With this bold statement, the DoE seeks to disperse concerns about the DOE and its Office of Fossil Energy rescinding non-FTA export authorizations in the future. Analysts said this is a response to suggestions that trade could be affected between the US and other countries by diplomatic jousting on the international stage or by exceptional policies enacted at home that could override the rule of law and constitutional rights that have been tested in Federal courts.
To date, the DOE has issued 29 final long-term authorizations to export LNG and compressed natural gas to non-FTA countries in a cumulative volume totaling 21.35 billion cubic feet per day (Bcf/d) of natural gas, around 7.79 trillion cubic feet per year (Tcf/y). Each of these authorizations has a term of 20 years, with additional time provided for LNG export operations to commence.
The DOE-FE said it had been asked by some parties what potential “developments” in the US LNG market could rise to the level of “such significant consequence as to put the public interest at risk” such that the DOE would unilaterally rescind one or more non-FTA export authorizations or take other action to protect the public interest.
In this policy statement, DOE-FE affirmed its commitment to all export authorizations issued under the Natural Gas Act, including long-term authorizations approving the export of LNG to non-FTA countries. “The DOE-FE stands firmly behind these factual findings and legal conclusions, many of which have been challenged and upheld in federal court,” said the statement in the government’s Federal Register. “Authorization holders, as well as any interested stakeholders, thus should have the utmost confidence in the validity of the DOE-FE’s LNG export authorizations for the full term of each non-FTA order,” it added.
“Indeed, as noted above, DOE has never rescinded a non-FTA export authorization for any reason,” it said, except when one US company concerned ended its own business activities. This happened in August 2014 when the authorization to Louisiana LNG Energy LLC was rescinded due to the company’s own prolonged inaction.
The DOE said that “specifically, Louisiana LNG Energy LLC failed to participate in its on-going Federal Energy Regulatory Commission process, such that FERC terminated its pre-filing review” because the company failed to comply with its reporting obligations under the terms of its FTA order for a period of more than 18 months. The proceeding was a highly unusual scenario where all evidence indicated that the company was no longer pursuing its proposed LNG export project and had, in fact, ceased to exist as a commercial operation.
As a matter of law, the DOE said it preserves its authority to take action to carry out its duties under the Natural Gas Act. However, it does not foresee a scenario where it would rescind one or more non-FTA authorizations. “The United States government takes very seriously the investment-backed expectations of private parties subject to its regulatory jurisdiction,” the DOE stressed. There are far-ranging economic investments and natural gas supply commitments associated with these authorizations over their full term. Hence, the DOE emphasized it remains committed to the durability and stability of the export authorizations it has granted.