[Federal Register Volume 79, Number 158 (Friday, August 15, 2014)]
[Notices]
[Pages 48132-48136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-19364]
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DEPARTMENT OF ENERGY
Procedures for Liquefied Natural Gas Export Decisions
AGENCY: Office of Fossil Energy, Department of Energy.
ACTION: Final revised procedures.
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SUMMARY: The U.S. Department of Energy (DOE or the Department) will act
on applications to export liquefied natural gas (LNG) from the lower-48
states to countries with which the United States does not have a free
trade agreement requiring national treatment for natural gas only after
completing the review required by the National Environmental Policy Act
(NEPA), suspending its practice of issuing conditional decisions prior
to final authorization decisions.
DATES: Effective Date: August 15, 2014.
FOR FURTHER INFORMATION CONTACT: John Anderson, U.S. Department of
Energy, Office of Oil and Gas Global Security and Supply, Office of
Fossil Energy, Forrestal Building, Room 3E-042, 1000 Independence
Avenue SW., Washington, DC 20585, (202) 586-5600; Samuel Walsh, U.S.
Department of Energy, Office of the General Counsel, Forrestal
Building, 1000 Independence Avenue SW., Washington, DC 20585, (202)
586-6732.
SUPPLEMENTARY INFORMATION:
I. Proposed Procedural Change
The Department of Energy is responsible for authorizing exports of
natural gas to foreign nations pursuant to section 3 of the Natural Gas
Act, 15 U.S.C. 717b. For proposed exports to countries with which the
United States lacks a free trade agreement requiring national treatment
for trade in natural gas (non-FTA countries), the Department conducts
an informal
[[Page 48133]]
adjudication and grants the application unless the Department finds
that the proposed exportation will not be consistent with the public
interest. 15 U.S.C. 717b(a). Before reaching a final decision on a non-
FTA application, the Department must also comply with the National
Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq. Typically, the
agency responsible for permitting the export facility serves as the
lead agency in the NEPA review process and DOE serves as a cooperating
agency within the meaning of the Council on Environmental Quality's
(CEQ) regulations. 40 CFR 1501.4, 1501.5. For LNG terminals located
onshore or in state waters, the agency responsible for permitting the
export facilities is the Federal Energy Regulatory Commission (FERC)
pursuant to Section 3(e) of the Natural Gas Act. 15 U.S.C. 717b(e). For
LNG terminals located offshore beyond state waters, the responsible
agency is the Maritime Administration (MARAD) within the Department of
Transportation pursuant to Section 3(9) of the Deepwater Ports Act, as
amended by Section 312 of the Coast Guard and Maritime Transportation
Act of 2012 (Pub. L. 112-213).
For more than 30 years, DOE's regulations governing natural gas
imports and exports have allowed for conditional decisions, on a
discretionary basis, before DOE completes its review process.\1\ DOE's
regulations at 10 CFR 590.402, entitled ``Conditional orders,'' state
that DOE may issue a conditional order at any time during a proceeding
prior to issuance of a final opinion and order. In the past three
years, DOE has issued eight conditional authorizations for exports of
LNG to non-FTA countries.\2\ In each of these proceedings, DOE has made
preliminary findings on all factors relating to the public interest
other than environmental issues. The conditional authorization orders
have explained that, before taking final action, DOE will reconsider
its public interest analysis in light of the information gathered in
the environmental review.\3\
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\1\ Dep't of Energy, Import and Export of Natural Gas; New
Administrative Procedures; Proposed Rule, 46 FR 44696 (Sept. 4,
1981).
\2\ LNG Develop. Co., LLC (d/b/a Oregon LNG), DOE/FE Order No.
3465 (July 31, 2014) [hereinafter Oregon LNG]; Jordan Cove Energy
Project, L.P., DOE/FE Order No. 3413 (March 24, 2014); Cameron LNG,
LLC, DOE/FE Order No. 3391 (Feb. 11, 2014); Freeport LNG Expansion,
L.P. et al., DOE/FE Order No. 3357 (Nov. 15, 2013); Dominion Cove
Point LNG, LP, DOE/Order No. 3331 (September 11, 2013); Lake Charles
Exports, LLC, DOE/FE Order No. 3324 (Aug. 7, 2013); Freeport LNG
Expansion, L.P. et al., DOE/FE Order No. 3282 (May 17, 2013); Sabine
Pass Liquefaction, LLC, DOE/FE Order No. 2961 (May 20, 2011).
\3\ See, e.g., Oregon LNG, DOE/FE Order No. 3465, at 138.
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DOE has acted on non-FTA LNG export applications according to the
order of precedence posted on DOE's Web site on December 5, 2012. On
June 4, 2014, however, DOE published a notice in the Federal Register
proposing to suspend its practice of issuing conditional decisions
prior to completion of the NEPA review process for LNG export
applications from the lower-48 states. Dep't of Energy, Proposed
Procedures for Liquefied Natural Gas Export Decisions; Notice of
Proposed Procedures, 79 FR 32261 (Proposed Procedures Notice). DOE did
not propose to amend 10 CFR 590.402 and, therefore, under the proposal
would retain discretion to issue conditional decisions in the future.
DOE explained that, under the newly proposed procedures, DOE would
cease to act on non-FTA LNG export applications according to the
published order of precedence. Instead, DOE would act on applications
in the order they become ready for final action. The Proposed
Procedures Notice stated that an application is ready for final action
when DOE has sufficient information on which to base a public interest
determination and when DOE has completed its NEPA review. The Proposed
Procedures Notice further explained that, for purposes of setting the
order in which DOE will act, an application would be deemed to have
completed the pertinent NEPA review process as follows: (1) For those
projects requiring an Environmental Impact Statement (EIS), 30 days
after publication of a Final EIS; (2) for projects for which an
Environmental Assessment (EA) has been prepared, upon publication by
DOE of a Finding of No Significant Impact (FONSI); or (3) upon a
determination by DOE that an application is eligible for a categorical
exclusion pursuant to DOE's regulations implementing NEPA, 10 CFR
1021.410, Appx. A & B. DOE explained that this test would apply in the
same fashion regardless of whether FERC, MARAD, or DOE has served as
the lead agency for preparation of the environmental review document.
The Proposed Procedures Notice also made clear that the proposed
procedures would not affect the continued validity of the conditional
authorizations DOE had already issued. For those applications, DOE
stated it would proceed as explained in the orders: By reconsidering
the conditional authorization in light of the information gathered in
the environmental review once that review is complete and taking
appropriate final action.
The Department offered four reasons for the proposed procedural
change. See Proposed Procedures Notice at 79 FR 32263-32264. First, the
Department explained that conditional authorizations no longer appear
necessary for FERC or the majority of applicants to commit resources to
the NEPA review process. Second, the Department explained that by
suspending its practice of issuing conditional decisions and ceasing to
follow the order of precedence published on December 5, 2012, DOE would
better be able to ensure prompt action on applications that are
otherwise ready to proceed. Third, the Department explained that the
proposed procedures would improve the quality of information on which
DOE bases its decisions. Finally, the Department noted that suspending
its practice of issuing conditional decisions would better allocate
departmental resources by reducing the likelihood that the Department
would be forced to act on applications with little prospect of
proceeding.
II. Public Comments
The Department received 74 comments in response to the Proposed
Procedures Notice.\4\ Many of the comments expressed general support
for or opposition to LNG exports or otherwise urged substantive changes
to DOE's public interest analysis. DOE officials have read and
considered these comments carefully, but consider them outside the
scope of the Proposed Procedures Notice, which addressed only whether
DOE should suspend its current practice of issuing conditional
decisions prior to completion of NEPA review.
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\4\ The comments are available at: http://energy.gov/fe/proposed-procedures-liquefied-natural-gas-export-decisions
(Comments).
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The remaining relevant comments generally fall into three groups:
Comments on the rationale DOE provided for the proposed procedures,
comments on the test proposed for when an application is ready for
final decision, and comments on the timing of final decisionmaking once
an application is ready for final action.
A. Comments on the Rationale for the Proposed Procedures
Public Comments: DOE's first rationale advanced in support of the
proposed procedural change was that conditional decisions no longer
appear necessary for FERC or the majority of
[[Page 48134]]
applicants to commit resources to the NEPA review process. Many
commenters supported this claim. Several other commenters questioned
it, however, observing that conditional decisions may have value for
applicants even if they have already initiated NEPA review. Likewise,
they asserted that conditional decisions may be of value to other
stakeholders, such as financial parties, LNG purchasers, or foreign
governments.
DOE Response: DOE acknowledges that conditional decisions may hold
value for some applicants and may supply useful information to third
parties. Nevertheless, the justification for issuing conditional
decisions before completing NEPA review is much weaker in an
environment where applicants are willing to commit resources to NEPA
review even without a conditional decision. In the approximately 18
months since we established the existing order of precedence, we have
had an opportunity to observe industry developments, as well as the
progress of numerous individual projects in the FERC-led NEPA review
processes. We have seen numerous instances where applicants have proven
willing to commit resources to NEPA review before having received a
conditional authorization. As noted above, to date DOE has issued eight
conditional authorizations (including one, Sabine Pass, which is now
final) cumulatively authorizing non-FTA exports in a combined total of
10.52 billion cubic feet per day of natural gas (Bcf/d). Many of these
applicants had made substantial progress in preparing resource reports
for the NEPA review process before receiving their conditional
authorizations. Likewise, among applicants that have not yet received a
conditional decision, at least seven projects constituting 9.51 Bcf/d
in requested export capacity have made considerable progress in the
NEPA review process.\5\ These examples demonstrate that, broadly
speaking, conditional decisions are no longer necessary for applicants
to commit substantial resources to the NEPA review process.
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\5\ See Corpus Christi Liquefaction, LLC, FERC Docket No. CP12-
507; Excelerate Liquefaction Solutions (Port Lavaca I), LLC et al.,
FERC Docket Nos. CP14-71, 72 & 73; Southern LNG Co. LLC, FERC Docket
No. CP14-103; CE FLNG, FERC Docket No. PF13-11, Golden Pass Products
LLC, FERC Docket No. PF13-14; Sabine Pass Liquefaction, LLC and
Sabine Pass LNG, L.P., FERC Docket No. CP14-12; Magnolia LNG, LLC,
FERC Docket No. PF13-9. In addition to these projects that have made
substantial progress, two others have recently been accepted for
pre-filing at FERC. See Gulf LNG Liquefaction Company, L.L.C., FERC
Docket No. PF 13-4, Louisiana Energy, LLC, FERC Docket No. PF14-17.
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Public Comments: The second rationale advanced in support of the
proposed procedural change was that it would ensure that applications
otherwise ready for DOE action will not be held back by their position
in the order of precedence. Many commenters voiced support for the
proposed procedures for this reason. One commenter, however, asserted
that under the proposed procedures, DOE will no longer concurrently
evaluate whether applications are in the public interest while these
applications are undergoing NEPA review. This commenter, therefore,
concluded that the proposed procedures would lengthen DOE's review
time. This commenter also asserted that it is arbitrary for DOE to
require the completion of NEPA review before DOE completes its public
interest review.
DOE Response: DOE wishes to clarify that applicants can and should
apply concurrently to DOE and to FERC or MARAD. DOE will begin the
process of evaluating whether an application is in the public interest
prior to completion of NEPA review, but will not issue a final decision
before the NEPA review is complete. The requirement that NEPA review be
completed prior to a final public interest determination is not
arbitrary, but rather flows from the most fundamental requirement in
NEPA: that agencies consider environmental impacts prior to deciding to
undertake a major federal action. See 10 CFR 1021.210(b) (``DOE shall
complete its NEPA review for each DOE proposal before making a decision
on the proposal.''); see also Silentman v. Federal Power Commission,
566 F.2d 237 (D.C. Cir. 1977) (a cooperating agency must await the lead
agency's completion of its impact statement before taking final
action).
Public Comments: The third rationale advanced in support of the
proposed procedural change was that it would improve the quality of
information on which DOE bases its decisions. One reason provided for
why the proposed procedures would improve the quality of information is
that, by restricting its decisions to applicants that have undertaken
the considerable expense of providing the engineering and design
information necessary to complete NEPA review, DOE would make its
decisions on a cohort of projects that are, on average, more likely to
be financed and built than those that have not completed NEPA review.
By focusing on projects that are more likely to proceed, DOE reasoned
that it would be better positioned to evaluate the cumulative impacts
of its decisions on natural gas markets. One commenter rejected this
reasoning, stating that applicants with the wherewithal to build LNG
export facilities also have the wherewithal to complete the permitting
process.
DOE Response: The commenter's observation that applicants with the
wherewithal to build LNG export facilities also have the wherewithal to
complete the permitting process supports rather than undermines DOE's
reasoning. DOE's view is that LNG projects for which NEPA review is
complete have already shown themselves more likely to advance to
commercial operation than projects that have not yet commenced the NEPA
process (or have stalled at that stage) for whatever reason. By
eliminating the possibility that DOE will issue conditional decisions
on applications that never complete the NEPA review process, the
proposed procedures will help to focus DOE's decisionmaking on projects
that are more likely to proceed and, therefore, will benefit DOE's
ability to assess cumulative market impacts.
Public Comments: DOE noted that it generally would be preferable to
integrate the consideration of all public interest factors in a single,
final order. Under existing procedures, DOE has focused on economic and
international factors at the conditional decision stage and considered
environmental factors at the final stage, once NEPA review is complete.
Under the proposed procedures, DOE would evaluate all such public
interest factors in one order. One commenter asserted that DOE failed
to explain why it is generally preferable to integrate analysis of all
public interest factors in a single order.
DOE Response: DOE's public interest determinations involve
consideration of a wide range of factors. These public interest factors
include economic, international, and environmental considerations that,
under current practice, have been bifurcated between DOE's conditional
and final authorizations. In some instances, the bifurcation is not
problematic because the issues are largely distinct. In other
instances, however, there may be overlap between environmental and non-
environmental issues that would be more efficiently and thoroughly
resolved in a single order. For these reasons, DOE believes that it is
generally preferable to consider these factors concurrently and to
present them in a single analysis. Further, doing so demonstrates that
each factor is given full consideration and allows DOE to communicate
its decision to the public in a simpler, more comprehensible way.
[[Page 48135]]
B. Comments on the Test for When an Application is Ready for Final
Decision
Public Comments: As explained above, DOE proposed that it would act
on applications in the order they become ready for final decision. DOE
specified that an application is ready for final decision when DOE has
completed the NEPA review and when DOE has sufficient information on
which to base a public interest determination. One commenter
recommended that the requirement that DOE has sufficient information on
which to base a public interest determination be removed. This
commenter asserted that, because the Natural Gas Act creates a
rebuttable presumption in favor of authorizing imports and exports, DOE
lacks the power to ensure that the record in a proceeding is complete
before taking final action.
DOE Response: In the revised procedures, DOE will retain the
requirement that it have sufficient information on which to base a
public interest determination as a predicate to final action. The
commenter is correct that the Natural Gas Act creates a rebuttable
presumption in favor of authorizing imports and exports. But that
presumption does not remove DOE's power to impose informational
requirements on applicants or to decide when it has a complete record
on which to base its decision. See, e.g., 10 CFR 590.202, 590.203.
Public Comments: DOE proposed that it would act on applications in
the order they become ready for final decision and that an application
is ready for final decision when DOE has completed the pertinent NEPA
review. DOE further specified that the application will be deemed to
have completed the pertinent NEPA review (1) for those projects
requiring an EIS, 30 days after publication of a Final EIS, (2) for
projects for which an EA has been prepared, upon publication by DOE of
a Finding of No Significant Impact (FONSI), or (3) upon a determination
by DOE that an application is eligible for a categorical exclusion
pursuant to DOE's regulations implementing NEPA, 10 CFR 1021.410, Appx.
A & B.
Commenters urged DOE to clarify that the pertinent NEPA review may
be one in which DOE serves as a cooperating agency and either FERC or
MARAD serves as lead agency. Relatedly, one commenter sought
clarification as to whether DOE intends to issue a FONSI in cases where
it adopts an EA prepared by another agency, and whether DOE may accept
a categorical exclusion determination made by another agency.
DOE Response: The pertinent NEPA review referred to in the Proposed
Procedures Notice may be one for which another agency is the lead
agency and DOE is a cooperating agency, provided that DOE ultimately
elects to adopt the EA or EIS produced by the lead agency. As a
cooperating agency, DOE may adopt an EIS or EA prepared by another
agency and need not re-publish those documents for additional comment.
40 CFR 1506.3(c). Nevertheless, even when it is participating as a
cooperating agency, DOE is ultimately responsible for its own NEPA
compliance. Therefore, where another agency has prepared an EA or EIS
that DOE has chosen to adopt, DOE must conduct its own independent
analysis and issue its own FONSI or Record of Decision, respectively.
Similarly, DOE must issue its own categorical exclusion determination.
A categorical exclusion determination issued by another agency may
inform DOE's decisionmaking, but DOE may only determine that a proposed
action is categorically excluded from NEPA review in accordance with
its own regulations. 10 CFR 1021.410, Appx. A & B. We note that DOE's
list of categorical exclusions applicable to specific agency actions
includes: ``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.'' Id. Appx. B at B5.7.
Public Comments: One commenter questioned why, for projects
requiring an EIS, completion of the NEPA review process occurs 30 days
after publication of the EIS rather than upon publication of the EIS.
DOE Response: The CEQ regulations implementing NEPA generally
prohibit agencies from making a final decision in reliance on an EIS
until 30 days after publication by the Environmental Protection Agency
of the notice of availability for the final EIS. 40 CFR 1506.10(b)(2).
In cases where DOE is a cooperating agency in the preparation of an
EIS, DOE must also adopt the final EIS before it can issue a Record of
Decision.
C. Comments Related to the Timing of Final Decisions
Public Comments: Numerous commenters urged DOE to establish a
uniform deadline by which DOE will issue final decisions after an
application's NEPA review is complete. These commenters contend that a
deadline would provide greater regulatory certainty enabling better
planning and investment decisions.
DOE Response: DOE is sympathetic to this concern. Indeed, one of
the overriding purposes of the procedural changes announced in this
notice is to enable prompt action on applications that are ready for
final decision. However, DOE has several concerns with creating a
uniform deadline. First, each application contains novel issues such
that a deadline that is reasonable for the majority of cases may be
unreasonable in an individual case. Second, DOE lacks control over when
the NEPA review for applications is complete. Were the final EIS for
several applications to be completed at or around the same time,
compliance with a fixed deadline may be unworkable. For these reasons,
DOE declines to create a deadline for final decisions in this notice.
III. Revised Procedures
For the reasons provided in the Proposed Procedures Notice and in
this notice, DOE will implement the procedural changes substantially as
proposed. Specifically, DOE will suspend its practice of issuing
conditional decisions on applications to export LNG to non-FTA
countries from the lower-48 states.\6\
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\6\ The revised procedures will apply only to exports from the
lower-48 states. In the Proposed Procedures Notice, DOE stated that
no long-term applications to export LNG from Alaska were currently
pending and, therefore, DOE could not say whether there may be
unique features of Alaskan projects that would warrant exercise of
the DOE's discretionary authority to issue conditional decisions.
After publishing the Proposed Procedures Notice, DOE received one
application to export LNG from Alaska. See Alaska LNG Project LLC,
Application for Long-Term Authorization to Export Liquefied Natural
Gas, Docket No. 14-96-LNG (July 18, 2014). DOE will consider whether
to issue a conditional decision on that application, or any future
application to export from Alaska, in the context of those
proceedings.
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DOE will no longer act in the published order of precedence, but
will act on applications in the order they become ready for final
action. An application is ready for final action when DOE has completed
the pertinent NEPA review process and when DOE has sufficient
information on which to base a public interest determination. For
purposes of determining the order in which DOE will act on applications
before it, DOE will use the following criteria: (1) For those projects
requiring an EIS, 30 days after publication of a Final EIS, (2) for
projects for which an EA has been prepared, upon publication by DOE of
a Finding of No Significant Impact, or (3) upon a determination by DOE
that an application is eligible for a categorical exclusion pursuant to
DOE's
[[Page 48136]]
regulations implementing NEPA, 10 CFR 1021.410, Appx. A & B.
These revised procedures will not affect the continued validity of
the conditional orders the Department has already issued. For those
applications, the Department will proceed as explained in the
conditional orders: When the NEPA review process for those projects is
complete, the Department will reconsider the conditional authorization
in light of the information gathered in the environmental review and
take appropriate final action.
Issued in Washington, DC, on August 11, 2014.
Christopher A. Smith,
Principal Deputy Assistant Secretary, Office of Fossil Energy.
[FR Doc. 2014-19364 Filed 8-14-14; 8:45 am]
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