DOE Issues Notice Of Proposed Rulemaking For Small-Scale Natural Gas Exports

On September 1, 2017, the Department of Energy ("DOE") issued a Notice of Proposed Rulemaking ("NOPR") proposing to revise its regulations to expedite the application and approval process for small-scale exports of natural gas.1

Under the proposed rule, the DOE would issue an export authorization to an applicant submitting a complete application to export natural gas, including LNG, to countries with which the United States has not entered into 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, provided that the application satisfies two criteria. The first criterion is that the application proposes to export natural gas in a volume up to and including 0.14 Bcf/d. This figure is based on the DOE's calculation of 1 million metric tons per year. The second criterion is that DOE's approval of the application does not require an environmental impact statement ("EIS") or an environmental assessment ("EA") under the National Environmental Policy Act ("NEPA") of 1969.

Procedurally, DOE would first determine if the application is complete under DOE's regulations. If the application is complete, DOE would then determine if the application meets the two criteria for small-scale natural gas export. Upon a finding that the criteria are met, DOE would issue a non-FTA authorization granting the application on an expedited basis, without providing notice of application and other procedures typically required for non-FTA export applications under DOE's regulations.2 The NOPR states that the proposed rule and its 45-day comment period would constitute the notice an opportunity for hearing on all prospective small-scale natural gas export applications.

Under section 3(a) of the Natural Gas Act ("NGA"), DOE is responsible for authorizing exports that are in the public interest to non-FTA countries.3 The NOPR does not apply to exports to FTA countries under section 3(c) of the NGA.4 The DOE has interpreted section 3 of the NGA as creating a rebuttable presumption that a proposed export of natural gas is in the public interest, so the DOE has in practice granted export applications unless it found that the proposed export would not be consistent with the public interest. In the NOPR, the DOE proposes that applications that satisfy the two criteria are consistent with the public interest under the NGA.

Generally, the DOE serves as a cooperating agency5 in the NEPA...