Policy Statement on Export Commencement Deadlines in Authorizations To Export Natural Gas to Non-Free Trade Agreement Countries, 25272-25278 [2023-08805]
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88 FR 9195.
88 FR 9106.
88 FR 17164.
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ML23073A116.
ML23075A156.
ML23073A095.
ML23107A144.
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ML23108A279.
DEPARTMENT OF ENERGY
Docket Nos.
10 CFR Part 590
Policy Statement on Export
Commencement Deadlines in
Authorizations To Export Natural Gas
to Non-Free Trade Agreement
Countries
Docket Nos.
Lake Charles Exports, LLC .........
Gulf LNG Liquefaction Company,
LLC.
Golden Pass LNG Terminal LLC
Lake Charles LNG Export Co.,
LLC.
Magnolia LNG, LLC .....................
Delfin LNG LLC ...........................
Alaska LNG Project LLC .............
Pieridae Energy (USA) Ltd ..........
Texas LNG Brownsville LLC .......
Cameron LNG, LLC .....................
Port Arthur LNG, LLC ..................
Rio Grande LNG, LLC .................
Venture Global Plaquemines
LNG, LLC.
Lake Charles LNG Export Co.,
LLC.
Lake Charles Exports, LLC .........
Driftwood LNG LLC .....................
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11–59–LNG.
12–101–LNG.
12–156–LNG.
13–04–LNG.
13–132–LNG.
13–147–LNG.
14–96–LNG.
14–179–LNG.
15–62–LNG.
15–90–LNG.
15–96–LNG.
15–190–LNG.
16–28–LNG.
16–109–LNG.
16–110–LNG.
16–144–LNG.
Sfmt 4700
Freeport LNG Expansion, L.P. &
FLNG Liquefaction 4, LLC.
Mexico Pacific Limited LLC .........
Corpus Christi Liquefaction, LLC
ECA Liquefaction, S. de R.L. de
C.V.
Energı´a Costa Azul, S. de R.L.
de C.V.
Epcilon LNG LLC .........................
Vista Pacifico LNG, S.A.P.I. de
C.V.
18–26–LNG.
18–70–LNG.
18–78–LNG.
18–144–LNG.
18–145–LNG.
20–31–LNG.
20–153–LNG.
Office of Fossil Energy and
Carbon Management, Department of
Energy.
ACTION: Policy statement.
AGENCY:
The Department of Energy
(DOE) is reaffirming the seven-year
deadline for authorization holders to
commence exports of domestically
produced natural gas, including
liquefied natural gas (LNG), to non-free
trade agreement (non-FTA) countries set
forth in long-term authorizations issued
under the Natural Gas Act. For existing
and future non-FTA authorizations for
the export of LNG, DOE will allow
SUMMARY:
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authorizations to expire on the export
commencement deadline originally set
forth in the order and will not consider
an application for an extension, unless
the authorization holder demonstrates
both that: it has physically commenced
construction on the associated export
facility, and its inability to comply with
the existing export commencement
deadline is the result of extenuating
circumstances outside of its control.
Authorization holders unable to make
this demonstration may submit a new
non-FTA application, which will be
considered without prejudice. This
policy will increase transparency for
non-FTA authorization holders and
pending applicants who have not yet
commenced exports, while providing
greater certainty about DOE’s approvals
for the LNG export market. Concurrently
with the issuance of this Policy
Statement, DOE is issuing final orders
on three pending applications for a
commencement extension.
DATES: This Policy Statement is
applicable on April 21, 2023.
FOR FURTHER INFORMATION CONTACT:
Amy Sweeney or Jennifer Wade, U.S.
Department of Energy (FE–34), Office of
Regulation, Analysis, and Engagement,
Office of Fossil Energy and Carbon
Management, Forrestal Building, Room
3E–042, 1000 Independence Avenue
SW, Washington, DC 20585; (202) 586–
2627 or (202) 586–4749; amy.sweeney@
hq.doe.gov or jennifer.wade@
hq.doe.gov; Cassandra Bernstein, U.S.
Department of Energy (GC–76), Office of
the Assistant General Counsel for
Energy Delivery and Resilience,
Forrestal Building, Room 6D–033, 1000
Independence Avenue SW, Washington,
DC 20585; (202) 586–9793;
cassandra.bernstein@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Acronyms and Abbreviations.
Acronyms and abbreviations used in
this document are set forth below for
reference.
Bcf/d Billion Cubic Feet per Day
DOE United States Department of Energy
FERC Federal Energy Regulatory
Commission
FTA Free Trade Agreement
LNG Liquefied Natural Gas
MARAD Maritime Administration
NEPA National Environmental Policy Act
of 1969
NGA Natural Gas Act of 1938
Tcf Trillion Cubic Feet
Table of Contents
I. Statutory Background
II. Regulatory Background
A. Long-Term Non-FTA Authorizations
Issued to Date
B. Seven-Year Commencement Deadline
for Exports to Non-FTA Countries
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C. Applications To Extend the Export
Commencement Deadline
1. Orders Extending the Export
Commencement Deadline Granted in
2020
2. Applications for Commencement
Extensions Submitted Since 2022
III. Policy Statement
A. Basis for Change in DOE’s Treatment of
Applications for Commencement
Extensions
B. Policy and Implementation
C. Policy Objectives
D. Applicability of Policy Statement
IV. Administrative Benefits
V. Approval of the Office of the Secretary
I. Statutory Background
DOE is responsible for authorizing
exports of domestically produced
natural gas, including LNG,1 to foreign
countries under section 3 of the Natural
Gas Act (NGA).2 The policy announced
in this Policy Statement is specific to
authorizations 3 for the export of natural
gas to countries with which the United
States does not have a free trade
agreement (FTA) requiring national
treatment for trade in natural gas and
with which trade is not prohibited by
U.S. law or policy (non-FTA countries).4
NGA section 3(a) authorizes the
exportation of natural gas from the
1 In referring to natural gas in this Policy
Statement, DOE refers primarily, but not
exclusively, to LNG. Some DOE proceedings have
involved (and, in the future, may involve) other
types of natural gas, including compressed natural
gas and compressed gas liquid. See 15 U.S.C.
717a(5) (definition of natural gas); 10 CFR
590.102(i).
2 15 U.S.C. 717b. The Secretary’s authority was
established by the Department of Energy
Organization Act, 42 U.S.C. 7151(b), which
transferred jurisdiction over import and export
authorizations from the Federal Power Commission
to the Secretary of Energy; see also 42 U.S.C.
7172(f). The authority to regulate the imports and
exports of natural gas, including LNG, under NGA
section 3 has been delegated to the Assistant
Secretary for Fossil Energy and Carbon Management
(FECM) in Redelegation Order No. S4–DEL–FE1–
2023, issued on April 10, 2023.
3 For purposes of this Policy Statement, DOE uses
the terms ‘‘authorization’’ and ‘‘order’’
interchangeably.
4 15 U.S.C. 717b(a). This Policy Statement does
not apply to exports to FTA countries under NGA
section 3(c), 15 U.S.C. 717b(c). Section 3(c) of the
NGA, as amended by section 201 of the Energy
Policy Act of 1992 (Pub. L. 102–486), requires that
applications to export natural gas to FTA countries
‘‘shall be deemed to be consistent with the public
interest’’ and granted ‘‘without modification or
delay.’’ 15 U.S.C. 717b(c). Additionally, as of
August 24, 2018, qualifying ‘‘small-scale natural gas
exports’’ to non-FTA countries are deemed to be
consistent with the public interest under NGA
section 3(a). See 10 CFR 590.102(p); 10 CFR
590.208(a); see also U.S. Dep’t of Energy, SmallScale Natural Gas Exports; Final Rule, 83 FR 35106
(July 25, 2018). Because small-scale orders contain
different terms than non-FTA orders involving
larger volumes of exports (specifically, requiring
authorization holders to commence small-scale
exports within two years), this Policy Statement
also does not apply to small-scale exports of natural
gas.
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United States unless DOE determines
that doing so ‘‘will not be consistent
with the public interest.’’ 5 DOE, as
affirmed by the U.S. Court of Appeals
for the District of Columbia Circuit, has
consistently interpreted this provision
as creating a rebuttable presumption
that a proposed export of natural gas to
non-FTA countries is in the public
interest.6 Accordingly, DOE will
conduct an informal adjudication and
grant an application requesting a nonFTA authorization unless DOE finds
that the proposed exportation will not
be consistent with the public interest.7
NGA section 3(a) also authorizes DOE,
‘‘after opportunity for hearing, and for
good cause shown,’’ to issue any
supplemental order ‘‘as it may find
necessary or appropriate.’’ 8
DOE’s authorization is solely with
respect to the export (or import) of
natural gas and does not extend to
authorization over the siting,
construction, and operation of the
liquefaction and export facilities. 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 NGA section 3(e).9
For LNG terminals located offshore
beyond state waters, the responsible
agency is the Maritime Administration
(MARAD) within the Department of
Transportation pursuant to the
Deepwater Ports Act of 1974.10
Although most approved non-FTA
exports originate (or will originate) from
existing or proposed projects to be built
in the United States, DOE has also
approved non-FTA exports in
extraterritorial proceedings involving
5 15
U.S.C. 717b(a).
Sierra Club v. U.S. Dep’t of Energy, 867 F.3d
189, 203 (D.C. Cir. 2017) (‘‘We have construed
[NGA section 3(a)] as containing a ‘general
presumption favoring [export] authorization.’ ’’)
(quoting W. Va. Pub. Serv. Comm’n v. U.S. Dep’t
of Energy, 681 F.2d 847, 856 (D.C. Cir. 1982)).
7 Id. (‘‘there must be ‘an affirmative showing of
inconsistency with the public interest’ to deny the
application’’ under NGA section 3(a)) (quoting
Panhandle Producers & Royalty Owners Ass’n v.
Econ. Regulatory Admin., 822 F.2d 1105, 1111 (D.C.
Cir. 1987)).
8 15 U.S.C. 717b(a).
9 15 U.S.C. 717b(e); see also 15 U.S.C. 717a(11)
(definition of LNG terminal); 18 CFR 153.2(d);
Sierra Club v. Fed. Energy Regulatory Comm’n, 827
F.3d 36, 40 (D.C. Cir. 2016) (observing that, while
DOE ‘‘maintains exclusive authority over the export
of natural gas as a commodity,’’ DOE has delegated
to FERC the authority to approve or deny an
application for the siting, construction, operation,
or expansion of an LNG terminal under NGA
section 3(e)).
10 See 33 U.S.C. 1502(9), 1503(a). The Deepwater
Port Act originally applied only to oil import
terminals, but was amended to include natural gas
terminals. See Maritime Transportation Security
Act of 2002, sec. 106, Public Law 107–295, 116 Stat.
2064.
6 See
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Mexico or Canada. In such proceedings,
DOE approves the export of U.S.sourced natural gas by pipeline to
Mexico or Canada under NGA section
3(c), and authorizes the re-export 11 of
the U.S.-sourced natural gas in the form
of LNG from a liquefaction and export
facility to be built in Mexico or Canada,
respectively, to non-FTA countries
under NGA section 3(a).12
Before reaching a final decision on
any non-FTA application, DOE must
also comply with the National
Environmental Policy Act of 1969
(NEPA).13
II. Regulatory Background
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A. Long-Term Non-FTA Authorizations
Issued to Date
Although NGA section 3(a)
establishes a broad public interest
standard and a presumption favoring
export authorizations, the statute does
not define ‘‘public interest’’ or identify
criteria that must be considered. In prior
decisions, DOE has identified a range of
factors that it evaluates when reviewing
an application to export LNG to nonFTA countries. These factors include
economic impacts, international
impacts, security of natural gas supply,
and environmental impacts, among
others. To conduct this review, DOE
looks to record evidence developed in
the application proceeding.14
Currently, there are 41 long-term
orders 15 authorizing the export of LNG
sourced from the United States (both the
lower-48 states and Alaska) to non-FTA
countries under NGA section 3(a).16
11 For purposes of these proceedings, ‘‘re-export’’
means to ship or transmit U.S.-sourced natural gas
in its various forms (gas, compressed, or liquefied)
subject to DOE’s jurisdiction under the NGA, 15
U.S.C. 717b, from one foreign country (i.e., a
country other than the United States) to another
foreign country.
12 See, e.g., Vista Pacifico LNG, S.A.P.I. de C.V.,
DOE/FECM Order No. 4929, Docket No. 20–153–
LNG, Order Granting Long-Term Authorization to
Re-Export U.S.-Sourced Natural Gas in the Form of
Liquefied Natural Gas from Mexico to Non-Free
Trade Agreement Nations, 1–7 (Dec. 20, 2022).
13 42 U.S.C. 4321 et seq.
14 See, e.g., Sabine Pass Liquefaction, LLC, DOE/
FECM Order No. 4800, Docket No. 19–125–LNG,
Order Granting Long-Term Authorization to Export
Liquefied Natural Gas to Non-Free Trade Agreement
Nations, 10–28 (Mar. 16, 2022).
15 Under DOE practice, ‘‘long-term’’ refers to
orders greater than two years in duration. See U.S.
Dep’t of Energy, Including Short-Term Export
Authority in Long-Term Authorizations for the
Export of Natural Gas on a Non-Additive Basis;
Policy Statement, 86 FR 2243 (Jan. 12, 2021).
16 See Freeport LNG Expansion, L.P., et al., DOE/
FECM Order No. 4961, Docket No. 21–98–LNG,
Order Granting Long-Term Authorization to Export
Liquefied Natural Gas to Non-Free Trade Agreement
Nations, at 72–76 (Mar. 3, 2023) (identifying final
non-FTA authorizations sourced from the lower-48
states); see also Alaska LNG Project LLC, DOE/FE
Order No. 3643–A, Docket No. 14–96–LNG, Final
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These orders authorize a cumulative
volume of non-FTA exports equivalent
to 47.28 billion cubic feet (Bcf) per day
(Bcf/d) of natural gas sourced from the
lower-48 United States and 2.55 Bcf/d
sourced from Alaska, or approximately
17.3 trillion cubic feet (Tcf) and 0.9 Tcf
per year, respectively.17 This
cumulative volume includes 43.52 Bcf/
d of U.S.-sourced natural gas authorized
for export from facilities built (or
proposed to be built) in the United
States (including Alaska), and 6.31 Bcf/
d of U.S-sourced natural gas authorized
for re-export in the form of LNG from
facilities to be built in Mexico or
Canada.18 It does not include volumes
from long-term non-FTA orders that
DOE has vacated 19 or orders
authorizing small-scale exports of
natural gas.20
Of the 49.83 Bcf/d in approved nonFTA export volumes as of today
(sourced from both the lower-48 states
and Alaska), the cumulative total of U.S.
and Mexico LNG export capacity that is
operating or under construction across
11 mid- or large-scale export projects is
24.19 Bcf/d of natural gas.21 The
Opinion and Order Granting Long-Term
Authorization to Export Liquefied Natural Gas to
Non-Free Trade Agreement Nations (Aug. 20, 2020),
reh’g granted in part, DOE/FE Order No. 3643–B
(Apr. 15, 2021), order aff’d, DOE/FECM Order No.
3643–C (Apr. 13, 2023).
17 See Freeport LNG Expansion, L.P., et al., DOE/
FECM Order No. 4961, at 72; see also Alaska LNG
Project LLC, DOE/FE Order No. 3643–A, at 5, 40.
Following issuance of Freeport LNG Expansion,
L.P., et al., DOE/FECM Order No. 4961, DOE
vacated one long-term non-FTA authorization at the
request of the authorization holder, Eagle LNG
Partners Jacksonville II LLC (0.01 Bcf/d). See infra
note 19.
18 See Freeport LNG Expansion, L.P., et al., DOE/
FECM Order No. 4961, at 72–76; see also Vista
Pacifico LNG, DOE/FECM Order No. 4929, at 7.
19 To date, DOE has vacated nine long-term
authorizations to export LNG to non-FTA countries
(none over the objection of the authorization
holder) in the following proceedings: Eagle LNG
Partners Jacksonville II LLC, Docket No. 17–79–LNG
(Mar. 12, 2023); Bear Head Energy Inc. and Bear
Head LNG (USA), LLC, Docket No. 15–33–LNG (Jan.
20, 2023); Jordan Cove Energy Project L.P., Docket
No. 12–32–LNG (Apr. 22, 2022); Air Flow N. Am.
Corp., Docket No. 14–206–LNG (Dec. 30, 2021);
Emera CNG, LLC, Docket No. 13–157–CNG (Oct. 20,
2021); Annova LNG Common Infrastructure, LLC,
Docket No. 19–34–LNG (Apr. 23, 2021); Floridian
Natural Gas Storage Co., LLC, Docket No. 15–38–
LNG (Oct. 22, 2020); Carib Energy (USA) LLC,
Docket No. 11–141–LNG (Nov. 17, 2020); Flint Hills
Res., LP, Docket No. 15–168–LNG (Feb. 5, 2019).
20 See 10 CFR 590.102(p); 10 CFR 590.208(a); see
supra note 4.
21 This 24.19 Bcf/d volume representing export
capacity approved to non-FTA countries currently
operating or under construction is comprised of:
(i) 23.75 Bcf/d of non-FTA volumes under
construction or operating in the United States at the
end of March 2023 (see U.S. Energy Info. Admin.,
U.S. Liquefaction Capacity (Apr. 17, 2023), https://
www.eia.gov/naturalgas/U.S.liquefaction
capacity.xlsx, calculated by adding Column N in
‘‘Existing & Under Construction’’ worksheet); and
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remaining 25.64 Bcf/d in approved nonFTA export volumes represent possible
future export capacity from numerous
other proposed LNG export projects, but
these proposed projects have not yet
progressed to the construction phase.
Some of these projects received
approval for non-FTA exports as far
back as 2016.22
B. Seven-Year Commencement Deadline
for Exports to Non-FTA Countries
Both the NGA and DOE’s regulations
provide DOE with broad authority to
attach conditions to non-FTA export
authorizations. NGA section 3(a) states
that DOE may grant an application for
a non-FTA export authorization ‘‘upon
such terms and conditions as the
[Secretary] may find necessary or
appropriate.’’ 23 Similarly, under 10 CFR
590.404, DOE may ‘‘issue a final
opinion and order and attach such
conditions thereto as may be required
by the public interest after completion
and review of the final record.’’ 24
Neither NGA section 3(a) nor DOE’s
regulations prescribe a specific time
period for a non-FTA authorization. For
this reason, DOE has determined that it
has discretion under 10 CFR 590.404 to
impose suitable terms.
For long-term orders authorizing the
export of U.S.-sourced LNG to non-FTA
countries, DOE provides each
authorization holder with a period of
seven years to commence export
operations, set from the date the order
is issued.25 The end of this seven-year
period is often referred to as the
‘‘commencement deadline,’’ after which
point the non-FTA authorization
expires. If the authorization holder
commences exports of LNG from its
facility within this seven-year period, its
export term (whether for 20 years or for
a term extending through December 31,
(ii) 0.44 Bcf/d in U.S.-sourced natural gas to be
re-exported in the form of LNG by ECA
Liquefaction, S. de R.L. de C.V. from the ECA MidScale Project Phase 1, under construction in
Mexico, to non-FTA countries (see Docket No. 18–
144–LNG).
22 See, e.g., Pieridae Energy (USA) Ltd., DOE/FE
Order No. 3768, Docket No. 14–179–LNG, Opinion
and Order Granting Long-Term, Multi-Contract
Authorization to Export U.S.-Sourced Natural Gas
Natural Gas by Pipeline to Canada for Liquefaction
and Re-Export in the Form of Liquefied Natural Gas
to Non-Free Trade Agreement Countries (Feb. 5,
2016), discussed infra.
23 15 U.S.C. 717b(a).
24 10 CFR 590.404.
25 The non-FTA exceptions are: (i) the Alaska
LNG non-FTA authorization, which has a 12-year
commencement deadline due to the unique aspects
of that proposed project, see Alaska LNG Project
LLC, DOE/FE Order No. 3643–A, at 41 (Ordering
Para. D), and (ii) orders authorizing small-scale
exports of natural gas, which have a two-year
commencement deadline (see supra note 4).
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2050) 26 begins upon the date of first
commercial export.27
This practice began in 2011, when
DOE issued its first conditional longterm export authorization involving
domestically produced LNG to Sabine
Pass Liquefaction, LLC (Sabine Pass).28
In its application, Sabine Pass had
requested ‘‘that its authorization
commence on the earlier of the date of
first export or five years from the date
of the issuance of the authorization.’’ 29
After reviewing the record evidence,
DOE determined that a period of seven
years for Sabine Pass to commence its
non-FTA exports was consistent with
the public interest.30
In reaching this conclusion, DOE first
explained that the purpose of the
commencement deadline ‘‘is to ensure
that other entities that may seek similar
authorizations are not frustrated in their
efforts to obtain those authorizations by
authorization holders that are not
engaged in actual export operations.’’ 31
Next, DOE stated that ‘‘a seven-year
operations commencement date has
been selected as a reasonable
accommodation given [Sabine Pass’s]
representation that it plans to be ready
to commence operations by 2015–
2016.’’ 32 DOE reasoned that a sevenyear commencement period ‘‘provides
approximately two years beyond
[Sabine Pass’s] current planned
commencement date before the
condition must be met,’’ and thus ‘‘will
allow for time lost due to unplanned
delays in licensing and construction of
the planned liquefaction facilities.’’ 33
Since 2011, DOE has continued to
provide a seven-year period for
authorization holders to commence
exports to non-FTA countries. This
seven-year commencement deadline is
set forth in both the Terms and
26 See U.S. Dep’t of Energy, Extending Natural
Gas Export Authorizations to Non-Free Trade
Agreement Countries Through the Year 2050;
Notice of Final Policy Statement and Response to
Comments, 85 FR 52237 (Aug. 25, 2020).
27 See, e.g., Magnolia LNG LLC, DOE/FECM Order
No. 3909–C, Docket No. 13–132–LNG, Order
Amending Long-Term Authorization to Export
Liquefied Natural Gas to Non-Free Trade Agreement
Nations, at 67–68 (Apr. 27, 2022) (Ordering Paras.
A, D).
28 See Sabine Pass Liquefaction, LLC, DOE/FE
Order No. 2961, Docket No. 10–111–LNG, Opinion
and Order Conditionally Granting Long-Term
Authorization to Export Liquefied Natural Gas from
Sabine Pass LNG Terminal to Non-Free Trade
Agreement Nations (May 20, 2011). DOE
incorporated this seven-year commencement period
in Sabine Pass’s final order (DOE/FE Order No.
2961–A), issued on August 7, 2012.
29 Sabine Pass Liquefaction, LLC, DOE/FE Order
No. 2961, at 2.
30 Id. at 33, 43 (Ordering Para. C).
31 Id. at 33.
32 Id.
33 Id.
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Conditions and the Ordering Paragraphs
of each long-term non-FTA order.34
Specifically, in the Terms and
Conditions, DOE continues to cite the
need for the seven-year commencement
deadline ‘‘to ensure that other entities
that may seek similar authorizations are
not frustrated in their efforts to obtain
those authorizations by authorization
holders that are not engaged in actual
export [or re-export] operations.’’ 35 In
the relevant Ordering Paragraph of each
non-FTA order, DOE states that the
authorization holder ‘‘must commence
export [or re-export] operations using
the planned liquefaction facilities no
later than seven years from the date of
issuance of [the Order].’’ 36
To date, all seven large-scale export
facilities using U.S.-sourced natural gas
that have commenced exports of LNG
have done so before the seven-year
commencement deadline established in
the authorization holders’
corresponding non-FTA
authorization(s).37
C. Applications To Extend the Export
Commencement Deadline
Several authorization holders have
filed applications (or requests) asking
DOE to extend their original seven-year
commencement deadline to a later date,
based on the circumstances associated
with their proposed LNG facility.
1. Orders Extending the Export
Commencement Deadline Granted in
2020
In 2020, DOE granted extensions of
the commencement deadline in six nonFTA orders (held by four different
authorization holders), as follows:
34 If an authorization holder has already
commenced export operations from its facility and
is requesting to export additional volumes, this
term is unnecessary and is therefore omitted from
successive orders. See, e.g., Sabine Pass, DOE/
FECM Order No. 4800, at 68–75.
35 E.g., Corpus Christi Liquefaction Stage III, LLC,
DOE/FE Order No. 4490, Docket No. 18–78–LNG,
Opinion and Order Granting Long-Term
Authorization to Export Liquefied Natural Gas to
Non-Free Trade Agreement Nations, at 49 (Term
and Condition B) (Feb. 10, 2020); see also Vista
Pacifico LNG, S.A.P.I. de C.V., DOE/FECM Order
No. 4929, at 73–74 (Term and Condition B) (Dec.
20, 2022).
36 Magnolia LNG LLC, DOE/FECM Order No.
3909–C, at 68 (Ordering Para. C). The exact
phrasing of this Ordering Paragraph may vary
among orders, but the seven-year commencement
deadline is consistent.
37 The authorization holders that have
commenced exports before their commencement
deadline are: (i) Sabine Pass; (ii) Cove Point LNG,
LP; (iii) Southern LNG Company, L.L.C.; (iv)
Cheniere Marketing, LLC and Corpus Christi
Liquefaction, LLC (joint authorization holders); (v)
Cameron LNG, LLC; (vi) Freeport LNG Expansion,
L.P., FLNG Liquefaction, LLC, FLNG Liquefaction 2,
LLC, and FLNG Liquefaction 3, LLC (joint
authorization holders); and (vii) Venture Global
Calcasieu Pass, LLC. See supra note 21.
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• Golden Pass LNG Terminal LLC,
DOE/FE Order No. 3978–C, Docket No.
12–156–LNG, Order Granting Request
for Extension of Export Commencement
Deadlines (Mar. 24, 2020) (extending
commencement deadline from April 25,
2024, to September 30, 2025);
• Lake Charles LNG Export Company,
LLC, DOE/FE Order Nos. 3868–A and
4010–A, Docket Nos. 13–04–LNG and
16–109–LNG, Order Granting
Application for Extension of
Commencement Deadlines (Oct. 6,
2020) (extending commencement
deadlines in two non-FTA orders from
July 29, 2023 or June 29, 2024,
respectively, to December 16, 2025);
• Lake Charles Exports, LLC, DOE/FE
Order Nos. 3324–B and 4011–A, Docket
Nos. 11–59–LNG and 16–110–LNG,
Order Granting Application to Amend
Long-Term Authorizations (Oct. 6, 2020)
(extending commencement deadlines in
two non-FTA orders from July 29, 2023
or June 29, 2024, respectively, to
December 16, 2025); and
• Cameron LNG, LLC, DOE/FE Order
No. 3846–A, Docket No. 15–90–LNG,
Order Granting Application for
Extension of Commencement Deadlines
(Nov. 2, 2020) (extending
commencement deadline from July 15,
2023, to May 5, 2026).
Although DOE evaluated these
authorization holders’ extension
applications on a case-by-case basis,
DOE considered the same general
factors in each proceeding.
First, DOE considered whether
FERC—the agency approving the siting,
construction, and operation of the LNG
export facility in each proceeding—had
approved an extension of its own
‘‘construction and in-service deadline’’
for the proposed facility.38 In each of
these proceedings, DOE found that
FERC had already approved an
extension for the facility’s original
construction and in-service deadline.
Second, DOE considered the projectspecific facts presented in the extension
application, including the authorization
holder’s progress in constructing the
proposed export facility,39 the
38 FERC’s authorizations for proposed LNG export
facilities under NGA section 3(e), 15 U.S.C. 717b(e),
include a deadline for the authorization holder to
complete construction of the facility and to make
it available for service—typically five years from the
date of the order, which may be extended for good
cause. See, e.g., Rio Grande LNG, LLC, Order
Granting Extension of Time Request, 181 FERC
¶ 61032, P 10 (Oct. 14, 2022).
39 Among the proceedings identified, progress on
the proposed facility noted by DOE has included,
for example, obtaining all required federal, state,
and local authorizations; conducting or completing
front-end engineering and design; awarding
engineering, procurement, and construction
contracts for the facility; and receiving
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additional time necessary for the
authorization holder to commence
exports, and any unique delays and
challenges faced by the authorization
holder.40
Finally, DOE published each
application for a commencement
extension in the Federal Register and
provided the public with 15 days to
submit protests, motions to intervene,
and comments in response to the
application.41 As part of DOE’s final
order on each application, DOE
considered any responses received
during this comment period.42
In each of these proceedings, DOE
found good cause to grant the
application for the commencement
extension and concluded that extending
the export commencement deadline
would not alter DOE’s public interest
determination in granting the original
non-FTA authorization.43
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2. Applications for Commencement
Extensions Submitted Since 2022
DOE has continued to receive new
applications for commencement
extensions. In 2022, Lake Charles LNG
Export Company, LLC and Lake Charles
Exports, LLC filed an application
requesting their second commencement
extension across a total of four non-FTA
orders,44 and Port Arthur LNG, LLC
filed an application requesting its first
commencement extension.45 Most
recently, in 2023, Pieridae Energy (USA)
Ltd.46 and Magnolia LNG, LLC 47 have
each filed an application requesting
their first commencement extension.48
authorization from FERC to proceed with site
clearance.
40 For example, the Lake Charles entities stated
that they experienced an unforeseen construction
delay resulting from a commercial merger in their
corporate ownership. See, e.g., Lake Charles LNG
Export Co., LLC, DOE/FE Order Nos. 3868–A and
4010–A, at 5.
41 See, e.g., U.S. Dep’t of Energy, Cameron LNG,
LLC; Request for Extension of Commencement
Deadline for Non-Free Trade Agreement
Authorization, 85 FR 20993 (Apr. 15, 2020).
42 See, e.g., Golden Pass LNG Terminal LLC, DOE/
FE Order No. 3978–C, at 4, 8–10.
43 Id. at 8–10.
44 See Docket Nos. 11–59–LNG, 16–110–LNG, 13–
04–LNG, and 16–109–LNG.
45 See Docket No. 15–96–LNG.
46 See Pieridae Energy (USA) Ltd., Request for
Extension for Long-Term, Multi-Contract
Authorization to Export U.S. Sourced Natural Gas
by Pipeline to Canada for Liquefaction and ReExport in the Form of Liquefied Natural Gas, Docket
No. 14–179–LNG (Feb. 2, 2023). Pieridae filed this
extension application three days before the export
commencement deadline set forth in its non-FTA
order (DOE/FE Order No. 3768), which was
February 5, 2023. Therefore, although Pieridae’s
non-FTA order has technically expired, its
extension application remains under review.
47 See Magnolia LNG, LLC, Request for Limited
Extension to Start Date of Term of Authorization,
Docket No. 13–132–LNG (Mar. 20, 2023).
48 See infra § III.D.
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III. Policy Statement
A. Basis for Change in DOE’s Treatment
of Applications for Commencement
Extensions
When DOE originally adopted a
seven-year export commencement
deadline for Sabine Pass’s non-FTA
authorization in 2011, it did so based
upon an explicit recognition that an
authorization holder would need time to
construct its proposed facility before
commencing exports of LNG—and that
this time period must be sufficiently
long to allow for ‘‘unplanned delays in
the licensing and construction’’ of the
facility.49 In the following 12 years,
DOE’s conclusion that seven years was
an adequate and reasonable amount of
time for authorization holders to
commence exports after initial
authorization, and the reasoning
underlying that conclusion, have been
validated. All authorization holders
currently exporting from the seven
large-scale export facilities in the United
States commenced exports within their
original seven-year commencement
period—some while facing the
particularly challenging delays and
uncertainties associated with the
COVID–19 pandemic.50 Most recently,
Venture Global Calcasieu Pass, LLC
(Calcasieu Pass) constructed and began
operating its LNG export facility in
Cameron Parish, Louisiana, within three
years from the date it received its nonFTA authorization from DOE,51
demonstrating that it is possible for
major LNG projects to be placed inservice well within the seven-year
commencement period, even during the
COVID–19 pandemic.
Nonetheless, not all authorization
holders have successfully moved
forward with their projects and
commenced exports within the sevenyear deadline. Some have asked DOE to
vacate their authorization prior to the
commencement deadline,52 whereas
others (as discussed herein) have filed
applications requesting more time.53
49 Sabine Pass, DOE/FECM Order No. 4800, at 33;
see supra § II.B.
50 See supra note 37.
51 Calcasieu Pass received its non-FTA export
authorization, DOE/FE Order No. 4346, on March
5, 2019. On March 1, 2022, Calcasieu Pass loaded
its first cargo of LNG at the newly constructed
Venture Global Calcasieu Pass Project, and it has
exported dozens of cargoes to date. See Venture
Global Calcasieu Pass, LLC, Semi-Annual Status
Report, Dockets No. 13–69–LNG, et al., at 2 (Mar.
31, 2023), https://www.energy.gov/sites/default/
files/2023-04/VG%20Calcasieu%20Pass_
April%202023%20DOE%20Progress
%20Report%20%28final%29.pdf.
52 See supra note 19.
53 DOE notes that, of the authorization holders
that have applied for and received an extension to
their export commencement deadline (see supra
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Indeed, as part of its analysis in nonFTA orders, DOE has long noted the
‘‘continuing uncertainty that all or even
most of the proposed LNG export
projects will ever be realized because of
the time, difficulty, and expense of
commercializing, financing, and
constructing LNG export terminals, as
well as the uncertainties and
competition inherent in the global
market for LNG.’’ 54 Yet, DOE
anticipates that authorization holders
will continue to file applications
requesting a commencement extension
in an effort to keep their non-FTA
authorization active, even if the
likelihood of completing construction
and commencing exports from their
facility is uncertain. DOE notes, for
example, that by the end of 2026, the
export commencement deadline in 14
long-term non-FTA authorizations will
expire.55
Further, in monitoring market
developments as the impact of
successive authorizations of LNG
exports unfolds, DOE has recognized
new challenges involving the growing
volume of approved non-FTA exports
associated with facilities that are not
currently operating or under
construction. Over time, as more
authorization holders are authorized to
export or re-export U.S.-sourced LNG to
non-FTA countries—but are not engaged
in actual export or re-export
operations—this approval gap, or
‘‘authorization overhang,’’ has widened,
with detrimental effects.56
For example, in October 2019, DOE
had issued final orders authorizing
exports of LNG to non-FTA countries
totaling 38.06 Bcf/d of natural gas, with
15.54 Bcf/d of export capacity then
operating or under construction—a
difference of 22.52 Bcf/d in approved
exports. As of today, however, that
difference has grown to 25.64 Bcf/d—
with approved non-FTA exports from
§ II.C.1), none have yet commenced export
operations.
54 Freeport LNG Expansion, L.P., et al., DOE/
FECM Order No. 4961, at 71.
55 These 14 authorizations are: Magnolia LNG,
LLC (DOE/FECM Order No. 3909–C); Delfin LNG,
LLC (DOE/FE Order No. 4028–C); Golden Pass LNG
Terminal LLC (DOE/FECM Order No. 3978–E); Lake
Charles Exports, LLC (DOE/FE Order Nos. 3324–B,
4011–A); Lake Charles LNG Export Co., LLC (DOE/
FE Order Nos. 3868–A, 4010–A); Mexico Pacific
Ltd. LLC (DOE/FECM Order No. 4312–A); ECA
Liquefaction, S. de R.L. de C.V. (DOE/FE Order No.
4364–B); Energı´a Costa Azul, S. de R.L. de C.V.
(DOE/FECM Order No. 4365–B); Cameron LNG, LLC
(DOE/FE Order No. 3846–B); Port Arthur LNG, LLC
(DOE/FE Order No. 4372–A); Driftwood LNG LLC
(DOE/FE Order No. 4373–A); Freeport LNG
Expansion, L.P., et al. (DOE/FE Order No. 4374–A);
Gulf LNG Liquefaction Co., LLC (DOE/FE Order No.
4410–A); and Venture Global Plaquemines LNG,
LLC (DOE/FE Order No. 4446–A).
56 See supra II.A.
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the United States totaling 49.83 Bcf/d,57
and 24.19 Bcf/d of export capacity
operating or under construction.58 This
overhang of authorized exports—25.64
Bcf/d of natural gas—is even larger than
today’s ‘‘proven’’ U.S. LNG export
market at 24.19 Bcf/d. This overhang
obscures an accurate picture of
investment-backed commitments
involving U.S. LNG.
When DOE’s cumulative volume of
approved non-FTA exports is greater
than the physical capacity to export
these volumes, there is no assurance of
when the full export capacity will be
available, or whether it will become
available at all. This uncertainty has
become increasingly disruptive to DOE’s
planning, economic forecasting, and
market analysis of the U.S. LNG export
market as reviews of non-FTA export
applications continue. Since 2019, DOE
has received eight new applications
requesting long-term authority to export
LNG to non-FTA countries in a
combined volume equivalent to 9.8 Bcf/
yr of natural gas.59 With the non-FTA
volumes already approved and these
applications for new non-FTA exports
under review, it is important for DOE to
have a clear picture of the U.S. LNG
export market, including what amount
of export capacity may be
commercialized within seven years.
Further, DOE has become aware of the
challenges this continuing uncertainty
presents to participants in the U.S. and
global LNG export markets, including
U.S. allies and trading partners. The
authorization overhang also may serve
to discourage or delay potential new
entrants to the U.S. export market—
including those that seek to utilize
57 This total represents 47.28 Bcf/d in approved
exports of LNG sourced from the lower-48 states
and 2.55 Bcf/d sourced from Alaska. See supra II.A.
58 See supra note 21.
59 These eight applications under review are:
Commonwealth LNG, LLC (1.21 Bcf/d) (Docket No.
19–134–LNG); Port Arthur LNG Phase II, LLC (1.91
Bcf/d) (Docket No. 20–23–LNG); Venture Global
CP2 LNG, LLC (3.96 Bcf/d) (Docket No. 21–131–
LNG); New Fortress Energy Louisiana FLNG LLC
(0.40 Bcf/d) (Docket No. 22–39–LNG); NFE
Altamira FLNG, S. de R.L. de C.V. (0.40 Bcf/d)
(Docket No. 22–110–LNG); Mexico Pacific Limited
LLC (0.80 Bcf/d) (Docket No. 22–167–LNG);
Gulfstream LNG Development, LLC (0.65 Bcf/d)
(Docket No. 23–34–LNG); Corpus Christi
Liquefaction, LLC, CCL Midscale 8–9, LLC, and
Cheniere Marketing, LLC (0.47 Bcf/d) (Docket No.
23–46–LNG); see also U.S. Dep’t of Energy, Office
of Fossil Energy and Carbon Management, Long
Term Applications Received by DOE to Export
Domestically Produced LNG, CNG, CGL from the
Lower-48 States (as of Mar. 14, 2023), https://
www.energy.gov/sites/default/files/2023-03/
Summary%20of%20LNG%20
Export%20Applications%203-14-23_0.pdf. Not
included are two applications for an amended nonFTA volume which, if granted, would not receive
a new seven-year export commencement deadline.
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newer technology and to adopt better
environmental practices.
Finally, DOE notes that its public
interest analysis supporting each nonFTA authorization under NGA section
3(a) may become stale after seven years,
as the natural gas market and supporting
analyses continue to evolve.60 In the
normal course, the NGA does not
require DOE to affirmatively reevaluate
whether exports remain in the public
interest during the term of an existing
export authorization. However, new
DOE decisions regarding non-FTA
exports, such as actions in response to
the pending expiration of an
authorization holder’s export
commencement deadline, should be
made on the basis of the latest market
information and analytical approaches
available at the time of DOE’s decision.
B. Policy and Implementation
For the reasons set forth herein, DOE
reaffirms the seven-year export
commencement deadline set forth in
long-term authorizations to export
domestically produced LNG to non-FTA
countries.61 The timely commencement
of exports from all seven large-scale
export facilities currently operating in
the United States demonstrates that
seven years is a reasonable, achievable
period of time for an authorization
holder both to construct its facility and
to commence exports of LNG.62
Accordingly, DOE is giving notice
that, in general, it intends to allow nonFTA authorizations to expire at the end
of the seven-year commencement period
set forth in each authorization. As such,
DOE will no longer consider
applications for extensions to export
commencement deadlines, unless an
authorization holder submits an
application prior to its commencement
deadline demonstrating that:
(i) The authorization holder (or its affiliate)
has physically commenced construction on
the associated export facility before the
request for additional time to commence
exports is made; and
(ii) The authorization holder’s inability to
comply with its export commencement
deadline is the result of extenuating
circumstances outside of the authorization
holder’s control, including but not limited to
acts of God.63
An authorization holder seeking to
apply for an extension under this Policy
60 See
supra II.A.
noted, this Policy Statement does not apply
to orders authorizing small-scale exports of natural
gas (see supra note 4); see also supra note 1.
62 See supra note 37.
63 For purposes of this Policy Statement, an ‘‘act
of God’’ means a severe natural event outside of
human control, such as a hurricane, flash flood, or
other natural disaster.
61 As
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25277
Statement should submit its application
to DOE at least 90 days prior to the
commencement deadline in its non-FTA
order.64 This will ensure that DOE has
sufficient time to provide notice of the
extension application in the Federal
Register for a 30-day public comment
period, and to evaluate the application
and any public filings received in
response to the notice of application
prior to the expiration of the non-FTA
order.65 In the extension application,
the authorization holder should provide
evidence, including any supporting
documentation, to meet both parts of the
required demonstration.66
Evidence that an authorization holder
(or its affiliate) has physically
commenced construction on its export
facility may include, for example: (i) a
copy of its most recent status report or
other update submitted to FERC or
MARAD, if available (or, for
extraterritorial projects, the comparable
federal regulatory agency), describing
the current construction status of the
export facility; 67 (ii) a verified statement
of the construction costs incurred to
date, as compared to the total projected
costs for construction; and/or (iii)
documentation showing that the
contractor has met one or more
completion targets under the relevant
engineering, procurement, and
construction agreement.
Although the two-part demonstration
described above is required for DOE to
consider an application for a
commencement extension, it does not
guarantee that DOE will approve the
request. Following the 30-day comment
period, DOE will issue an order
evaluating the application, and any
responses received in response to the
notice of application, under the good
cause standard provided by NGA
section 3(a), with appropriate
64 10 CFR 590.201(b) (‘‘Applications shall be filed
at least ninety (90) days in advance of the proposed
import or export or other requested action, unless
a later date is permitted for good cause shown.’’).
65 See supra § II.C.1; 10 CFR 590.205 (Notice of
applications).
66 An application for an export commencement
extension must also meet other requirements set
forth in DOE’s regulations governing the export of
natural gas, 10 CFR part 590.
67 DOE notes that FERC’s authorizations of LNG
terminals under NGA section 3(e) require the
authorization holder to provide status reports to
FERC on a monthly basis until all construction
activities are complete. These status reports must
include the ‘‘current construction status of the
project and work planned for the following
reporting period.’’ See, e.g., Commonwealth LNG,
LLC, Order Granting Authorization Under Section 3
of the Natural Gas Act, 181 FERC ¶ 61,143,
Appendix A (Enviro. Condition #8) (Nov. 17, 2022),
www.ferc.gov/media/c-2-cp19–502–000.
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consideration of the public interest.68
Further, DOE will consider extending an
export commencement deadline only for
such time as DOE deems necessary for
the authorization holder to commence
exports, based on the extenuating
circumstances identified in the
application.
If an authorization holder reaches the
end of the seven-year export
commencement period set forth in its
non-FTA authorization, and cannot
make such a demonstration, the nonFTA authorization will expire on the
deadline set forth in the order.69 DOE
will consider any new export
application under NGA section 3(a)
without prejudice, which would be
evaluated pursuant to the policies and
analytical tools in use at the time of the
new application.
C. Policy Objectives
Over time, this policy should reduce
the authorization overhang, as
authorizations expire on their
commencement deadline (unless an
authorization holder makes the
demonstration set forth above and DOE
determines there is good cause to grant
the commencement extension). As a
result, the total volume of exports
approved under DOE’s non-FTA orders
should become more aligned with the
export capacity under construction or
operating using U.S.-sourced LNG. This,
in turn, will allow DOE to better assess
whether any new non-FTA applications
are in the public interest; provide more
certainty to the U.S. and global LNG
export markets; and ensure that DOE is
making decisions utilizing the latest
market information and analytical tools
available. It should also encourage
authorization holders to develop their
export facilities in a timely manner,
without excessive delays. Based on its
analysis of the U.S. natural gas export
market, and as discussed herein, DOE
believes these changes are in the public
interest.
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D. Applicability of Policy Statement
In order to provide industry and the
public with fair notice of the change in
DOE policy described herein, this Policy
Statement will apply to all existing and
68 See, e.g., Cameron LNG, LLC, DOE/FE Order
No. 3846–A, at 6 (evaluating extension application
under NGA section 3(a) to determine whether there
is good cause shown for extending the
commencement deadline, and whether such
extension would alter DOE’s public interest
determination in granting the original non-FTA
export authorization).
69 Because this Policy Statement does not apply
to FTA export authorizations issued under NGA
section 3(c) (see supra note 4), any related FTA
authorization would not be affected by the
expiration of a non-FTA authorization.
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future long-term non-FTA
authorizations, except for those
authorizations for which an application
requesting an export commencement
extension was filed prior to issuance of
this Policy Statement on April 21, 2023.
DOE will review and act on those
applications filed before April 21, 2023,
at the appropriate time, using the caseby-case factual review undertaken by
DOE prior to issuance of this Policy
Statement.
Specifically, concurrently with this
Policy Statement, DOE is issuing final
orders on commencement extension
applications filed by Lake Charles LNG
Export Company, LLC; Lake Charles
Exports, LLC; and Port Arthur LNG, LLC
in their respective dockets. Because
these applications were filed in 2022,
DOE is not taking action on these
applications under this Policy
Statement, but rather under DOE’s prior
practice based on the record in each
commencement extension proceeding.70
Likewise, because the commencement
extension applications filed recently by
Pieridae Energy (USA) Ltd. and
Magnolia LNG, LLC (on February 2,
2023, and March 20, 2023, respectively)
were filed before issuance of this Policy
Statement, they will not be reviewed
under this Policy Statement. At the
appropriate time after the public
comment period for each of these
applications is complete, DOE will issue
an order taking action on each
application under DOE’s prior practice
based on the record in each
commencement extension proceeding.71
IV. Administrative Benefits
In this Policy Statement, DOE is not
proposing any new requirements for
applicants or authorization holders
under 10 CFR part 590. Rather, DOE’s
intent is to provide greater transparency
to authorization holders and
participants in the U.S. natural gas
export market, and to minimize
administrative burdens.
V. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this policy statement.
70 See
supra at II.C.2.
supra notes 46–47; see also Pieridae Energy
(USA) Ltd., Request for Extension for Long-Term
Authorization to Export Liquefied Natural Gas, 88
FR 18530 (Mar. 29, 2023) (establishing 30-day
public comment period for Pieridae’s application
requesting an extension to its commencement
deadline); Magnolia LNG, LLC, Request for Limited
Extension to Start Date of Term of Authorization,
88 FR 23020 (Apr. 14, 2023) (establishing 30-day
public comment period for Magnolia’s application
requesting an extension to its commencement
deadline).
71 See
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
Signing Authority
This document of the Department of
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undersigned DOE Federal Register
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official document of the Department of
Energy. This administrative process in
no way alters the legal effect of this
document upon publication in the
Federal Register.
Signed in Washington, DC, on April 21,
2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S.
Department of Energy.
[FR Doc. 2023–08805 Filed 4–25–23; 8:45 am]
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[Federal Register Volume 88, Number 80 (Wednesday, April 26, 2023)]
[Rules and Regulations]
[Pages 25272-25278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08805]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
10 CFR Part 590
Policy Statement on Export Commencement Deadlines in
Authorizations To Export Natural Gas to Non-Free Trade Agreement
Countries
------------------------------------------------------------------------
Docket Nos.
------------------------------------------------------------------------
Lake Charles Exports, LLC............... 11-59-LNG.
Gulf LNG Liquefaction Company, LLC...... 12-101-LNG.
Golden Pass LNG Terminal LLC............ 12-156-LNG.
Lake Charles LNG Export Co., LLC........ 13-04-LNG.
Magnolia LNG, LLC....................... 13-132-LNG.
Delfin LNG LLC.......................... 13-147-LNG.
Alaska LNG Project LLC.................. 14-96-LNG.
Pieridae Energy (USA) Ltd............... 14-179-LNG.
Texas LNG Brownsville LLC............... 15-62-LNG.
Cameron LNG, LLC........................ 15-90-LNG.
Port Arthur LNG, LLC.................... 15-96-LNG.
Rio Grande LNG, LLC..................... 15-190-LNG.
Venture Global Plaquemines LNG, LLC..... 16-28-LNG.
Lake Charles LNG Export Co., LLC........ 16-109-LNG.
Lake Charles Exports, LLC............... 16-110-LNG.
Driftwood LNG LLC....................... 16-144-LNG.
Freeport LNG Expansion, L.P. & FLNG 18-26-LNG.
Liquefaction 4, LLC.
Mexico Pacific Limited LLC.............. 18-70-LNG.
Corpus Christi Liquefaction, LLC........ 18-78-LNG.
ECA Liquefaction, S. de R.L. de C.V..... 18-144-LNG.
Energ[iacute]a Costa Azul, S. de R.L. de 18-145-LNG.
C.V.
Epcilon LNG LLC......................... 20-31-LNG.
Vista Pacifico LNG, S.A.P.I. de C.V..... 20-153-LNG.
------------------------------------------------------------------------
AGENCY: Office of Fossil Energy and Carbon Management, Department of
Energy.
ACTION: Policy statement.
-----------------------------------------------------------------------
SUMMARY: The Department of Energy (DOE) is reaffirming the seven-year
deadline for authorization holders to commence exports of domestically
produced natural gas, including liquefied natural gas (LNG), to non-
free trade agreement (non-FTA) countries set forth in long-term
authorizations issued under the Natural Gas Act. For existing and
future non-FTA authorizations for the export of LNG, DOE will allow
[[Page 25273]]
authorizations to expire on the export commencement deadline originally
set forth in the order and will not consider an application for an
extension, unless the authorization holder demonstrates both that: it
has physically commenced construction on the associated export
facility, and its inability to comply with the existing export
commencement deadline is the result of extenuating circumstances
outside of its control. Authorization holders unable to make this
demonstration may submit a new non-FTA application, which will be
considered without prejudice. This policy will increase transparency
for non-FTA authorization holders and pending applicants who have not
yet commenced exports, while providing greater certainty about DOE's
approvals for the LNG export market. Concurrently with the issuance of
this Policy Statement, DOE is issuing final orders on three pending
applications for a commencement extension.
DATES: This Policy Statement is applicable on April 21, 2023.
FOR FURTHER INFORMATION CONTACT: Amy Sweeney or Jennifer Wade, U.S.
Department of Energy (FE-34), Office of Regulation, Analysis, and
Engagement, Office of Fossil Energy and Carbon Management, Forrestal
Building, Room 3E-042, 1000 Independence Avenue SW, Washington, DC
20585; (202) 586-2627 or (202) 586-4749; [email protected] or
[email protected]; Cassandra Bernstein, U.S. Department of
Energy (GC-76), Office of the Assistant General Counsel for Energy
Delivery and Resilience, Forrestal Building, Room 6D-033, 1000
Independence Avenue SW, Washington, DC 20585; (202) 586-9793;
[email protected].
SUPPLEMENTARY INFORMATION:
Acronyms and Abbreviations. Acronyms and abbreviations used in this
document are set forth below for reference.
Bcf/d Billion Cubic Feet per Day
DOE United States Department of Energy
FERC Federal Energy Regulatory Commission
FTA Free Trade Agreement
LNG Liquefied Natural Gas
MARAD Maritime Administration
NEPA National Environmental Policy Act of 1969
NGA Natural Gas Act of 1938
Tcf Trillion Cubic Feet
Table of Contents
I. Statutory Background
II. Regulatory Background
A. Long-Term Non-FTA Authorizations Issued to Date
B. Seven-Year Commencement Deadline for Exports to Non-FTA
Countries
C. Applications To Extend the Export Commencement Deadline
1. Orders Extending the Export Commencement Deadline Granted in
2020
2. Applications for Commencement Extensions Submitted Since 2022
III. Policy Statement
A. Basis for Change in DOE's Treatment of Applications for
Commencement Extensions
B. Policy and Implementation
C. Policy Objectives
D. Applicability of Policy Statement
IV. Administrative Benefits
V. Approval of the Office of the Secretary
I. Statutory Background
DOE is responsible for authorizing exports of domestically produced
natural gas, including LNG,\1\ to foreign countries under section 3 of
the Natural Gas Act (NGA).\2\ The policy announced in this Policy
Statement is specific to authorizations \3\ for the export of natural
gas to countries with which the United States does not have a free
trade agreement (FTA) requiring national treatment for trade in natural
gas and with which trade is not prohibited by U.S. law or policy (non-
FTA countries).\4\ NGA section 3(a) authorizes the exportation of
natural gas from the United States unless DOE determines that doing so
``will not be consistent with the public interest.'' \5\ DOE, as
affirmed by the U.S. Court of Appeals for the District of Columbia
Circuit, has consistently interpreted this provision as creating a
rebuttable presumption that a proposed export of natural gas to non-FTA
countries is in the public interest.\6\ Accordingly, DOE will conduct
an informal adjudication and grant an application requesting a non-FTA
authorization unless DOE finds that the proposed exportation will not
be consistent with the public interest.\7\ NGA section 3(a) also
authorizes DOE, ``after opportunity for hearing, and for good cause
shown,'' to issue any supplemental order ``as it may find necessary or
appropriate.'' \8\
---------------------------------------------------------------------------
\1\ In referring to natural gas in this Policy Statement, DOE
refers primarily, but not exclusively, to LNG. Some DOE proceedings
have involved (and, in the future, may involve) other types of
natural gas, including compressed natural gas and compressed gas
liquid. See 15 U.S.C. 717a(5) (definition of natural gas); 10 CFR
590.102(i).
\2\ 15 U.S.C. 717b. The Secretary's authority was established by
the Department of Energy Organization Act, 42 U.S.C. 7151(b), which
transferred jurisdiction over import and export authorizations from
the Federal Power Commission to the Secretary of Energy; see also 42
U.S.C. 7172(f). The authority to regulate the imports and exports of
natural gas, including LNG, under NGA section 3 has been delegated
to the Assistant Secretary for Fossil Energy and Carbon Management
(FECM) in Redelegation Order No. S4-DEL-FE1-2023, issued on April
10, 2023.
\3\ For purposes of this Policy Statement, DOE uses the terms
``authorization'' and ``order'' interchangeably.
\4\ 15 U.S.C. 717b(a). This Policy Statement does not apply to
exports to FTA countries under NGA section 3(c), 15 U.S.C. 717b(c).
Section 3(c) of the NGA, as amended by section 201 of the Energy
Policy Act of 1992 (Pub. L. 102-486), requires that applications to
export natural gas to FTA countries ``shall be deemed to be
consistent with the public interest'' and granted ``without
modification or delay.'' 15 U.S.C. 717b(c). Additionally, as of
August 24, 2018, qualifying ``small-scale natural gas exports'' to
non-FTA countries are deemed to be consistent with the public
interest under NGA section 3(a). See 10 CFR 590.102(p); 10 CFR
590.208(a); see also U.S. Dep't of Energy, Small-Scale Natural Gas
Exports; Final Rule, 83 FR 35106 (July 25, 2018). Because small-
scale orders contain different terms than non-FTA orders involving
larger volumes of exports (specifically, requiring authorization
holders to commence small-scale exports within two years), this
Policy Statement also does not apply to small-scale exports of
natural gas.
\5\ 15 U.S.C. 717b(a).
\6\ See Sierra Club v. U.S. Dep't of Energy, 867 F.3d 189, 203
(D.C. Cir. 2017) (``We have construed [NGA section 3(a)] as
containing a `general presumption favoring [export] authorization.'
'') (quoting W. Va. Pub. Serv. Comm'n v. U.S. Dep't of Energy, 681
F.2d 847, 856 (D.C. Cir. 1982)).
\7\ Id. (``there must be `an affirmative showing of
inconsistency with the public interest' to deny the application''
under NGA section 3(a)) (quoting Panhandle Producers & Royalty
Owners Ass'n v. Econ. Regulatory Admin., 822 F.2d 1105, 1111 (D.C.
Cir. 1987)).
\8\ 15 U.S.C. 717b(a).
---------------------------------------------------------------------------
DOE's authorization is solely with respect to the export (or
import) of natural gas and does not extend to authorization over the
siting, construction, and operation of the liquefaction and export
facilities. 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 NGA section 3(e).\9\
For LNG terminals located offshore beyond state waters, the responsible
agency is the Maritime Administration (MARAD) within the Department of
Transportation pursuant to the Deepwater Ports Act of 1974.\10\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 717b(e); see also 15 U.S.C. 717a(11) (definition
of LNG terminal); 18 CFR 153.2(d); Sierra Club v. Fed. Energy
Regulatory Comm'n, 827 F.3d 36, 40 (D.C. Cir. 2016) (observing that,
while DOE ``maintains exclusive authority over the export of natural
gas as a commodity,'' DOE has delegated to FERC the authority to
approve or deny an application for the siting, construction,
operation, or expansion of an LNG terminal under NGA section 3(e)).
\10\ See 33 U.S.C. 1502(9), 1503(a). The Deepwater Port Act
originally applied only to oil import terminals, but was amended to
include natural gas terminals. See Maritime Transportation Security
Act of 2002, sec. 106, Public Law 107-295, 116 Stat. 2064.
---------------------------------------------------------------------------
Although most approved non-FTA exports originate (or will
originate) from existing or proposed projects to be built in the United
States, DOE has also approved non-FTA exports in extraterritorial
proceedings involving
[[Page 25274]]
Mexico or Canada. In such proceedings, DOE approves the export of U.S.-
sourced natural gas by pipeline to Mexico or Canada under NGA section
3(c), and authorizes the re-export \11\ of the U.S.-sourced natural gas
in the form of LNG from a liquefaction and export facility to be built
in Mexico or Canada, respectively, to non-FTA countries under NGA
section 3(a).\12\
---------------------------------------------------------------------------
\11\ For purposes of these proceedings, ``re-export'' means to
ship or transmit U.S.-sourced natural gas in its various forms (gas,
compressed, or liquefied) subject to DOE's jurisdiction under the
NGA, 15 U.S.C. 717b, from one foreign country (i.e., a country other
than the United States) to another foreign country.
\12\ See, e.g., Vista Pacifico LNG, S.A.P.I. de C.V., DOE/FECM
Order No. 4929, Docket No. 20-153-LNG, Order Granting Long-Term
Authorization to Re-Export U.S.-Sourced Natural Gas in the Form of
Liquefied Natural Gas from Mexico to Non-Free Trade Agreement
Nations, 1-7 (Dec. 20, 2022).
---------------------------------------------------------------------------
Before reaching a final decision on any non-FTA application, DOE
must also comply with the National Environmental Policy Act of 1969
(NEPA).\13\
---------------------------------------------------------------------------
\13\ 42 U.S.C. 4321 et seq.
---------------------------------------------------------------------------
II. Regulatory Background
A. Long-Term Non-FTA Authorizations Issued to Date
Although NGA section 3(a) establishes a broad public interest
standard and a presumption favoring export authorizations, the statute
does not define ``public interest'' or identify criteria that must be
considered. In prior decisions, DOE has identified a range of factors
that it evaluates when reviewing an application to export LNG to non-
FTA countries. These factors include economic impacts, international
impacts, security of natural gas supply, and environmental impacts,
among others. To conduct this review, DOE looks to record evidence
developed in the application proceeding.\14\
---------------------------------------------------------------------------
\14\ See, e.g., Sabine Pass Liquefaction, LLC, DOE/FECM Order
No. 4800, Docket No. 19-125-LNG, Order Granting Long-Term
Authorization to Export Liquefied Natural Gas to Non-Free Trade
Agreement Nations, 10-28 (Mar. 16, 2022).
---------------------------------------------------------------------------
Currently, there are 41 long-term orders \15\ authorizing the
export of LNG sourced from the United States (both the lower-48 states
and Alaska) to non-FTA countries under NGA section 3(a).\16\ These
orders authorize a cumulative volume of non-FTA exports equivalent to
47.28 billion cubic feet (Bcf) per day (Bcf/d) of natural gas sourced
from the lower-48 United States and 2.55 Bcf/d sourced from Alaska, or
approximately 17.3 trillion cubic feet (Tcf) and 0.9 Tcf per year,
respectively.\17\ This cumulative volume includes 43.52 Bcf/d of U.S.-
sourced natural gas authorized for export from facilities built (or
proposed to be built) in the United States (including Alaska), and 6.31
Bcf/d of U.S-sourced natural gas authorized for re-export in the form
of LNG from facilities to be built in Mexico or Canada.\18\ It does not
include volumes from long-term non-FTA orders that DOE has vacated \19\
or orders authorizing small-scale exports of natural gas.\20\
---------------------------------------------------------------------------
\15\ Under DOE practice, ``long-term'' refers to orders greater
than two years in duration. See U.S. Dep't of Energy, Including
Short-Term Export Authority in Long-Term Authorizations for the
Export of Natural Gas on a Non-Additive Basis; Policy Statement, 86
FR 2243 (Jan. 12, 2021).
\16\ See Freeport LNG Expansion, L.P., et al., DOE/FECM Order
No. 4961, Docket No. 21-98-LNG, Order Granting Long-Term
Authorization to Export Liquefied Natural Gas to Non-Free Trade
Agreement Nations, at 72-76 (Mar. 3, 2023) (identifying final non-
FTA authorizations sourced from the lower-48 states); see also
Alaska LNG Project LLC, DOE/FE Order No. 3643-A, Docket No. 14-96-
LNG, Final Opinion and Order Granting Long-Term Authorization to
Export Liquefied Natural Gas to Non-Free Trade Agreement Nations
(Aug. 20, 2020), reh'g granted in part, DOE/FE Order No. 3643-B
(Apr. 15, 2021), order aff'd, DOE/FECM Order No. 3643-C (Apr. 13,
2023).
\17\ See Freeport LNG Expansion, L.P., et al., DOE/FECM Order
No. 4961, at 72; see also Alaska LNG Project LLC, DOE/FE Order No.
3643-A, at 5, 40. Following issuance of Freeport LNG Expansion,
L.P., et al., DOE/FECM Order No. 4961, DOE vacated one long-term
non-FTA authorization at the request of the authorization holder,
Eagle LNG Partners Jacksonville II LLC (0.01 Bcf/d). See infra note
19.
\18\ See Freeport LNG Expansion, L.P., et al., DOE/FECM Order
No. 4961, at 72-76; see also Vista Pacifico LNG, DOE/FECM Order No.
4929, at 7.
\19\ To date, DOE has vacated nine long-term authorizations to
export LNG to non-FTA countries (none over the objection of the
authorization holder) in the following proceedings: Eagle LNG
Partners Jacksonville II LLC, Docket No. 17-79-LNG (Mar. 12, 2023);
Bear Head Energy Inc. and Bear Head LNG (USA), LLC, Docket No. 15-
33-LNG (Jan. 20, 2023); Jordan Cove Energy Project L.P., Docket No.
12-32-LNG (Apr. 22, 2022); Air Flow N. Am. Corp., Docket No. 14-206-
LNG (Dec. 30, 2021); Emera CNG, LLC, Docket No. 13-157-CNG (Oct. 20,
2021); Annova LNG Common Infrastructure, LLC, Docket No. 19-34-LNG
(Apr. 23, 2021); Floridian Natural Gas Storage Co., LLC, Docket No.
15-38-LNG (Oct. 22, 2020); Carib Energy (USA) LLC, Docket No. 11-
141-LNG (Nov. 17, 2020); Flint Hills Res., LP, Docket No. 15-168-LNG
(Feb. 5, 2019).
\20\ See 10 CFR 590.102(p); 10 CFR 590.208(a); see supra note 4.
---------------------------------------------------------------------------
Of the 49.83 Bcf/d in approved non-FTA export volumes as of today
(sourced from both the lower-48 states and Alaska), the cumulative
total of U.S. and Mexico LNG export capacity that is operating or under
construction across 11 mid- or large-scale export projects is 24.19
Bcf/d of natural gas.\21\ The remaining 25.64 Bcf/d in approved non-FTA
export volumes represent possible future export capacity from numerous
other proposed LNG export projects, but these proposed projects have
not yet progressed to the construction phase. Some of these projects
received approval for non-FTA exports as far back as 2016.\22\
---------------------------------------------------------------------------
\21\ This 24.19 Bcf/d volume representing export capacity
approved to non-FTA countries currently operating or under
construction is comprised of:
(i) 23.75 Bcf/d of non-FTA volumes under construction or
operating in the United States at the end of March 2023 (see U.S.
Energy Info. Admin., U.S. Liquefaction Capacity (Apr. 17, 2023),
https://www.eia.gov/naturalgas/U.S.liquefactioncapacity.xlsx,
calculated by adding Column N in ``Existing & Under Construction''
worksheet); and
(ii) 0.44 Bcf/d in U.S.-sourced natural gas to be re-exported in
the form of LNG by ECA Liquefaction, S. de R.L. de C.V. from the ECA
Mid-Scale Project Phase 1, under construction in Mexico, to non-FTA
countries (see Docket No. 18-144-LNG).
\22\ See, e.g., Pieridae Energy (USA) Ltd., DOE/FE Order No.
3768, Docket No. 14-179-LNG, Opinion and Order Granting Long-Term,
Multi-Contract Authorization to Export U.S.-Sourced Natural Gas
Natural Gas by Pipeline to Canada for Liquefaction and Re-Export in
the Form of Liquefied Natural Gas to Non-Free Trade Agreement
Countries (Feb. 5, 2016), discussed infra.
---------------------------------------------------------------------------
B. Seven-Year Commencement Deadline for Exports to Non-FTA Countries
Both the NGA and DOE's regulations provide DOE with broad authority
to attach conditions to non-FTA export authorizations. NGA section 3(a)
states that DOE may grant an application for a non-FTA export
authorization ``upon such terms and conditions as the [Secretary] may
find necessary or appropriate.'' \23\ Similarly, under 10 CFR 590.404,
DOE may ``issue a final opinion and order and attach such conditions
thereto as may be required by the public interest after completion and
review of the final record.'' \24\ Neither NGA section 3(a) nor DOE's
regulations prescribe a specific time period for a non-FTA
authorization. For this reason, DOE has determined that it has
discretion under 10 CFR 590.404 to impose suitable terms.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 717b(a).
\24\ 10 CFR 590.404.
---------------------------------------------------------------------------
For long-term orders authorizing the export of U.S.-sourced LNG to
non-FTA countries, DOE provides each authorization holder with a period
of seven years to commence export operations, set from the date the
order is issued.\25\ The end of this seven-year period is often
referred to as the ``commencement deadline,'' after which point the
non-FTA authorization expires. If the authorization holder commences
exports of LNG from its facility within this seven-year period, its
export term (whether for 20 years or for a term extending through
December 31,
[[Page 25275]]
2050) \26\ begins upon the date of first commercial export.\27\
---------------------------------------------------------------------------
\25\ The non-FTA exceptions are: (i) the Alaska LNG non-FTA
authorization, which has a 12-year commencement deadline due to the
unique aspects of that proposed project, see Alaska LNG Project LLC,
DOE/FE Order No. 3643-A, at 41 (Ordering Para. D), and (ii) orders
authorizing small-scale exports of natural gas, which have a two-
year commencement deadline (see supra note 4).
\26\ See U.S. Dep't of Energy, Extending Natural Gas Export
Authorizations to Non-Free Trade Agreement Countries Through the
Year 2050; Notice of Final Policy Statement and Response to
Comments, 85 FR 52237 (Aug. 25, 2020).
\27\ See, e.g., Magnolia LNG LLC, DOE/FECM Order No. 3909-C,
Docket No. 13-132-LNG, Order Amending Long-Term Authorization to
Export Liquefied Natural Gas to Non-Free Trade Agreement Nations, at
67-68 (Apr. 27, 2022) (Ordering Paras. A, D).
---------------------------------------------------------------------------
This practice began in 2011, when DOE issued its first conditional
long-term export authorization involving domestically produced LNG to
Sabine Pass Liquefaction, LLC (Sabine Pass).\28\ In its application,
Sabine Pass had requested ``that its authorization commence on the
earlier of the date of first export or five years from the date of the
issuance of the authorization.'' \29\ After reviewing the record
evidence, DOE determined that a period of seven years for Sabine Pass
to commence its non-FTA exports was consistent with the public
interest.\30\
---------------------------------------------------------------------------
\28\ See Sabine Pass Liquefaction, LLC, DOE/FE Order No. 2961,
Docket No. 10-111-LNG, Opinion and Order Conditionally Granting
Long-Term Authorization to Export Liquefied Natural Gas from Sabine
Pass LNG Terminal to Non-Free Trade Agreement Nations (May 20,
2011). DOE incorporated this seven-year commencement period in
Sabine Pass's final order (DOE/FE Order No. 2961-A), issued on
August 7, 2012.
\29\ Sabine Pass Liquefaction, LLC, DOE/FE Order No. 2961, at 2.
\30\ Id. at 33, 43 (Ordering Para. C).
---------------------------------------------------------------------------
In reaching this conclusion, DOE first explained that the purpose
of the commencement deadline ``is to ensure that other entities that
may seek similar authorizations are not frustrated in their efforts to
obtain those authorizations by authorization holders that are not
engaged in actual export operations.'' \31\ Next, DOE stated that ``a
seven-year operations commencement date has been selected as a
reasonable accommodation given [Sabine Pass's] representation that it
plans to be ready to commence operations by 2015-2016.'' \32\ DOE
reasoned that a seven-year commencement period ``provides approximately
two years beyond [Sabine Pass's] current planned commencement date
before the condition must be met,'' and thus ``will allow for time lost
due to unplanned delays in licensing and construction of the planned
liquefaction facilities.'' \33\
---------------------------------------------------------------------------
\31\ Id. at 33.
\32\ Id.
\33\ Id.
---------------------------------------------------------------------------
Since 2011, DOE has continued to provide a seven-year period for
authorization holders to commence exports to non-FTA countries. This
seven-year commencement deadline is set forth in both the Terms and
Conditions and the Ordering Paragraphs of each long-term non-FTA
order.\34\ Specifically, in the Terms and Conditions, DOE continues to
cite the need for the seven-year commencement deadline ``to ensure that
other entities that may seek similar authorizations are not frustrated
in their efforts to obtain those authorizations by authorization
holders that are not engaged in actual export [or re-export]
operations.'' \35\ In the relevant Ordering Paragraph of each non-FTA
order, DOE states that the authorization holder ``must commence export
[or re-export] operations using the planned liquefaction facilities no
later than seven years from the date of issuance of [the Order].'' \36\
---------------------------------------------------------------------------
\34\ If an authorization holder has already commenced export
operations from its facility and is requesting to export additional
volumes, this term is unnecessary and is therefore omitted from
successive orders. See, e.g., Sabine Pass, DOE/FECM Order No. 4800,
at 68-75.
\35\ E.g., Corpus Christi Liquefaction Stage III, LLC, DOE/FE
Order No. 4490, Docket No. 18-78-LNG, Opinion and Order Granting
Long-Term Authorization to Export Liquefied Natural Gas to Non-Free
Trade Agreement Nations, at 49 (Term and Condition B) (Feb. 10,
2020); see also Vista Pacifico LNG, S.A.P.I. de C.V., DOE/FECM Order
No. 4929, at 73-74 (Term and Condition B) (Dec. 20, 2022).
\36\ Magnolia LNG LLC, DOE/FECM Order No. 3909-C, at 68
(Ordering Para. C). The exact phrasing of this Ordering Paragraph
may vary among orders, but the seven-year commencement deadline is
consistent.
---------------------------------------------------------------------------
To date, all seven large-scale export facilities using U.S.-sourced
natural gas that have commenced exports of LNG have done so before the
seven-year commencement deadline established in the authorization
holders' corresponding non-FTA authorization(s).\37\
---------------------------------------------------------------------------
\37\ The authorization holders that have commenced exports
before their commencement deadline are: (i) Sabine Pass; (ii) Cove
Point LNG, LP; (iii) Southern LNG Company, L.L.C.; (iv) Cheniere
Marketing, LLC and Corpus Christi Liquefaction, LLC (joint
authorization holders); (v) Cameron LNG, LLC; (vi) Freeport LNG
Expansion, L.P., FLNG Liquefaction, LLC, FLNG Liquefaction 2, LLC,
and FLNG Liquefaction 3, LLC (joint authorization holders); and
(vii) Venture Global Calcasieu Pass, LLC. See supra note 21.
---------------------------------------------------------------------------
C. Applications To Extend the Export Commencement Deadline
Several authorization holders have filed applications (or requests)
asking DOE to extend their original seven-year commencement deadline to
a later date, based on the circumstances associated with their proposed
LNG facility.
1. Orders Extending the Export Commencement Deadline Granted in 2020
In 2020, DOE granted extensions of the commencement deadline in six
non-FTA orders (held by four different authorization holders), as
follows:
Golden Pass LNG Terminal LLC, DOE/FE Order No. 3978-C,
Docket No. 12-156-LNG, Order Granting Request for Extension of Export
Commencement Deadlines (Mar. 24, 2020) (extending commencement deadline
from April 25, 2024, to September 30, 2025);
Lake Charles LNG Export Company, LLC, DOE/FE Order Nos.
3868-A and 4010-A, Docket Nos. 13-04-LNG and 16-109-LNG, Order Granting
Application for Extension of Commencement Deadlines (Oct. 6, 2020)
(extending commencement deadlines in two non-FTA orders from July 29,
2023 or June 29, 2024, respectively, to December 16, 2025);
Lake Charles Exports, LLC, DOE/FE Order Nos. 3324-B and
4011-A, Docket Nos. 11-59-LNG and 16-110-LNG, Order Granting
Application to Amend Long-Term Authorizations (Oct. 6, 2020) (extending
commencement deadlines in two non-FTA orders from July 29, 2023 or June
29, 2024, respectively, to December 16, 2025); and
Cameron LNG, LLC, DOE/FE Order No. 3846-A, Docket No. 15-
90-LNG, Order Granting Application for Extension of Commencement
Deadlines (Nov. 2, 2020) (extending commencement deadline from July 15,
2023, to May 5, 2026).
Although DOE evaluated these authorization holders' extension
applications on a case-by-case basis, DOE considered the same general
factors in each proceeding.
First, DOE considered whether FERC--the agency approving the
siting, construction, and operation of the LNG export facility in each
proceeding--had approved an extension of its own ``construction and in-
service deadline'' for the proposed facility.\38\ In each of these
proceedings, DOE found that FERC had already approved an extension for
the facility's original construction and in-service deadline.
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\38\ FERC's authorizations for proposed LNG export facilities
under NGA section 3(e), 15 U.S.C. 717b(e), include a deadline for
the authorization holder to complete construction of the facility
and to make it available for service--typically five years from the
date of the order, which may be extended for good cause. See, e.g.,
Rio Grande LNG, LLC, Order Granting Extension of Time Request, 181
FERC ] 61032, P 10 (Oct. 14, 2022).
---------------------------------------------------------------------------
Second, DOE considered the project-specific facts presented in the
extension application, including the authorization holder's progress in
constructing the proposed export facility,\39\ the
[[Page 25276]]
additional time necessary for the authorization holder to commence
exports, and any unique delays and challenges faced by the
authorization holder.\40\
---------------------------------------------------------------------------
\39\ Among the proceedings identified, progress on the proposed
facility noted by DOE has included, for example, obtaining all
required federal, state, and local authorizations; conducting or
completing front-end engineering and design; awarding engineering,
procurement, and construction contracts for the facility; and
receiving authorization from FERC to proceed with site clearance.
\40\ For example, the Lake Charles entities stated that they
experienced an unforeseen construction delay resulting from a
commercial merger in their corporate ownership. See, e.g., Lake
Charles LNG Export Co., LLC, DOE/FE Order Nos. 3868-A and 4010-A, at
5.
---------------------------------------------------------------------------
Finally, DOE published each application for a commencement
extension in the Federal Register and provided the public with 15 days
to submit protests, motions to intervene, and comments in response to
the application.\41\ As part of DOE's final order on each application,
DOE considered any responses received during this comment period.\42\
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\41\ See, e.g., U.S. Dep't of Energy, Cameron LNG, LLC; Request
for Extension of Commencement Deadline for Non-Free Trade Agreement
Authorization, 85 FR 20993 (Apr. 15, 2020).
\42\ See, e.g., Golden Pass LNG Terminal LLC, DOE/FE Order No.
3978-C, at 4, 8-10.
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In each of these proceedings, DOE found good cause to grant the
application for the commencement extension and concluded that extending
the export commencement deadline would not alter DOE's public interest
determination in granting the original non-FTA authorization.\43\
---------------------------------------------------------------------------
\43\ Id. at 8-10.
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2. Applications for Commencement Extensions Submitted Since 2022
DOE has continued to receive new applications for commencement
extensions. In 2022, Lake Charles LNG Export Company, LLC and Lake
Charles Exports, LLC filed an application requesting their second
commencement extension across a total of four non-FTA orders,\44\ and
Port Arthur LNG, LLC filed an application requesting its first
commencement extension.\45\ Most recently, in 2023, Pieridae Energy
(USA) Ltd.\46\ and Magnolia LNG, LLC \47\ have each filed an
application requesting their first commencement extension.\48\
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\44\ See Docket Nos. 11-59-LNG, 16-110-LNG, 13-04-LNG, and 16-
109-LNG.
\45\ See Docket No. 15-96-LNG.
\46\ See Pieridae Energy (USA) Ltd., Request for Extension for
Long-Term, Multi-Contract Authorization to Export U.S. Sourced
Natural Gas by Pipeline to Canada for Liquefaction and Re-Export in
the Form of Liquefied Natural Gas, Docket No. 14-179-LNG (Feb. 2,
2023). Pieridae filed this extension application three days before
the export commencement deadline set forth in its non-FTA order
(DOE/FE Order No. 3768), which was February 5, 2023. Therefore,
although Pieridae's non-FTA order has technically expired, its
extension application remains under review.
\47\ See Magnolia LNG, LLC, Request for Limited Extension to
Start Date of Term of Authorization, Docket No. 13-132-LNG (Mar. 20,
2023).
\48\ See infra Sec. III.D.
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III. Policy Statement
A. Basis for Change in DOE's Treatment of Applications for Commencement
Extensions
When DOE originally adopted a seven-year export commencement
deadline for Sabine Pass's non-FTA authorization in 2011, it did so
based upon an explicit recognition that an authorization holder would
need time to construct its proposed facility before commencing exports
of LNG--and that this time period must be sufficiently long to allow
for ``unplanned delays in the licensing and construction'' of the
facility.\49\ In the following 12 years, DOE's conclusion that seven
years was an adequate and reasonable amount of time for authorization
holders to commence exports after initial authorization, and the
reasoning underlying that conclusion, have been validated. All
authorization holders currently exporting from the seven large-scale
export facilities in the United States commenced exports within their
original seven-year commencement period--some while facing the
particularly challenging delays and uncertainties associated with the
COVID-19 pandemic.\50\ Most recently, Venture Global Calcasieu Pass,
LLC (Calcasieu Pass) constructed and began operating its LNG export
facility in Cameron Parish, Louisiana, within three years from the date
it received its non-FTA authorization from DOE,\51\ demonstrating that
it is possible for major LNG projects to be placed in-service well
within the seven-year commencement period, even during the COVID-19
pandemic.
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\49\ Sabine Pass, DOE/FECM Order No. 4800, at 33; see supra
Sec. II.B.
\50\ See supra note 37.
\51\ Calcasieu Pass received its non-FTA export authorization,
DOE/FE Order No. 4346, on March 5, 2019. On March 1, 2022, Calcasieu
Pass loaded its first cargo of LNG at the newly constructed Venture
Global Calcasieu Pass Project, and it has exported dozens of cargoes
to date. See Venture Global Calcasieu Pass, LLC, Semi-Annual Status
Report, Dockets No. 13-69-LNG, et al., at 2 (Mar. 31, 2023), https://www.energy.gov/sites/default/files/2023-04/VG%20Calcasieu%20Pass_April%202023%20DOE%20Progress%20Report%20%28final%29.pdf.
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Nonetheless, not all authorization holders have successfully moved
forward with their projects and commenced exports within the seven-year
deadline. Some have asked DOE to vacate their authorization prior to
the commencement deadline,\52\ whereas others (as discussed herein)
have filed applications requesting more time.\53\ Indeed, as part of
its analysis in non-FTA orders, DOE has long noted the ``continuing
uncertainty that all or even most of the proposed LNG export projects
will ever be realized because of the time, difficulty, and expense of
commercializing, financing, and constructing LNG export terminals, as
well as the uncertainties and competition inherent in the global market
for LNG.'' \54\ Yet, DOE anticipates that authorization holders will
continue to file applications requesting a commencement extension in an
effort to keep their non-FTA authorization active, even if the
likelihood of completing construction and commencing exports from their
facility is uncertain. DOE notes, for example, that by the end of 2026,
the export commencement deadline in 14 long-term non-FTA authorizations
will expire.\55\
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\52\ See supra note 19.
\53\ DOE notes that, of the authorization holders that have
applied for and received an extension to their export commencement
deadline (see supra Sec. II.C.1), none have yet commenced export
operations.
\54\ Freeport LNG Expansion, L.P., et al., DOE/FECM Order No.
4961, at 71.
\55\ These 14 authorizations are: Magnolia LNG, LLC (DOE/FECM
Order No. 3909-C); Delfin LNG, LLC (DOE/FE Order No. 4028-C); Golden
Pass LNG Terminal LLC (DOE/FECM Order No. 3978-E); Lake Charles
Exports, LLC (DOE/FE Order Nos. 3324-B, 4011-A); Lake Charles LNG
Export Co., LLC (DOE/FE Order Nos. 3868-A, 4010-A); Mexico Pacific
Ltd. LLC (DOE/FECM Order No. 4312-A); ECA Liquefaction, S. de R.L.
de C.V. (DOE/FE Order No. 4364-B); Energ[iacute]a Costa Azul, S. de
R.L. de C.V. (DOE/FECM Order No. 4365-B); Cameron LNG, LLC (DOE/FE
Order No. 3846-B); Port Arthur LNG, LLC (DOE/FE Order No. 4372-A);
Driftwood LNG LLC (DOE/FE Order No. 4373-A); Freeport LNG Expansion,
L.P., et al. (DOE/FE Order No. 4374-A); Gulf LNG Liquefaction Co.,
LLC (DOE/FE Order No. 4410-A); and Venture Global Plaquemines LNG,
LLC (DOE/FE Order No. 4446-A).
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Further, in monitoring market developments as the impact of
successive authorizations of LNG exports unfolds, DOE has recognized
new challenges involving the growing volume of approved non-FTA exports
associated with facilities that are not currently operating or under
construction. Over time, as more authorization holders are authorized
to export or re-export U.S.-sourced LNG to non-FTA countries--but are
not engaged in actual export or re-export operations--this approval
gap, or ``authorization overhang,'' has widened, with detrimental
effects.\56\
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\56\ See supra II.A.
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For example, in October 2019, DOE had issued final orders
authorizing exports of LNG to non-FTA countries totaling 38.06 Bcf/d of
natural gas, with 15.54 Bcf/d of export capacity then operating or
under construction--a difference of 22.52 Bcf/d in approved exports. As
of today, however, that difference has grown to 25.64 Bcf/d--with
approved non-FTA exports from
[[Page 25277]]
the United States totaling 49.83 Bcf/d,\57\ and 24.19 Bcf/d of export
capacity operating or under construction.\58\ This overhang of
authorized exports--25.64 Bcf/d of natural gas--is even larger than
today's ``proven'' U.S. LNG export market at 24.19 Bcf/d. This overhang
obscures an accurate picture of investment-backed commitments involving
U.S. LNG.
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\57\ This total represents 47.28 Bcf/d in approved exports of
LNG sourced from the lower-48 states and 2.55 Bcf/d sourced from
Alaska. See supra II.A.
\58\ See supra note 21.
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When DOE's cumulative volume of approved non-FTA exports is greater
than the physical capacity to export these volumes, there is no
assurance of when the full export capacity will be available, or
whether it will become available at all. This uncertainty has become
increasingly disruptive to DOE's planning, economic forecasting, and
market analysis of the U.S. LNG export market as reviews of non-FTA
export applications continue. Since 2019, DOE has received eight new
applications requesting long-term authority to export LNG to non-FTA
countries in a combined volume equivalent to 9.8 Bcf/yr of natural
gas.\59\ With the non-FTA volumes already approved and these
applications for new non-FTA exports under review, it is important for
DOE to have a clear picture of the U.S. LNG export market, including
what amount of export capacity may be commercialized within seven
years. Further, DOE has become aware of the challenges this continuing
uncertainty presents to participants in the U.S. and global LNG export
markets, including U.S. allies and trading partners. The authorization
overhang also may serve to discourage or delay potential new entrants
to the U.S. export market--including those that seek to utilize newer
technology and to adopt better environmental practices.
---------------------------------------------------------------------------
\59\ These eight applications under review are: Commonwealth
LNG, LLC (1.21 Bcf/d) (Docket No. 19-134-LNG); Port Arthur LNG Phase
II, LLC (1.91 Bcf/d) (Docket No. 20-23-LNG); Venture Global CP2 LNG,
LLC (3.96 Bcf/d) (Docket No. 21-131-LNG); New Fortress Energy
Louisiana FLNG LLC (0.40 Bcf/d) (Docket No. 22-39-LNG); NFE Altamira
FLNG, S. de R.L. de C.V. (0.40 Bcf/d) (Docket No. 22-110-LNG);
Mexico Pacific Limited LLC (0.80 Bcf/d) (Docket No. 22-167-LNG);
Gulfstream LNG Development, LLC (0.65 Bcf/d) (Docket No. 23-34-LNG);
Corpus Christi Liquefaction, LLC, CCL Midscale 8-9, LLC, and
Cheniere Marketing, LLC (0.47 Bcf/d) (Docket No. 23-46-LNG); see
also U.S. Dep't of Energy, Office of Fossil Energy and Carbon
Management, Long Term Applications Received by DOE to Export
Domestically Produced LNG, CNG, CGL from the Lower-48 States (as of
Mar. 14, 2023), https://www.energy.gov/sites/default/files/2023-03/Summary%20of%20LNG%20Export%20Applications%203-14-23_0.pdf. Not
included are two applications for an amended non-FTA volume which,
if granted, would not receive a new seven-year export commencement
deadline.
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Finally, DOE notes that its public interest analysis supporting
each non-FTA authorization under NGA section 3(a) may become stale
after seven years, as the natural gas market and supporting analyses
continue to evolve.\60\ In the normal course, the NGA does not require
DOE to affirmatively reevaluate whether exports remain in the public
interest during the term of an existing export authorization. However,
new DOE decisions regarding non-FTA exports, such as actions in
response to the pending expiration of an authorization holder's export
commencement deadline, should be made on the basis of the latest market
information and analytical approaches available at the time of DOE's
decision.
---------------------------------------------------------------------------
\60\ See supra II.A.
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B. Policy and Implementation
For the reasons set forth herein, DOE reaffirms the seven-year
export commencement deadline set forth in long-term authorizations to
export domestically produced LNG to non-FTA countries.\61\ The timely
commencement of exports from all seven large-scale export facilities
currently operating in the United States demonstrates that seven years
is a reasonable, achievable period of time for an authorization holder
both to construct its facility and to commence exports of LNG.\62\
---------------------------------------------------------------------------
\61\ As noted, this Policy Statement does not apply to orders
authorizing small-scale exports of natural gas (see supra note 4);
see also supra note 1.
\62\ See supra note 37.
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Accordingly, DOE is giving notice that, in general, it intends to
allow non-FTA authorizations to expire at the end of the seven-year
commencement period set forth in each authorization. As such, DOE will
no longer consider applications for extensions to export commencement
deadlines, unless an authorization holder submits an application prior
to its commencement deadline demonstrating that:
(i) The authorization holder (or its affiliate) has physically
commenced construction on the associated export facility before the
request for additional time to commence exports is made; and
(ii) The authorization holder's inability to comply with its
export commencement deadline is the result of extenuating
circumstances outside of the authorization holder's control,
including but not limited to acts of God.\63\
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\63\ For purposes of this Policy Statement, an ``act of God''
means a severe natural event outside of human control, such as a
hurricane, flash flood, or other natural disaster.
An authorization holder seeking to apply for an extension under
this Policy Statement should submit its application to DOE at least 90
days prior to the commencement deadline in its non-FTA order.\64\ This
will ensure that DOE has sufficient time to provide notice of the
extension application in the Federal Register for a 30-day public
comment period, and to evaluate the application and any public filings
received in response to the notice of application prior to the
expiration of the non-FTA order.\65\ In the extension application, the
authorization holder should provide evidence, including any supporting
documentation, to meet both parts of the required demonstration.\66\
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\64\ 10 CFR 590.201(b) (``Applications shall be filed at least
ninety (90) days in advance of the proposed import or export or
other requested action, unless a later date is permitted for good
cause shown.'').
\65\ See supra Sec. II.C.1; 10 CFR 590.205 (Notice of
applications).
\66\ An application for an export commencement extension must
also meet other requirements set forth in DOE's regulations
governing the export of natural gas, 10 CFR part 590.
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Evidence that an authorization holder (or its affiliate) has
physically commenced construction on its export facility may include,
for example: (i) a copy of its most recent status report or other
update submitted to FERC or MARAD, if available (or, for
extraterritorial projects, the comparable federal regulatory agency),
describing the current construction status of the export facility; \67\
(ii) a verified statement of the construction costs incurred to date,
as compared to the total projected costs for construction; and/or (iii)
documentation showing that the contractor has met one or more
completion targets under the relevant engineering, procurement, and
construction agreement.
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\67\ DOE notes that FERC's authorizations of LNG terminals under
NGA section 3(e) require the authorization holder to provide status
reports to FERC on a monthly basis until all construction activities
are complete. These status reports must include the ``current
construction status of the project and work planned for the
following reporting period.'' See, e.g., Commonwealth LNG, LLC,
Order Granting Authorization Under Section 3 of the Natural Gas Act,
181 FERC ] 61,143, Appendix A (Enviro. Condition #8) (Nov. 17,
2022), www.ferc.gov/media/c-2-cp19-502-000.
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Although the two-part demonstration described above is required for
DOE to consider an application for a commencement extension, it does
not guarantee that DOE will approve the request. Following the 30-day
comment period, DOE will issue an order evaluating the application, and
any responses received in response to the notice of application, under
the good cause standard provided by NGA section 3(a), with appropriate
[[Page 25278]]
consideration of the public interest.\68\ Further, DOE will consider
extending an export commencement deadline only for such time as DOE
deems necessary for the authorization holder to commence exports, based
on the extenuating circumstances identified in the application.
---------------------------------------------------------------------------
\68\ See, e.g., Cameron LNG, LLC, DOE/FE Order No. 3846-A, at 6
(evaluating extension application under NGA section 3(a) to
determine whether there is good cause shown for extending the
commencement deadline, and whether such extension would alter DOE's
public interest determination in granting the original non-FTA
export authorization).
---------------------------------------------------------------------------
If an authorization holder reaches the end of the seven-year export
commencement period set forth in its non-FTA authorization, and cannot
make such a demonstration, the non-FTA authorization will expire on the
deadline set forth in the order.\69\ DOE will consider any new export
application under NGA section 3(a) without prejudice, which would be
evaluated pursuant to the policies and analytical tools in use at the
time of the new application.
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\69\ Because this Policy Statement does not apply to FTA export
authorizations issued under NGA section 3(c) (see supra note 4), any
related FTA authorization would not be affected by the expiration of
a non-FTA authorization.
---------------------------------------------------------------------------
C. Policy Objectives
Over time, this policy should reduce the authorization overhang, as
authorizations expire on their commencement deadline (unless an
authorization holder makes the demonstration set forth above and DOE
determines there is good cause to grant the commencement extension). As
a result, the total volume of exports approved under DOE's non-FTA
orders should become more aligned with the export capacity under
construction or operating using U.S.-sourced LNG. This, in turn, will
allow DOE to better assess whether any new non-FTA applications are in
the public interest; provide more certainty to the U.S. and global LNG
export markets; and ensure that DOE is making decisions utilizing the
latest market information and analytical tools available. It should
also encourage authorization holders to develop their export facilities
in a timely manner, without excessive delays. Based on its analysis of
the U.S. natural gas export market, and as discussed herein, DOE
believes these changes are in the public interest.
D. Applicability of Policy Statement
In order to provide industry and the public with fair notice of the
change in DOE policy described herein, this Policy Statement will apply
to all existing and future long-term non-FTA authorizations, except for
those authorizations for which an application requesting an export
commencement extension was filed prior to issuance of this Policy
Statement on April 21, 2023. DOE will review and act on those
applications filed before April 21, 2023, at the appropriate time,
using the case-by-case factual review undertaken by DOE prior to
issuance of this Policy Statement.
Specifically, concurrently with this Policy Statement, DOE is
issuing final orders on commencement extension applications filed by
Lake Charles LNG Export Company, LLC; Lake Charles Exports, LLC; and
Port Arthur LNG, LLC in their respective dockets. Because these
applications were filed in 2022, DOE is not taking action on these
applications under this Policy Statement, but rather under DOE's prior
practice based on the record in each commencement extension
proceeding.\70\
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\70\ See supra at II.C.2.
---------------------------------------------------------------------------
Likewise, because the commencement extension applications filed
recently by Pieridae Energy (USA) Ltd. and Magnolia LNG, LLC (on
February 2, 2023, and March 20, 2023, respectively) were filed before
issuance of this Policy Statement, they will not be reviewed under this
Policy Statement. At the appropriate time after the public comment
period for each of these applications is complete, DOE will issue an
order taking action on each application under DOE's prior practice
based on the record in each commencement extension proceeding.\71\
---------------------------------------------------------------------------
\71\ See supra notes 46-47; see also Pieridae Energy (USA) Ltd.,
Request for Extension for Long-Term Authorization to Export
Liquefied Natural Gas, 88 FR 18530 (Mar. 29, 2023) (establishing 30-
day public comment period for Pieridae's application requesting an
extension to its commencement deadline); Magnolia LNG, LLC, Request
for Limited Extension to Start Date of Term of Authorization, 88 FR
23020 (Apr. 14, 2023) (establishing 30-day public comment period for
Magnolia's application requesting an extension to its commencement
deadline).
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IV. Administrative Benefits
In this Policy Statement, DOE is not proposing any new requirements
for applicants or authorization holders under 10 CFR part 590. Rather,
DOE's intent is to provide greater transparency to authorization
holders and participants in the U.S. natural gas export market, and to
minimize administrative burdens.
V. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this policy
statement.
Signing Authority
This document of the Department of Energy was signed on April 21,
2023, by Brad Crabtree, Assistant Secretary, Office of Fossil Energy
and Carbon Management, pursuant to delegated authority from the
Secretary of Energy. That document with the original signature and date
is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on April 21, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2023-08805 Filed 4-25-23; 8:45 am]
BILLING CODE 6450-01-P
