U.S. FERC Announces Scoping Period for Liquid Natural Gas Export Terminal’s Proposed Carbon Capture and Sequestration Systems

On September 9, 2022, the Federal Energy Regulatory Commission (FERC) issued a Notice of Scoping Period Requesting Comments on Environmental Issues for the Proposed Carbon Capture and Sequestration System Amendment, and Notice of Public Scoping Sessions (Notice) requesting public comment on the environmental effects of a proposed carbon capture and sequestration (CCS) systems addition to the Rio Grande Liquid Natural Gas (LNG) Terminal (Terminal). This marks the first time FERC has requested public comment on the potential environmental effects, environmental mitigation measures, and reasonable alternatives related to CCS technology as part of National Environmental Policy Act review for an LNG terminal facility.

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Fifth Circuit Says FERC Can’t Stop Rejection of Filed-Rate Contracts in Bankruptcy

On July 19, 2022, the U.S. Court of Appeals for the Fifth Circuit held that debtors in bankruptcy may reject regulated energy contracts, vacating two Federal Energy Regulatory Commission (FERC) orders to the contrary, in Gulfport Energy Corp. v. FERC. The question turned on how a party’s ability to reject executory contracts in bankruptcy interacts with FERC’s ability to determine whether a party can abrogate or modify contracts that constitute filed rates under a doctrine referred to as Mobile-Sierra. The court found that FERC cannot use its Natural Gas Act authority over contract abrogation and modification to countermand a debtor’s bankruptcy-law rights or the bankruptcy court’s powers.

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FERC Jurisdiction Upheld in Puerto Rican Liquified Natural Gas Terminal Proceeding, New Fortress Energy Inc. v. FERC

On June 14, 2022, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Federal Energy Regulatory Commission (FERC) finding of jurisdiction over New Fortress Energy LLC’s (New Fortress) liquified natural gas (LNG) import terminal facility in San Juan, Puerto Rico, in New Fortress Energy Inc. v. FERC. (more…)

Fifth Circuit Rejects Challenge to Texas LNG Project

On March 10, 2021, the U.S. Court of Appeals for the Fifth Circuit rejected a challenge to an opinion by the Fish and Wildlife Service (FWS) allowing a South Texas liquified natural gas (LNG) pipeline project to proceed. Sierra Club, et al. v. U.S. Department of Interior, et al. involved a proposed LNG pipeline that would pass through Cameron, Willacy, Kenedy, and Kleburg counties in south Texas. (more…)

U.S. Department of Energy Implements Updated Regulations on National Environmental Policy Act Compliance for Natural Gas Act Authorizations

On December 4, the U.S. Department of Energy (DOE) issued a final rule updating the National Environmental Policy Act (NEPA) implementing regulations applicable to its review of applications to export domestically produced liquified natural gas (LNG) to non-free-trade-agreement countries under Section 3 of the Natural Gas Act. DOE has determined that these actions are categorically excluded from NEPA review because 1) DOE is required by Section 3(c) of the Natural Gas Act to authorize these exports and 2) the reasonably foreseeable environmental effects DOE must review are limited — beginning at the point of export and extending to marine transport effects only. DOE is also removing reference to the import of LNG from its NEPA implementing regulations because the Energy Policy Act of 1992 leaves DOE with no discretion in its approval of such imports.

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D.C. Circuit Declares Tolling Orders Impermissible Under the Natural Gas Act

On June 30, 2020, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) ruled en banc 10-1 in Allegheny Defense Project v. FERC to invalidate the Federal Energy Regulatory Commission’s (FERC) common practice of issuing tolling orders to extend the time for deciding rehearing requests under the Natural Gas Act (NGA) beyond the 30-day deadline set forth in the statute. The court found that a tolling order, in which FERC “grants rehearing” for the limited purpose of affording it additional time to act on a rehearing request, does not constitute “action” upon the rehearing request as required by the NGA. The decision reversed the approximately 50-year old D.C. Circuit precedent upholding the tolling order practice as permissible. The court derided the practice as an unauthorized way for FERC to stall for time while precluding parties aggrieved by FERC orders from seeking judicial review.

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Exploring the Impact of Increased Chinese Tariffs on LNG Growth

On Monday, May 13, China proposed to increase the current tariff of 10% to 25% on liquefied natural gas (LNG) exported from the United States. The proposed increase would go into effect on June 1 in response to the proposed increase on certain Chinese goods imported into the U.S. While this may have limited immediate impact on LNG exports from the United States for LNG plants that have already been constructed (there have been only two cargos of LNG sold to China from the United States this year), it has the potential to slow the growth of LNG exports, including reduced LNG off-take and equity investments in the United States from Chinese entities. China is currently the largest importer of LNG in the world, having surpassed Japan in 2018. The U.S. is projected to be the third-largest LNG exporter, with much of those exports forecasted to go to China.

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DOE Deputy Secretary Attends German LNG Conference

On February 12, 2019, U.S. Deputy Secretary of Energy Dan Brouillette and U.S. Ambassador to Germany, Richard Grenell, participated in a German LNG Conference hosted in Berlin by German Federal Minister of Economic Affairs and Energy Peter Altmaier.  The group was joined by high-level government and industry leaders, including Executive Director of the International Energy Agency, Dr. Fatih Birol.  (more…)

U.S. Department of Energy issues policy statement eliminating the “end use” reporting provision in authorizations for the export of liquefied natural gas

On December 19, 2018, the U.S. Department of Energy issued a policy statement eliminating from any future export authorization orders the requirement that exporters report where LNG was “received for end use.’’  The relief is a nod to market participants who expressed concerns that exporters often have limited visibility into where their natural gas is ultimately consumed.  The policy now will only require that exporters report where the natural gas was “actually delivered.”  DOE issued an accompanying blanket order, DOE/FE Order No. 4322, to remove the end use provision from existing authorizations.

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Energy Enforcement Update

This week’s enforcement update covers:

  • FERC Enforcement Staff presents the 2018 Summer Energy Market and Reliability Assessment;
  • CFTC Staff issues report assessing market impacts of LNG;
  • CFTC Commissioner Behnam discusses CFTC enforcement program and trends;
  • FERC files opposition to TOTAL petition for writ of certiorari in the Supreme Court;
  • Second Circuit affirms dismissal of class action against TOTAL for alleged natural gas manipulation; and
  • FERC Enforcement settles investigation with PSEG.

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