Biden's LNG export licence pause has been temporarily suspended, but DOE decisions could still be delayed, writes Chris Knight
A federal court's ruling that blocks President Joe Biden's pause on new US LNG export licences represents a legal victory to industry groups and some states, but the decision might still give way to an "unofficial" freeze on the licences.
A ruling by US district court judge James Cain suspends Biden's controversial pause on licensing for new LNG projects until litigation by Louisiana and other states is resolved, describing it as "completely without reason or logic". Louisiana and other states behind the lawsuit have argued that the pause could put at risk $73bn in LNG export projects, as well as threaten royalties and taxes collected as a result.
Gas industry groups have applauded the court's ruling, which they see as validating their complaints about the legality of the licensing pause and its potential adverse effects on energy security and economic growth. But some have expressed scepticism about its practical implications. Under the Natural Gas Act, there is no firm deadline by which to decide an LNG export application, meaning that despite the ruling, the US Department of Energy (DOE) will still hold significant discretion over the timing of the LNG licensing process and its final result.
Cain said the DOE should proceed "expeditiously" in issuing licences to export to countries that do not have a free trade agreement (FTA) with the US. In light of the ruling, gas group Center for LNG would "strongly encourage" the DOE to return to approving export licences for pending LNG projects, executive director Charlie Riedl says. Yet Cain's ruling cannot force the DOE to decide any time soon on any of the LNG export projects awaiting such permits, including the 9.5mn t/yr Commonwealth LNG project and Venture Global's 28mn t/yr CP2 project, among others.
The court ruling's most likely outcome will be that the administration will "revert to the status quo, which was an unofficial freeze, an unofficial pause", industry group LNG Allies president Fred Hutchison says. In the three years before Biden announced the pause, the DOE had not approved a "non-FTA" licence that would allow an entirely new LNG facility to export to countries without an FTA with the US, although the agency has approved some capacity expansions at existing terminals. The DOE's inaction shows "an unwillingness to deal with what the law clearly states it has to do, which is to deal with these expeditiously", Hutchison says, pointing in particular at the Commonwealth LNG request, which has been pending at the DOE for more than 19 months.
DOE weighs its options
The DOE says it disagrees with the court's ruling and "continues to review the court's order and evaluate the next steps". The agency has yet to say how the ruling might affect its plan to complete a new study on LNG exports that was set to be completed in the first quarter of 2025 and is intended to guide licensing in future.
Consumer groups say nothing in the ruling requires the DOE to depart from its original plan, announced in January in conjunction with the pause, to defer issuing licences until it completes the study, which will focus on the potential climate and economic effects of approving more LNG terminals. The ruling does not require the DOE to "approve any particular pending LNG export authorisation", Public Citizen's energy programme director, Tyson Slocum, says.
With the pause no longer in place, environmentalists who oppose additional LNG projects say the administration would be justified in simply denying pending export licences. "Halting the massive and dangerous expansion of these exports is the right thing to do for Gulf coast communities, wildlife and all of us who hope to keep living on a sustainable planet," Center for Biological Diversity attorney Lauren Parker says.
