Environmental groups are attempting to enlist the U.S. Department of Commerce (“DOC”) in their fight against fracking operations and climate change by petitioning DOC to ban natural gas exports under the Energy Policy and Conservation Act of 1975 (“EPCA”).
At the same time, however, DOC reportedly has decided to lift a long-existing ban on crude oil exports imposed under the same law. The Wall Street Journal reported Aug. 14 that DOC told members of Congress it intends to approve an application by the national oil company of Mexico to exchange heavy oil produced in Mexico for lighter crude produced in the United States. While the decision would represent only a limited lifting of the ban on crude oil exports, proponents of a complete elimination on the ban are vowing to press for more. Shortly after DOC announced the news, Sen. Lisa Murkowski (R-AK) – one of the chief proponents of a wholesale lifting of the ban – welcomed the decision, but added “I remain committed to the full repeal on the ban on selling oil to our friends and allies overseas.”
With regard to natural gas exports,three groups filed a petition on August 12 under Section 553(a) of the Administrative Procedure Act (“APA”) demanding that DOC “immediately promulgate a rule or rules prohibiting the export of all natural gas products from the United States.” The petitioners are the Center for Biological Diversity, Friends of the Earth, and Greenpeace. Their concerns, however, have little to do with preserving supplies of the natural resources for domestic use. Rather, they argue that demand for natural gas is driving increased domestic production through fracking, which leads to increases in methane and other greenhouse gas (“GHG”) emissions, damage to natural resources and wildlife, and increased seismic activity. Their solution – to cut off supply of natural gas produced in the United States to foreign markets – is mandated by the EPCA, they claim.
While it remains to be seen whether DOC will grant the petition, DOC’s decision to partially lift its ban on crude oil exports by allowing exchanges with Mexico provides some indication of the likelihood it will grant the petition. Regardless of DOC’s decision, however, petitioners have clearly indicated that this is just the first step in a larger legal strategy should DOC fail to act. The groups have followed similar strategies under other statutes. In 2014, for instance, they filed a notice of intent to sue the Environmental Protection Agency (“Agency”) under the Clean Air Act for failing to act on a petition that the Agency make an endangerment finding with regard to GHG emissions from aircraft. That effort resulted in a June 2015 Agency proposal to make such a finding.
Petitioners base their argument to DOC on Section 103(b)(1) of the EPCA, which provides in relevant part that the President “shall exercise the authority provided for in [Section 103(a) of EPCA] to promulgate a rule prohibiting the export of crude oil and natural gas produced in the United States.” Petitioners claim that Section 103, together with Executive Order 11912, which delegates authority to promulgate rules implementing the EPCA to DOC, “unequivocally mandates the President to generally prohibit natural gas from being exported from the United States.”
Petitioners also claim that regulatory programs implemented by the Department of Energy to grant licenses for natural gas exports do not “absolve” DOC from taking action under the EPCA. “Overall, DOC’s mandatory program of prohibition is intended to be a gatekeeper on natural gas exports and guide natural gas export policy generally,” petitioners argue. “The [Natural Gas Act] licensing program administered by DOE is governed by a public interest standard, where DOE approves an export application unless the export is found to be against public interest. In contrast, the EPCA mandated requirements for permitting natural gas exports under EPCA’s general prohibition rule yield critically different outcomes to the NGA-mandated licensing program. This ensures DOC’s role as a gatekeeper to natural gas exports that subsequently may reach the DOE and FERC licensing stages of approval.”
Finally, petitioners also argue that DOC cannot treat natural gas differently than crude oil under the EPCA, noting the department promulgated regulations banning crude oil exports shortly after EPCA was enacted. They contend DOC conceded as much at the time, when it published a notice in the Federal Register stating its intention to promulgate similar rules for natural gas; a notice on which DOC never acted.