UPDATE: Energy Department Revises Policy for Approving Natural Gas Exports

Ships transporting liquefied natural gas

Update (06/04/2014): The Department of Energy (DOE) has proposed revisions to how it reviews applications to export liquefied natural gas to non-free trade agreement countries.

Under current procedures, the Assistant Secretary of DOE may conditionally approve an application prior to the completion of the National Environmental Policy Act (NEPA) review process. The revised policy would limit conditional approvals; DOE would only grant decisions on applications for which the environmental impact assessment review required by NEPA is complete. DOE cites four reasons for this proposed change:

  1. Conditional decisions are no longer necessary for the Federal Energy Regulatory Commission (FERC) or most applicants to devote resources to the environmental review;

  2. DOE would be able to prioritize its actions by focusing on those applications that are ready for a final decision;

  3. DOE decisions would be based on better and more complete information; and

  4. DOE would be able to more effectively allocate its resources.  DOE will still consider requests for conditional approvals prior to finalizing the proposed rule and will still recognize conditional approvals granted prior to the date the revisions are finalized.

DOE is also soliciting comments from the public on two draft reports. One report is DOE’s draft addendum to its environmental review documents concerning U.S. natural gas exports. According to the notice published in the Federal Register on June 4, the addendum is intended to provide the public with additional information about the potential environmental impacts of exploration and production of unconventional natural gas (e.g., fracking) in the U.S.

The second report DOE has released for public comment compares lifecycle greenhouse gas emissions from U.S. liquefied natural gas exports to emissions from coal and other imported natural gas used for electric power generation in Europe and Asia.

All three comment periods are open to the public until July 21. 

. . . 

On April 30, the House Energy and Commerce Committee approved the Domestic Prosperity and Global Freedom Act (H.R. 6), introduced by Rep. Cory Gardner (R-CO) in March. The bill would accelerate the process for approving applications to export natural gas overseas. However, accelerating natural gas exports poses significant risks to the U.S. economy, our public health and safety, and the environment.

On April 29, the Center for Effective Government joined with dozens of public interest groups in a letter to the committee's ranking member, Rep. Henry Waxman (D-CA), urging the committee to oppose the bill. The letter warned that requiring the Department of Energy (DOE) to expedite its review of natural gas export applications could undermine the agency's ability to evaluate the full range of impacts when deciding whether such projects are in the public interest. 

The joint letter also cautioned that "this bill could have a detrimental effect on both American consumers and American industries that rely on natural gas." The domestic price of natural gas is likely to increase as the supply decreases due to sending U.S. gas overseas, and higher gas prices will encourage more hydraulic fracturing (fracking) operations in the U.S., along with their associated environmental, health, and safety risks.

Prior to voting on the bill, the committee adopted two amendments: the first amendment removed a requirement that DOE consider all applications to export natural gas to any of the 159 members of the World Trade Organization (WTO) to be in the public interest.

The second amendment replaced a requirement that the DOE automatically approve all pending applications with a requirement that the agency issue a decision on any application to export natural gas within 90 days after the close of the public comment period on the application or within 90 days after the bill takes effect, whichever is later. The second amendment also added new language giving the U.S. Courts of Appeals sole jurisdiction to review DOE application decisions or DOE’s failure to issue a decision by the legislative deadline. The circuit that reviews each decision would be determined by the location of the proposed export facility.

Although the amended bill is a modest improvement over the original proposal, it nonetheless fails to address the significant risks that exporting natural gas poses to the U.S. economy as well as to our health, safety, and environment.

On the same day Gardner's bill was approved, Sen. Mark Udall (D-CO), who is facing a challenge by Gardner for his Senate seat this November, introduced virtually identical legislation. Udall said the bill mirrors the bill approved by the House committee to avoid it being held up due to technical variations between the House and Senate versions.

Udall also said he plans to introduce his bill as an amendment to a bipartisan energy-efficiency bill soon to be voted on in the Senate. Among other amendments that Republicans are seeking, one offered by Sen. John Barrasso (R-WY) would require the DOE to approve applications to export liquefied natural gas to all World Trade Organization member countries. However, these amendments could potentially jeopardize any chance of the energy-efficiency bill becoming law, according to a statement by White House counselor John Podesta on Monday. Podesta warned that the president would veto the bill if it includes riders targeting the administration's energy and environmental initiatives: "If it passes with unacceptable riders, it will be headed to the watery depths."

Tell Congress and the White House to oppose any legislation that would accelerate the Energy Department's process for reviewing and approving applications to export natural gas overseas. Before approving natural gas exports, the Energy Department should have the time and resources it needs to determine whether an export project is in the public interest and can be carried out without imposing all of the risks, and none of the rewards, on the American public and our environment.

Editor's Note: This article was originally published on May 6, 2014 with the title "Legislation to Accelerate Natural Gas Exports Would Increase Costs, Health and Environmental Damage."

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