US urged to turn down ‘flawed application’ to fast-track LNG player’s pending export permit

The Center for Biological Diversity, a U.S.-based nonprofit known for its work protecting endangered species through legal action, has urged the U.S. Department of Energy (DOE) to reject the request by Lake Charles Exports (LCE), a subsidiary of Energy Transfer, for immediate action on its application to export LNG from the Lake Charles LNG Project to non-free trade agreement (non-FTA) countries, following the preliminary injunction issued by a Louisiana judge to revoke the pause on pending permits for such projects.

After the Biden-Harris administration introduced a temporary freeze on pending permits for exports of LNG to non-FTA countries in January, Big Oil, Republicans, and many others have expressed their displeasure with such a movement in the No. 1 country for LNG exports in the world during 2023, voicing their concerns over the effect it would have on the U.S. economy. 

Furthermore, as America is the biggest provider of LNG for Europe, which is trying to reduce its dependence on Russian gas, the oil and gas proponents saw it as a major missed opportunity and a complete reversal of the DOE’s previous stance to continue approving LNG exports to bolster global energy security.

While the decision was, unsurprisingly, met with resistance from the oil and gas players in the country, who dubbed it the ‘LNG export ban’, the White House underlined the temporary nature of the measure, expected to be in place until the DOE updates the outdated analyses to assess the future impact the LNG infrastructure could have on the environment and costs borne by consumers.

The American Petroleum Institute (API), a trade association representing the oil and gas industry, was quick to respond, filing an application for rehearing with the DOE, claiming that the decision was unlawful as it contradicts the Natural Gas Act (NGA), which states that the DOE can only stop issuing LNG export permits to non-FTA countries if this is not in the public interest. Additionally, the imposition of the pause without giving the public the opportunity to comment was seen as a violation of the procedures mandated by the Administrative Procedure Act (APA), contravening the constitutional separation of powers.

The legal action did not stop there. In May, Pelican Institute and Liberty Justice Center, representing the Oil & Gas Workers Association, filed a complaint in the U.S. District Court for the Western District of Louisiana, while attorneys general of sixteen Republican-led U.S. states brought an action against the federal government for its decision to freeze pending permits for LNG exports.

This culminated in Judge James Cain siding with the multi-state initiative and granting their request for a preliminary injunction. The judge believes that denying LNG export applications without indicating why this conflicts with public interest is a subversion of that interest. According to him, the federal government’s actions are outside the scope of its authority and rooted in politics and climate change policies.

Following the injunction, on July 11, 2024, LCE, which is developing a large-scale LNG export facility in Lake Charles, Louisiana, asked that DOE “comply with the Court’s order and expeditiously act on its pending application in this docket and issue an order without delay.” in ‘Request for Immediate Action on Pending Application to Export LNG to non-FTA Countries’ submitted to the DOE by Thomas Knight, Counsel for Lake Charles Exports.

The pending application in question relates to authorization for exporting up to 851 bcf/year of LNG from the existing Lake Charles terminal. The firm claims this is “best suited for immediate action” as DOE already authorized the same amount of LNG to be exported from the Lake Charles Terminal after finding it was not inconsistent with the public interest.

LCE explained that it was not seeking to export any additional volumes of LNG from the Lake Charles terminal, adding that nothing has changed with respect to DOE’s original analysis approving exports from the Lake Charles Terminal. Therefore, LCE claims its pending application is not inconsistent with the public interest. 

Furthermore, Knight argues that potential environmental impacts were studied by the Federal Energy Regulatory Commission (FERC) as set out in the final environmental impact statement (EIS), which the DOE reviewed, affirmed, and adopted.

“DOE’s ‘pause’ on its review of LCE’s application has caused considerable angst among companies that have previously entered into long term LNG offtake contracts with LCE as these companies have real world needs for these committed LNG volumes.  In addition, LCE’s discussions with other LNG customers and with potential equity participants in the project have experienced setbacks due to the uncertainty of the timing and substances of DOE’s review process related to its ‘pause,’” states LCE’s submission.

However, the Center for Biological Diversity replied to LCE’s request on July 17, 2024, arguing that Judge Cain’s decision does not require immediate action from DOE, especially since “substantial” new information has become available on the adverse effects of increased LNG export prompting supplemental review since FERC authorized the export in the 2015 EIS.

“The Center believes DOE should reject LCE’s request to rush a decision on its flawed application. Instead, DOE must proceed with updating the studies relied upon to evaluate the public interest and review of the Lake Charles LNG Project’s impacts, including by conducting supplemental NEPA analysis,” reads the Center’s submission.

“If DOE chooses to take immediate action, DOE should deny the application because the project’s extensive impacts on the climate, economy, public health, national security, local communities and the pursuit of environmental justice render LCE’s proposal contrary to the public interest,” reads the Center’s reply.

According to Lauren Parker, the Center’s Staff Attorney, the DOE has acknowledged that the studies it used for its previous authorization are outdated and need to be updated with new economic and environmental information necessary for proper decision-making. 

The Center believes final actions on LNG export applications are not bound by a specific timeline and can only occur “when DOE has sufficient information on which to base a public interest determination.” It therefore thinks DOE needs to continue to update its studies, carry out additional analysis, and publish a supplemental EIS before considering LCE’s application.