L.P., et al.; American LNG Marketing LLC; and
Southern LNG Company, LLC).\79\ If this Proposal is adopted and these
authorization holders elect to apply for an extended export term, they
ultimately could have authority to export for more than 30 years in
total. For example, if Sabine Pass were to obtain an extended export
term for Order No. 2961-A through December 31, 2050, it ultimately
would be authorized to export LNG for a total of 38 years, with an
actual export period of up to 34 years, 10 months (if Sabine Pass
exported continuously through the year 2050).
---------------------------------------------------------------------------
\78\ See supra at Sec. I.B.4.
\79\ See U.S. Dep't of Energy, Office of Fossil Energy, LNG
Monthly (Dec. 2019), at 9-25 (Tables 2a(i)-2a(vi), 2b), available
at: https://www.energy.gov/sites/prod/files/2019/12/f69/LNG%20Monthly%202019_0.pdf (identifying exporters of U.S. LNG). DOE
notes that Southern LNG Company, LLC began exporting LNG in December
2019, but those exports are not yet reflected in DOE's LNG Monthly
report.
---------------------------------------------------------------------------
For the majority of existing authorization holders, however, this
Proposal would result in a maximum 30-year export term (depending on
whether and when the authorization holders begin exporting LNG).
Likewise, the Proposal would provide up to a 30-year export term for
future authorizations issued beginning in 2020.
Under this Proposal, the December 31, 2050 date would be the end of
the authorization period for all non-FTA exports, inclusive of any
``make-up'' export periods.\80\ DOE will continue to
[[Page 7680]]
monitor developments in the LNG export market, however, including EIA's
projections about natural gas supply and demand. Consistent with its
longstanding practice, DOE anticipates that it will commission new
economic studies and consider any extensions in the export period
beyond the year 2050 at the appropriate time in the future.\81\
---------------------------------------------------------------------------
\80\ See supra note 34.
\81\ DOE previously affirmed its commitment to export
authorizations issued under the NGA, including existing and future
long-term non-FTA authorizations at issue under this Proposal. See
U.S. Dep't of Energy, Policy Statement Regarding Long-Term
Authorizations to Export Natural Gas to Non-Free Trade Agreement
Countries, 83 FR 28841, 28843 (June 21, 2018) (stating that
authorization holders and interested stakeholders ``should have the
utmost confidence in the validity of DOE/FE's LNG export
authorizations for the full term of each non-FTA order'').
---------------------------------------------------------------------------
5. Potential Impact on FTA Authorizations and Applications
This Proposal does not apply to FTA applications and
authorizations, since DOE is required to grant FTA applications
``without modification or delay'' under NGA section 3(c). Because of
this statutory standard, applicants for FTA orders are not subject to
DOE's standard 20-year term for non-FTA authorizations, and numerous
FTA orders already have export terms of 25 or more years. Nonetheless,
authorization holders typically apply for both FTA and non-FTA
authorizations, and they prefer to align their FTA and non-FTA exports
over the same time period for administrative efficiencies. Therefore,
if this Proposal is adopted, DOE anticipates that authorization holders
may elect to request a comparable extension in the export term of their
existing FTA authorization(s) or any pending FTA applications.
B. Proposed Implementation Process
DOE proposes to implement the Proposed Policy Statement as follows:
(1) For existing non-FTA authorizations: Existing authorization
holders would request the change on a voluntary opt-in basis.
Specifically, each non-FTA authorization holder would file an
application requesting an amendment to its authorization to extend its
export term through December 31, 2050, with an attendant increase in
the total export volume over the life of the authorization;
(2) For pending non-FTA applications: Existing applicants would
request the change as an amendment to their pending application, on a
voluntary opt-in basis.\82\ Each applicant would file an amendment to
its application to extend its requested export term through December
31, 2050, with an attendant increase in the total export volume over
the life of the authorization; and
---------------------------------------------------------------------------
\82\ See 10 CFR 590.204.
---------------------------------------------------------------------------
(3) For future applications: The extended term would become DOE's
standard export term for all future non-FTA authorizations.
Accordingly, for any application filed after the date the Proposed
Policy Statement is finalized (if it is adopted), the applicant would
request an export term lasting through December 31, 2050, unless the
applicant prefers a shorter export term.
In each individual docket proceeding, the authorization holder or
applicant would be required to submit an application (for #1 and #3) or
an amendment to its pending application (for #2) with relevant facts
and argument supporting the term request.\83\ DOE would provide notice
of the application or amendment in the Federal Register.\84\
Additionally, if this Proposed Policy Statement is adopted, DOE
anticipates that it would provide suggested application templates on
its website (including an option for consolidated non-FTA and FTA
application proceedings, see supra at Section II.A.5) to ensure more
consistent, streamlined proceedings.
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\83\ See 10 CFR 590.201, 590.202, 590.204.
\84\ See 10 CFR 590.205.
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Following the notice and comment period in each proceeding, DOE
would conduct a public interest analysis of the application (or amended
application) under NGA section 3(a). DOE would also have to comply with
NEPA, as discussed herein. For existing non-FTA orders, the public
interest analysis would be limited to the application for an extended
export term--meaning an intervenor or protestor could challenge the
requested extension but not the existing non-FTA order. Consistent with
its established practice, DOE would respond to any comments received in
its final order on each application (or amendment) requesting the
extended export term.
DOE notes that, in Cheniere's comments on the 2018 LNG Export Study
requesting that DOE implement a 30-year export term, Cheniere urged DOE
to consider a ``consolidated proceeding'' for all existing
authorizations. Under this approach, Cheniere stated that DOE should
``consider the [export term] extension of all existing authorizations
in a single proceeding . . . because the public interest question in
each case is identical.'' \85\ Cheniere also asserted that DOE's
decision to extend all existing export terms in a consolidated
proceeding would be eligible for a categorical exclusion from NEPA
\86\--specifically, categorical exclusion B5.7 (10 CFR part 1021,
subpart D, appendix B5).\87\
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\85\ Cheniere Comments at 6.
\86\ Id. at 6-7.
\87\ See 10 CFR 1021.410, appendix B to subpart D of part 1021,
Categorical Exclusion B5.7 (``Approvals or disapprovals of new
authorizations or amendments of existing authorizations to import or
export natural gas under section 3 of the Natural Gas Act that
involve minor operational changes (such as changes in natural gas
throughput, transportation, and storage operations) but not new
construction.'').
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As indicated, DOE is currently proposing a voluntary application
process for existing authorization holders that would be adjudicated in
each individual proceeding (#1). DOE believes that not every
authorization holder may want to have an extended export term, and that
the public interest considerations in individual proceedings may vary.
Additionally, DOE takes no position on Cheniere's suggestion that any
decision by DOE to extend an existing export term would be eligible for
a categorical exclusion from NEPA (such as categorical exclusion B5.7).
If this Proposed Policy Statement is adopted, DOE would comply with its
NEPA obligations in each individual application proceeding, consistent
with its current practice.\88\
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\88\ See supra at Sec. I.A.
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III. Invitation To Comment
In response to this document, any person may file comments
addressing the Proposed Policy Statement. The comments will help to
inform DOE's decision as to whether to adopt the Proposed Policy
Statement for use in current and future non-FTA proceedings. DOE
invites comment on any aspect of the Proposed Policy Statement,
including but not limited to the potential benefits and impacts
associated with the Proposal and the voluntary opt-in process for
existing authorization holders and applicants. Interested parties will
be provided 30 days from the date of publication of this Notice of
proposed policy statement in which to submit their comments.
IV. Public Comment Procedures
DOE is not establishing a new proceeding or docket in this
document. Comments submitted in compliance with the instructions in
this document will be placed in the administrative record for all of
the above-referenced proceedings and need only be submitted once.
Additionally, the submission of comments in response to this Notice
of proposed policy statement will not make commenters parties to any of
the affected dockets. Persons with an
[[Page 7681]]
interest in the outcome of one or more of the affected dockets already
have been given an opportunity to intervene in or protest those matters
by complying with the procedures established in the notice of
application issued in each respective docket and published in the
Federal Register. Future opportunities for intervention or protest will
be published in the Federal Register only for the applications to
extend the term.
Comments may be submitted using one of the following methods:
(1) Submitting the comments using the online form at https://fossil.energy.gov/app/docketindex/docket/index/22.
(2) Mailing an original and three paper copies of the filing to the
Office of Regulation, Analysis, and Engagement at the address listed in
ADDRESSES; or
(3) Hand delivering an original and three paper copies of the
filing to the Office of Regulation, Analysis, and Engagement at the
address listed in ADDRESSES.
For administrative efficiency, DOE prefers comments to be filed
electronically using the online form (method 1). All comments must
include a reference to ``Term Extension--Proposed Policy Statement'' in
the title line. The record in the above-referenced proceedings will
include all comments received in response to this Notice of proposed
policy statement. DOE will review the comments received on a
consolidated basis.
The Proposed Policy Statement is available for inspection and
copying in the Division of Natural Gas Regulation docket room, Room 3E-
042, 1000 Independence Avenue SW, Washington, DC 20585. The docket room
is open between the hours of 8:00 a.m. and 4:30 p.m., Monday through
Friday, except Federal holidays. Additionally, the Proposed Policy
Statement and any comments filed in response to this document will be
available on the following DOE website: https://fossil.energy.gov/app/docketindex/docket/index/22.
V. Administrative Benefits
In this Proposed Policy Statement, DOE is not proposing any new
requirements for applicants or authorization holders under 10 CFR part
590. Rather, DOE's intent is to minimize administrative burdens and to
enhance certainty for authorization holders in the U.S. natural gas
export market, as well as for those who may purchase U.S. LNG.
VI. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this Proposed
Policy Statement.
Signed in Washington, DC, on January 31, 2020.
Steven Eric Winberg,
Assistant Secretary, Office of Fossil Energy.
[FR Doc. 2020-02358 Filed 2-10-20; 8:45 am]
BILLING CODE 6450-01-P