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September 24, 2014

Industry Comes Down on LNG Export Rules Proposal

While some lawmakers have embraced export policy changes for liquefied natural gas that the Energy Department announced in May, industry groups voiced clear opposition Monday, the last day to file comments on the proposal.

“We are concerned that the proposed changes in the notice will actually exacerbate delays in the current review process for LNG export authorizations, create regulatory uncertainty, and eliminate an important signaling mechanism that has played a key role in the rapidly evolving U.S. LNG export industry to date,” Erik Milito, upstream director for the American Petroleum Institute, wrote in a letter to the department.

The Energy Department is responsible for evaluating the potential national effects of LNG exports, which it previously authorized on a case-by-case basis with a conditional approval based on the order applications were received. Following industry pressure to expedite the process, the department proposed doing away with the conditional approval and instead issue only a final approval once a project had completed required environmental reviews.

“API is concerned that by ending the practice of issuing conditional orders for most applications, the Department is arbitrarily eliminating an important signaling mechanism to markets (both for U.S. project financing and for natural gas commodities globally) and to our strategic allies,” Milito wrote.

When it first gave notice, the department expected the opposite effect. “By removing the intermediate step of conditional decisions and setting the order of DOE decision-making based on readiness for final action, DOE will avoid the possibility of delayed action on applications that are otherwise ready to proceed,” the department wrote.

The API called instead for approving all pending applications, issuing public interest determinations within 30 days of a company filing with the Federal Energy Regulatory Commission (which conducts environmental oversight for export facilities) and issuing final orders within 10 days of a company completing environmental reviews.

The Industrial Energy Consumers of America, which opposes uncontrolled LNG exports, also objected to the changes.

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