Industry seeks to compel DOE action as House speaker mulls LNG pause reversal

As US House leadership mulls tucking LNG export language into a deal on a Ukraine funding package, US LNG industry officials are urging an approach that effectively prompts Department of Energy action on the natural gas export applications.

House Speaker Michael Johnson recently expressed interest in including language to reverse the administration's pause announced Jan. 26 by the DOE on reviews of LNG exports to non-Free Trade Agreement nations. And Reuters reported April 2 that the White House was open to considering a deal on the matter, though the White House has subsequently denied the report and reiterated President Joe Biden's support for the temporary hold.

White House Press Secretary Karine Jean-Pierre said April 3 that the president continues to back the pause on additional approvals of export licenses in order to evaluate the climate impacts, economic impacts, and effects on consumers and communities.

"The pause on the pending approvals of LNG exports, it is important," Jean-Pierre said, describing it as part of robust action Biden has taken to deal with the climate crisis.

Amid the uncertainty around the parameters of any language under consideration, the LNG sector is encouraging lawmakers to go beyond an approach that lifts the pause on paper but which could still allow DOE to stall export reviews in practice.

"What we're trying to convey is that it's got to be more than lifting the pause," Charlie Riedl of the trade group Center for Liquified Natural Gas said in an interview April 3. "It would be important if any deal is struck that it actually compels DOE to take action."

Navigating politics

Striking a deal involving Ukraine funding and the LNG exports presents a political tightrope for both the speaker and the White House. Johnson could struggle to draw enough support for Ukraine funding within Republican ranks amid conservative opposition. And after touting the pause as a demonstration of Biden's climate policy bona fides, the White House may need to weigh political costs of walking back from the January decision.

On Fox News Sunday, Johnson March 31 mentioned gas exports among provisions he may want to add to any Ukraine funding package without offering specifics.

"We want to unleash American energy -- we want to have natural gas exports that will help un-fund Vladimir Putin's war effort there," Johnson said.

ClearView Energy Partners April 3 highlighted the challenges of achieving a legislative fix.

"We do not think the administration is inclined to trade away the pause, and we question whether pause-canceling language could even muster the two-thirds House majority ... likely to be necessary for passage," ClearView said. But, the analysts said, much could depend on wording.

"If he had no other option, we believe President Biden might sign a bill which merely blocked the pause, as the DOE still could retain discretion over the pace of non-FTA approvals."

The House of Representatives already has passed legislation multiple times to strip the DOE of its role approving LNG exports, but that version has gone nowhere in the Senate.

Other potential middle ground approaches include setting a time limit on DOE decisions on exports, although some in industry have worried that also risks expediting denials.

Legal challenges

The permitting suspension is also being challenged in court. Attorneys general of 16 Republican-led states, including exporters Texas and Louisiana, filed suit against the Biden administration March 21 in a Louisiana federal court. The suit asks a judge to overturn the permitting suspension.

A developer of a proposed LNG export project – Commonwealth LNG – and a coalition of trade groups also filed formal requests in late February at the DOE asking the agency to reverse the pause on export reviews in a step that could presage further litigation.

The DOE dismissed those requests March 27 on the grounds that the permitting suspension does not amount to an order or final agency action that would provide a basis for seeking rehearing.

In the dismissals, signed by Assistant Energy Secretary Brad Crabtree, the DOE said it expects updating the economic and environmental analyses it uses to determine whether the export approvals are in the public interest will take several months before DOE invites public comment on the updates for at least 60 days.

"Together with the public process, DOE estimates that the update will be completed within a year," Crabtree wrote, reiterating an estimate provided by Energy Secretary Jennifer Granholm in March.

In the reply to Commonwealth, Crabtree said that the Natural Gas Act "does not entitle an applicant to export to non-FTA countries unless and until DOE determines that those exports are not inconsistent with the public interest" and that the law "does not establish a right to a decision within a specified timeframe."

"DOE has not and will not unreasonably postpone making this determination, but DOE is under no obligation to do so on Commonwealth's preferred timeline or using outdated information," the agency official wrote.