On May 17, 2013, the Department of Energy ("DOE") ended its nearly two-year-long hiatus from authorizing projects for the export of liquefied natural gas ("LNG") when it granted a conditional authorization of the Freeport LNG Export Project. DOE/FE Order No. 3282 (May 17, 2013) [hereinafter "DOE Order"]. The DOE Order clearly states that "satisfactory completion of environmental review" is a remaining hurdle, and the bulk of the Order focuses on economics, trade, and security considerations. But a careful read through an "environmental lens" magnifies some points for applicants in other pending and future projects.
Environmental impacts are not exempt from the presumption favoring authorization of exports. In the Order, DOE identified a range of factors relevant to its public interest review. "These factors include economic impacts, international impacts, security of natural gas supply, and environmental impacts, among others." DOE Order at 6. But DOE noted throughout that section 2 of the Natural Gas Act presumes that the public interest favors granting the export authorization. Consequently, opponents on environmental grounds carry the burden of overcoming the presumption.
DOE's process does not offer a second bite at the NEPA apple. DOE explains in the order that FERC is the lead agency for the National Environmental Policy Act ("NEPA") review of LNG export projects. "DOE/FE is participating in that environmental review as a cooperating agency, and will independently review FERC's conclusions when FERC's review is complete." However, DOE also clarifies twice (just in case the reader misses it the first time) that stakeholders must raise their concerns in the FERC review.
[P]ersons wishing to raise questions regarding the environmental review of the present Application are responsible for doing so within the FERC proceedings. As explained in our orders in Sabine Pass, DOE/FE's participation as a cooperating agency in the FERC proceeding is intended to avoid duplication of effort by agencies with overlapping environmental review responsibilities, to achieve early coordination among agencies, and to concentrate public participation in a single forum. Insofar as a participant in the FERC proceeding actively raises concerns over the scope or substance of environmental review but is unsuccessful in securing that agency's consideration of its stated interests, DOE/FE reserves the right to address the stated interests within this proceeding. However, absent a showing of good cause for a failure of interested persons to participate in the FERC environmental review proceeding, DOE/FE may dismiss such claims if raised out of time in this proceeding.
DOE Order at 120-121 (repeating id. at 96-97). In addition to the warning for stakeholders, this clarification also provides an incentive to applicants to engage in a reasonably robust FERC review.
Although DOE has declined to do a programmatic NEPA review of LNG exports, its cumulative effects review of each successive application may ultimately have a "programmatic" result. In the Freeport proceeding, a number of stakeholders argued that public participation provisions required DOE to undertake a programmatic approach to its review. DOE declined, noting both the plethora of opportunities it had offered for stakeholders to participate and its discretion to prescribe its procedures. DOE Order at 108-109 (denying requests for additional rulemaking, studies and public hearings). However, DOE "hasten[ed] to add that DOE/FE will take a measured approach in … reviewing the other pending applications to export domestically produced LNG. Specifically, DOE/FE will assess the cumulative impacts of each succeeding request for export authorization on the public interest …." DOE Order at 112-113. As each review adds another layer to the cumulative effects analysis, the distinction between DOE's "measured approach" and a programmatic assessment may become a distinction without a difference.
As noted by DOE, FERC will handle the next stage of Freeport LNG's review, and stakeholders will undoubtedly add to the discussion in that forum. It remains to be seen whether and to what extent FERC's environmental reviews inform future DOE evaluations, which then inform future FERC reviews, and so on, creating a cumulative record over time. Accordingly, prudent applicants will pay attention to reviews of those ahead in the queue, if only to understand where their own reviews may start.