On May 1, 2020, the U.S. Department of Energy (“DOE”) issued a Notice of Proposed Rulemaking (“NOPR”) to update its National Environmental Policy Act (“NEPA”) implementing regulations concerning applications to import to, or export from, liquid natural gas (“LNG”) terminals. In particular, DOE has previously determined that the transportation of natural gas by marine vessels normally does not pose the potential for significant environmental impacts, and accordingly, exports of LNG should be considered a “categorical exclusion” from NEPA review.  Comments are due June 1, 2020.  DOE is responsible for authorizing applications to import and export natural gas under section 3 of the Natural Gas Act. Before making a final decision on such an application, however, DOE must comply with NEPA. DOE must authorize these applications unless it determines that doing so would not be consistent with the public interest, but section 201 of the Energy Policy Act of 1992 deems imports (as well as exports to countries with free trade agreements) consistent with the public interest as a matter of law. Pursuant to section 201, any such application “shall be granted [by DOE] without modification or delay.” Thus, DOE asserts that it lacks discretion over these LNG applications. DOE has also determined that because it lacks authority to approve construction and operation of LNG export facilities, its NEPA review of LNG export applications (with countries without free trade agreements) must focus only on impacts that occur at or after the point of export, namely the flange of the LNG export vessel, but does not include the use of LNG in foreign countries.

Accordingly, the NOPR includes two types of proposed revisions. First, DOE proposes to remove references to authorizations to import natural gas from its NEPA implementation regulations. According to DOE, in light of its limited statutory review of LNG imports, such removal is consistent with the legal principle that an agency is not required to prepare a NEPA analysis when it has no discretion in its action. Second, DOE proposes to revise the categorical exclusions in its NEPA implementation regulations for applications to export natural gas (to countries without free trade agreements). As DOE asserted, based on prior NEPA reviews and technical reports, transportation of natural gas by marine vessel at or after the point of export (that is, at or after the flange of the LNG export vessel) “normally does not pose the potential for significant environmental impacts,” and accordingly, is suitable for NEPA “categorical exclusion” treatment. According to DOE, these proposed revisions are consistent with the legal principle that potential environmental effects considered under NEPA do not include effects that the agency has no authority to prevent (such as the later consumption of LNG after exportation) because they would not have a sufficiently close causal connection to the proposed action.

DOE invites public comment on the proposed changes, which is due June 1, 2020.

A copy of the NOPR is available here.