Proposed Procedures for Liquefied Natural Gas Export Decisions, 32261-32264 [2014-12932]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 79, Number 107 (Wednesday, June 4, 2014)]
[Notices]
[Pages 32261-32264]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-12932]


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DEPARTMENT OF ENERGY


Proposed Procedures for Liquefied Natural Gas Export Decisions

AGENCY: Office of Fossil Energy, Department of Energy.

ACTION: Notice of proposed procedures.

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SUMMARY: The U.S. Department of Energy (DOE or the Department) proposes 
to act on applications to export liquefied natural gas (LNG) only after 
the review required by the National Environmental Policy Act (NEPA) has 
been completed, suspending its practice of issuing conditional 
decisions prior to final authorization decisions.

DATES: Comments are to be filed using procedures detailed in the 
Submission of Comments section no later than 4:30 p.m., Eastern Time, 
July 21, 2014.

ADDRESSES: Interested persons may submit comments by any of the 
following methods:
    Electronic Filing Using Online Form: https://energy.gov/fe/Procedures.
    Regular Mail: U.S. Department of Energy (FE-34), Attn: Proposed 
Procedures, Office of Oil and Gas Global Security and Supply, 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: Proposed Procedures 
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.

FOR FURTHER INFORMATION CONTACT:

John Anderson, U.S. Department of Energy (FE-34), Office of Oil and Gas 
Global Security and Supply, Office of Fossil Energy, Forrestal 
Building, Room 3E-042, 1000 Independence

[[Page 32262]]

Avenue SW., Washington, DC 20585, (202) 586-5600.
Samuel Walsh, U.S. Department of Energy (GC-1), Office of the General 
Counsel, Forrestal Building, 1000 Independence Avenue SW., Washington, 
DC 20585, (202) 586-6732.

SUPPLEMENTARY INFORMATION:

I. Background

a. Roles of the Agencies With Respect to Natural Gas Exports and 
Related Facilities

    Section 3(a) of the Natural Gas Act (NGA), 15 U.S.C. Sec.  717b(a), 
gives the Department of Energy \1\ responsibility for authorizing 
exports of natural gas to foreign nations. The nature of the 
Department's review of applications for export authorization depends on 
the country to which the natural gas is proposed to be exported. 
Exports to countries with which the United States has a free trade 
agreement (FTA) requiring national treatment for trade in natural gas 
(FTA countries) are deemed in the public interest by statute and must 
be authorized ``without modification or delay.'' 15 U.S.C. 717b(c). 
This notice does not concern applications to export natural gas to FTA 
countries. For exports to countries with which the United States does 
not have a such an agreement (non-FTA countries), the Department must 
conduct an informal adjudication and then grant the application unless 
the Department finds that the proposed export will not be consistent 
with the public interest.
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    \1\ The Department of Energy Organization Act transferred 
jurisdiction over import and export authorizations from the Federal 
Power Commission to the Secretary of Energy. 42 U.S.C. Sec.  7151.
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    In addition to an authorization from the Department under Section 
3(a) of the NGA, an applicant intending to export natural gas from a 
new or modified LNG terminal must also obtain approval to site, 
construct, and operate the terminal. For LNG terminals located onshore 
or in state waters, the applicant must obtain approval from the Federal 
Energy Regulatory Commission (FERC) pursuant to Section 3(e) of the 
NGA. 15 U.S.C. 717b(e). For LNG terminals located offshore beyond state 
waters, the applicant must obtain approval from the Maritime 
Administration within the Department of Transportation (MARAD) 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). To date, all but two of the 26 large-scale non-FTA LNG export 
applications to DOE have proposed exports from LNG terminals located 
onshore or in state waters and therefore have fallen within FERC's 
jurisdiction. In most cases, these applicants have applied to DOE and 
FERC in parallel, which has enabled the two agencies to conduct 
concurrent reviews under the NGA.
    An application to export natural gas to non-FTA countries also 
requires review of potential environmental impacts under the National 
Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq., as does an 
application to site, construct, and operate an LNG terminal. Therefore, 
both DOE and FERC (or MARAD) must satisfy the applicable requirements 
of NEPA, which typically result in the preparation or adoption of an 
Environmental Impact Statement (EIS) or an Environmental Assessment 
(EA) describing the potential environmental impacts associated with the 
proposed authorization before taking final action. Nearly all of the 
non-FTA export proposals currently pending before DOE that have begun 
the NEPA review process are seeking parallel authorizations from FERC. 
In those cases, FERC is serving as the lead agency for purposes of 
preparing the environmental review documents and DOE is serving as a 
cooperating agency. See 40 CFR 1501.4, 1504.5.

b. DOE Procedures for Non-FTA Export Applications

    DOE regulations at 10 CFR part 590 describe DOE's process for 
reviewing non-FTA export applications. This process begins with the 
submission of an application, the required contents of which are 
described at 10 CFR 590.202. Upon receipt, DOE reviews the application 
for completeness. If the application is complete, DOE publishes a 
notice in the Federal Register inviting public participation and 
comment. 10 CFR 590.205. Upon completing its review of all comments and 
protests received in response to the notice of application, all 
information generated in the NEPA review process, and any other 
information entered into the administrative record at DOE's initiative 
or otherwise, DOE issues an order deciding whether the proposed export 
is consistent with the public interest. Parties then have 30 days to 
seek rehearing or clarification of DOE's order. 15 U.S.C. Sec.  
717r(a); 10 CFR 590.501.
    DOE regulations also contemplate the issuance of conditional 
decisions on a discretionary basis prior to the completion of DOE's 
review process. Section 590.402 of DOE's regulations, entitled 
``Conditional orders,'' states: ``The Assistant Secretary may issue a 
conditional order at any time during a proceeding prior to issuance of 
a final opinion and order. The conditional order shall include the 
basis for not issuing a final opinion and order at that time and a 
statement of findings and conclusions. The findings and conclusions 
shall be based solely on the official record of the proceeding.''
    In 1981, when DOE proposed this provision, it explained that a 
``conditional decision would be appropriate in cases where a need 
exists for an indication of [DOE's] preliminary findings and 
conclusions, but additional information is needed before a final 
decision and order can be rendered.'' Dep't of Energy, Import and 
Export of Natural Gas; New Administrative Procedures; Proposed Rule, 46 
FR 44696 (Sept. 4, 1981). The Department noted the interconnected 
regulatory authority possessed by DOE and FERC, and the benefit that 
conditional decisions may hold for FERC. The Department explained that 
``[s]ince decisions on such applications are usually major Federal 
actions significantly affecting the quality of the human environment 
within the meaning of [NEPA], an environmental impact statement (EIS) 
would usually be prepared to assess the impacts of and alternatives to 
the proposed project. The EIS would then be used by both FERC and [DOE] 
in making their respective decisions on the application. Since the 
terminal facilities potentially would involve the larger environmental 
impact, the FERC would generally be the lead agency for preparing an 
EIS. Before expending the time and resources needed to develop an EIS, 
the FERC would benefit from a preliminary indication from [DOE] 
regarding consistency of the importation with the public interest.'' 
Id. at 44700.
    In the years following, DOE issued conditional authorizations on 
numerous occasions.\2\ DOE typically issued these conditional 
authorizations after completion of the notice and comment process, but 
before completion of NEPA review. DOE has also, in the past three 
years, issued seven conditional authorizations for exports of LNG to 
non-FTA countries.\3\ In these orders,

[[Page 32263]]

DOE has assessed all factors relating to the public interest other than 
environmental factors and has explained that, when the environmental 
review is complete, DOE will reconsider the conditional authorization 
in light of the information gathered in the environmental review before 
taking final action.\4\
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    \2\ See, e.g., Rochester Gas and Electric Corp., DOE/FE Order 
No. 503 (May 16, 1991); Brooklyn Union Gas Company, et al., DOE/FE 
Order No. 368-A (1990); Atlantic Richfield Company, DOE/FE Order No. 
301-B (1990); Midland Cogeneration Venture Limited Partnership, DOE/
FE Order No. 305-A (1990); Tennessee Gas Pipeline Company, DOE Order 
No. 254-A (1989).
    \3\ 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).
    \4\ See, e.g., Jordan Cove Energy Project, L.P., DOE/FE Order 
No. 3413 (March 24, 2014) at 15.
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c. The Published Order of Precedence

    On December 5, 2012, the Department published the order in which it 
intended to take up applications to export LNG to non-FTA countries. 
The order, which the Department has updated from time to time, grouped 
the pending applications into three categories. The group of 
applications placed first were those for which the applicant had 
received approval from FERC to use the FERC pre-filing process on or 
before December 5, 2012. Receiving this approval from FERC means that 
an applicant has initiated the NEPA review process, which, as explained 
above, is a predicate for final action by both FERC and DOE. The group 
of applications placed second were those that had not yet initiated 
NEPA review but had already applied to DOE. The group placed third 
consisted of all applicants that had yet to apply to DOE as of December 
5, 2012, regardless of their status in the NEPA review process. Within 
each group, applications were and have continued to be placed in order 
of submission to DOE.

II. Discussion

a. Proposed Procedures

    In this notice, the Department is proposing to suspend its practice 
of issuing conditional decisions on applications to export LNG from the 
lower-48 states \5\ to non-FTA countries prior to completion of NEPA 
review. However, DOE is not proposing to amend 10 CFR 590.402 and will 
retain its discretion to issue conditional decisions in the future 
should the reasoning set forth in this Notice no longer apply.
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    \5\ The Department currently has no long-term applications 
before it to export LNG from Alaska. Lacking any such applications, 
the Department cannot say whether there may be unique features of 
Alaskan projects that would warrant exercise of the Department's 
discretionary authority to issue conditional decisions. Accordingly, 
this notice does not address the treatment of applications to export 
natural gas from Alaska.
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    Under the proposed procedure, DOE would no longer proceed in the 
published order of precedence, but would act on applications in the 
order in which 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 this order, 
an application will be deemed to have completed the NEPA review 
process: (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 regulations 
implementing NEPA, 10 CFR 1021.410, Appx. A & B. The test for whether 
an application has completed NEPA review will be applied as stated 
above and without regard for whether FERC, MARAD, or DOE has served as 
lead agency in preparation of the environmental review document.
    This proposed procedure, if adopted, would 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. Further, the Department will continue to 
act on requests for conditional authorizations during the period when 
the procedures proposed in this notice are under consideration.

b. Rationale

    The Department is proposing the procedure described above for four 
reasons: first, because conditional decisions no longer appear 
necessary for FERC or the majority of applicants to devote resources to 
NEPA review; second, because doing so will prioritize acting upon 
applications that are otherwise ready to proceed; third, because doing 
so will facilitate decisionmaking informed by better and more complete 
information; and fourth, because doing so will better allocate agency 
resources.
    The Department's original stated justification for issuing 
conditional authorizations--to provide greater certainty for FERC--no 
longer appears to apply. FERC has proceeded with the NEPA review 
process for many LNG terminals that have yet to receive conditional 
non-FTA authorizations from DOE. Similarly, the applicants themselves 
have, in general, been willing to devote time and resources to the NEPA 
review process without having received conditional authorizations. In 
addition to the seven applications comprising a total of 9.27 billion 
cubic feet per day (Bcf/d) in export authority to non-FTA countries 
that DOE has already approved either finally or conditionally, there 
are another 8 projects comprising 10.82 Bcf/d in requested non-FTA 
export authority that are well into the NEPA review process without 
having received a conditional authorization.\6\
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    \6\ See Oregon LNG, FERC Docket No. CP09-6; 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.
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    Further, the proposed procedure will ensure that applications 
otherwise ready to proceed will not be held back by their position in 
the order of precedence. While the first grouping of applications in 
the order of precedence was partially determined by the applicants' 
having initiated NEPA review, over time the order of precedence is 
likely to bear less of a direct relationship to the applicants' 
progress in NEPA review. Indeed, it is likely that if DOE were to 
continue on its current course in the published order of precedence, 
DOE would act on some applications that have yet to initiate NEPA 
review before acting on others that have already finished NEPA review. 
By removing the intermediate step of conditional decisions and setting 
the order of DOE decisionmaking based on readiness for final action, 
DOE will avoid the possibility of delayed action on applications that 
are otherwise ready to proceed.
    The proposed procedure is also likely to improve the quality of 
information on which DOE bases its decisions for three reasons. First, 
by considering economic issues closer in time to when the project is 
ready to commence construction, DOE will be able to base its decision 
on more current data than when it issues a conditional decision, which 
could potentially occur years before NEPA review for the application is 
complete. Second, by acting only on applications for which NEPA review 
has been completed, DOE will be in a better position to judge the 
cumulative market

[[Page 32264]]

impacts of its authorizations in its public interest review. Completion 
of the NEPA review process requires, among other things, preparation of 
engineering and design plans at considerable expense to the 
applicant.\7\ An applicant's willingness and capability to make such 
expenditures is indicative of the applicant's willingness and 
capability to complete the proposed project. Therefore, while it is 
surely not the case that all projects for which NEPA review is 
completed will be financed and constructed, projects that have 
undertaken the expense to complete NEPA review are, as a group, more 
likely to proceed than those that have not. Third, DOE believes that, 
while it may be warranted in some circumstances to bifurcate the 
consideration of environmental factors and all other factors affecting 
the public interest in two separate orders, it is generally preferable 
to integrate the consideration of all public interest factors in a 
single order.
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    \7\ See, FERC, Office of Energy Projects, Guidance Manual for 
Environmental Report Preparation (Aug. 2002), available at https://www.ferc.gov/industries/gas/enviro/erpman.pdf (describing required 
contents of Resource Report 13).
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    Declining to issue conditional decisions will also better allocate 
departmental resources. Applying for an export authorization from DOE 
is relatively inexpensive; it requires a small application fee and 
modest informational requirements. For that reason, some companies may 
view it as advantageous to file an application with DOE even if they 
foresee only a low probability that they will ultimately undergo NEPA 
review and complete the application process. By acting only on 
applications that are ready for final action, DOE will likely avoid 
devoting resources to applications that have little prospect of 
proceeding. These saved resources can be better deployed to providing 
timely action on applications that are furthest along in the regulatory 
review process.

III. Public Participation

A. Submission of Comments

    In response to this notice, any person may file comments. DOE 
prefers comments to be filed using the following online form (method 
1). However, for those lacking access to the Internet, comments may be 
filed using method 2 or 3. The three methods are: (1) Submission of 
comments using the on-line form at https://energy.gov/fe/Procedures; (2) 
mailing comments to the Office of Oil and Gas Global Security and 
Supply at the address listed in ADDRESSES; or (3) delivering comments 
(by hand or courier) to the Office of Oil and Gas Global Security and 
Supply at the address listed in ADDRESSES. All filings must include a 
reference to Notice of Change of Procedures. PLEASE NOTE: DOE/FE is not 
accepting any comments by email. Any hardcopy filing submitted greater 
in length than 50 pages must also include, at the time of the filing, a 
digital copy on disk of the entire submission in PDF format. Please do 
not include any active hyperlinks or password protection in any of the 
electronic documents related to the filing. All electronic filings 
submitted to DOE must follow these guidelines to ensure that all 
documents are filed in a timely manner. All comments filed in response 
to this Notice will be publicly available on the DOE/FE Web site 
(https://energy.gov/fe/Procedures) and on www.regulations.gov.
    While this invitation to comment covers a specific issue, DOE may 
disregard comments that are not germane to the present inquiry. 
Commenters should be advised that filings with DOE shall be subject to 
public disclosure, so submissions should be free of any personally 
identifiable information (PII) or other information that the individual 
does not wish to be revealed in a public forum.
    Any hardcopy filings are available for inspection and copying in 
the Division of Natural Gas Regulatory Activities 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. All comments filed will also 
be available electronically by going to the following DOE/FE Web 
address: https://energy.gov/fe/Procedures.
    DOE will accept comments no later than the date provided at the 
beginning of this notice. After the close of the comment period, DOE 
will review the comments received and decide whether to implement the 
proposed policy.
    According to 10 CFR part 1004.11, any person submitting information 
that he or she believes to be confidential and exempt by law from 
public disclosure should submit two copies: one copy of the document 
should have all the information believed to be confidential deleted. 
DOE will make its own determination as to the confidential status of 
the information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include (1) a description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known or available from public sources; (4) whether the 
information has previously been made available to others without 
obligations concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting persons which would result from 
public disclosure; (6) a date after which such information might no 
longer be considered confidential; and (7) why disclosure of the 
information would be contrary to the public interest.

B. Issues on Which DOE Seeks Comments

    DOE welcomes comments on all aspects of the proposed procedures, 
including its likely impact on applicants and other stakeholders. The 
Department invites all interested parties to submit in writing by July 
21, 2014 comments and information on matters addressed in this notice. 
After the expiration of the period for submitting written statements, 
the Department will consider all comments and additional information 
that is obtained from interested parties or through further analyses, 
and it will prepare a final procedure statement.

    Issued in Washington, DC, on May 29, 2014.
Christopher A. Smith,
Principal Deputy Assistant Secretary, Office of Fossil Energy.
[FR Doc. 2014-12932 Filed 6-3-14; 8:45 am]
BILLING CODE 6450-01-P