DOE proposes regulation to keep NEPA reviews limited for LNG exports

Washington — Citing efforts to "improve the efficiency" of its decision-making, the Department of Energy has proposed to limit National Environmental Policy Act reviews of LNG exports.

The proposal could impact future proposed LNG facilities, those in the early review stages at the Federal Energy Regulatory Commission or future expansions of facilities. But the impact may be blunted because 11 of the 12 major LNG projects that recently cleared the FERC process already have DOE's signoff for exports to countries that lack free trade agreements with the US.

Published in the Federal Register May 1, the proposal would enshrine into regulation a narrow view of DOE's review obligations at a time when environmentalists continue to press for studies of upstream and downstream greenhouse gas impacts associated with new LNG facilities. A DOE official said the proposal aims to reduce a redundancy, given the lead role played by FERC in environmental review of LNG export facilities.

POINT OF EXPORT

The proposal would apply a "categorical exclusion" of NEPA reviews to the LNG exports, finding the impacts that fall under DOE's purview are limited to actions "occurring at or after the point of export," including the associated transportation of the marine vessels. Based on prior NEPA views and technical reports, it said DOE has already found that shipment of gas by marine vessel "normally does not pose the potential for significant environmental impacts."

"On the surface, this appears to be a significant policy change, however, near-term impact could be less substantial given that the projects up for approval in the coming months may prefer not to wait for finalization of the new process," ClearView Energy Partners said in a research note Thursday. However, it said, "opponents of natural gas exports may find it more difficult — should this proposal be finalized as offered — to argue that adverse environmental effects outweigh the economic benefits of exporting the commodity, as they have attempted to argue on judicial review."

FERC already takes the lead on environmental impact statements for LNG facilities, and DOE under the Trump administration, even without the proposal, has promptly approved LNG exports to non-FTA nations within several weeks after FERC authorizations in most cases. In approving exports, DOE often points to studies it has performed on domestic economic impacts as well as its studies on life-cycle GHG emissions of exports.

GHG LITIGATION

It is unclear how the proposed regulation's approach would square with arguments in FERC's LNG approvals that it need not look at upstream and downstream GHG impacts because DOE approves LNG exports.

"The courts have explained that, because the authority to authorize the LNG exports rests with DOE, NEPA does not require [FERC] to consider the upstream or downstream GHG emissions that may be indirect effects of the export itself when determining whether the related LNG export facility satisfies Section 3 of the NGA," the commission said in a recent order approving the Jordan Cove LNG project.

Nathan Matthews of the Sierra Club said in an email that "everything about this proposal is wrong."

"For years, the federal government's position has been that DOE has exclusive authority to consider the impacts of export-induced gas production. For DOE to now say that it has no authority to consider where exported gas will come from, and the impacts of that production, is an abrupt and unexplained reversal, as the agencies play a shell game of arguing that environmental impacts are always someone else's problem," he wrote. He cast the proposal as seeking to "end all further inquiry into the climate impact of LNG exports," adding that "trying to sweep these imports under the rug violates NEPA."

DOE's proposal asserts that the regulation would be consistent with two prior DOE-commissioned reports that found exports for power generation in European and Asian markets will not increase GHG emissions from a life-cycle perspective when compared with regional coal extraction and consumption for power generation. It asserts those reports are not part of DOE's NEPA reviews because regasification and burning of the LNG abroad is beyond DOE's NEPA purview.

LNG industry officials suggested the proposal does not signify dramatic change because FERC has long taken the lead on the NEPA reviews related to construction and operation of LNG facilities.

Charles Riedl of the Center for LNG suggested the proposal could be helpful in cutting back extra paperwork, and underscoring that a NEPA review of LNG facilities is not part of the jurisdictional mandate for DOE.