API Files Rehearing Application on Biden's LNG Pause

In a statement posted on its website recently, the American Petroleum Institute (API) announced that it has filed an application for rehearing on the Department of Energy’s (DOE) indefinite pause on new and pending liquefied natural gas permit approvals for non-FTA (Free Trade Agreement) countries.

The API highlighted in its statement that the legal filing, which accompanied the statement and was filed alongside several other oil and gas groups, argued that the pause is unlawful and that “it erodes America’s energy advantage by threatening U.S. jobs, national security, and environmental progress”. 

“The indefinite pause is unlawful under both the Natural Gas Act and the Administrative Procedure Act,” the filing states.

“First, the Indefinite Pause is ‘not in accordance with the law’ because it contradicts the Natural Gas Act’s clear mandate that DOE shall issue export permits unless it makes a specific finding that the permit is not in the public interest. 5 U.S.C. § 706(2)(A),” it adds.

“Second, the Indefinite Pause will result in export permits ‘unlawfully withheld or unreasonably delayed’. Id. § 706(1). Third, the Indefinite Pause is arbitrary and capricious. Id. § 706(2)(A),” it continues.

“Fourth, the indefinite pause does not comply with ‘procedure required by law’, because DOE failed to undergo notice-and-comment rulemaking before implementing the indefinite pause. Id. § 706(2)(D). The indefinite pause also undermines broader U.S. policy, harming U.S. industry and consumers,” it goes on to state.

In the API statement, API Vice President of Natural Gas Markets, Rob Jennings, said, “at a time of geopolitical turmoil around the world, the Department of Energy’s arbitrary LNG freeze is not only unlawful - it cedes America’s energy advantage to hostile nations while jeopardizing thousands of American jobs”.

“U.S. LNG is a cornerstone of global energy security, and its benefits - which include bolstering the American economy, reducing global emissions and strengthening our national security - are well-established. There is bipartisan recognition that this move is political, and we will continue to take any steps necessary to resume American leadership on LNG,” Jennings added.

The API noted in its statement that, in 2022, the U.S. fed its domestic markets while sending more than 800 LNG cargoes to Europe. That figure marked a 141 percent increase from 2021, the API highlighted in its statement, which warned that “recent studies show that Europe and Asia face potential long-term natural gas supply gaps threatening their energy security”.

The U.S. natural gas and oil industry supports 10.8 million jobs and contributes $1.8 trillion to the U.S. economy, the API pointed out in its statement, adding that LNG exports are a critical part of the natural gas value chain, “supporting jobs from production facilities in Pennsylvania and New Mexico to pipeline operations Ohio and West Virgina to export and liquefaction facilities in Texas and Louisiana”. 

Rigzone has asked the DOE and the White House for comment on the API’s statement and on the legal filing accompanying the statement. At the time of writing, neither department has responded to Rigzone yet.

On January 26, U.S. President Joe Biden revealed in a statement posted on the White House website that his administration was announcing a temporary pause on pending decisions of LNG exports, “with the exception of unanticipated and immediate national security emergencies”.

Wood Mackenzie’s (WoodMac) LNG team previously outlined to Rigzone that the impact of the Biden administration’s temporary pause on pending approvals of liquefied natural gas exports depends on several things.

“The impact of the pause depends on how long it lasts, whether it affects both new non-FTA approval and existing non-FTA approval extensions, and how it will affect future U.S. non-FTA approvals,” the WoodMac LNG team told Rigzone earlier this year.

In a report sent to Rigzone shortly after Biden’s statement, analysts at Standard Chartered said the pause will have no effect on existing terminals or on those already approved but warned that it is likely to mean decisions on pending approval requests are deferred beyond the November election.

To contact the author, email andreas.exarheas@rigzone.com