Changes Would Affect Regulations Governing LNG Imports and Exports from Offshore Facilities

HIGHLIGHTS:

  • The proposed revisions are expected to help expedite licensing reviews by clarifying the regulatory process and cooperating agency requirements.
  • The proposed rule would also update the regulations to account for new technologies and uses, including LNG exports.

On April 9, 2015, the U.S. Coast Guard issued a Notice of Proposed Rulemaking (NPRM) in the Federal Register seeking public comments on a proposed overhaul of its existing regulations implementing the Deepwater Port Act of 1974(DWPA). The proposed revisions should, among other things, help expedite licensing reviews by clarifying the regulatory process. The rulemaking also updates the regulations to account for recent trends in the natural gas industry, including facilitating the licensing of deepwater ports as liquefied natural gas (LNG) export terminals.

The DWPA is the federal law governing the licensing and operation of offshore facilities used to import or export oil or natural gas. Applications to construct and operate deepwater ports are jointly reviewed by the Coast Guard and U.S. Maritime Administration (MARAD) – an agency of the Department of Transportation (DOT) – in coordination with cooperating federal agencies including the Army Corps of Engineers, the Pipeline and Hazardous Materials Safety Administration (PHMSA), the Bureau of Ocean Energy Management, the Environmental Protection Agency and others.

The Coast Guard is responsible for the preparation of the environmental impact analysis for project applications under the National Environmental Policy Act (NEPA); compliance with NEPA as well as other relevant environmental laws; and matters relating to navigation safety and security, engineering and safety standards, and facility inspections. MARAD has ultimate licensing authority over project applications.

The Coast Guard's regulations – which outline the requirements regarding the licensing, design and operation of deepwater ports – were first issued in 1975 for the regulation of oil import terminals, such as the Louisiana Offshore Oil Port (LOOP), and were extensively revised in 2004 and 2006 after the DWPA was amended to cover natural gas (e.g., LNG) import terminals. In December of 2012, the DWPA was further amended to allow exports of both oil and LNG from offshore terminals.

One of the main purposes of the proposed rule is to clarify the deepwater port application process and the roles and requirements of cooperating federal agencies to help expedite the licensing process. Under the DWPA, the timeline for action on applications, from the time of filing to MARAD's licensing decision, is 356 days. However, the Coast Guard and MARAD observe regulatory "stop clocks" that toll the timeline when additional information is needed to process applications. The proposed revisions seek to minimize "stop clocks" by adopting agency practices as regulatory requirements, such as clarifying that applicants must provide meteorological and oceanographic (metocean), vessel traffic, and full geological data as part of a license application.

The proposed revisions also clarify the jurisdictional roles between the Coast Guard and PHMSA with respect to deepwater port pipelines and subsea components. The rulemaking also updates the regulations to account for licensing export terminal facilities and for technologies such as submerged turret loading buoys, which are commonly used in floating LNG regasification terminals. Finally, the proposed rule updates and revises a number of design and operational requirements regarding facility equipment and safety.