A US federal court judge in Louisiana on July 1 blocked the Biden administration’s pause on LNG export permits, but the real-world impacts of the ruling remain uncertain.
Judge James Cain Jr., of the US District Court for the Western District of Louisiana, called the pause “completely without reason or logic,” in his 62-page decision. The ruling is a victory for industry groups and attorneys general in 16 Republican states that sued after the White House in January ordered a halt of any new export licenses to non-Free Trade Agreement countries while the Department of Energy (DOE) reviews the climate and economic impacts of surging LNG exports (OGJ Online, Jan. 26, 2024).
Cain ordered that the “LNG export ban be stayed in its entirety, effective immediately.” The timing of DOE’s resumption of reviews and issuance of permits is unclear because DOE, which is responsible for issuing export authorizations, “retains substantial discretion regarding the pace at which it fulfills its public interest obligations under the Natural Gas Act,” ClearView Energy Partners said in a note. “In short, outside observers might see little tangible difference between the DOE’s endogenous pause and court-compelled resumption…at least initially,” the note continued.
US LNG economic, environmental analysis
Judge Cain, a Trump appointee, agreed with the plaintiffs’ arguments that the Biden administration’s rationale for the export pause was faulty. Because LNG will likely replace fuels with higher greenhouse gas emissions, the White House’s concerns over the environmental effects of growing exports were overblown, Cain ruled.
He also said the economic benefits of exporting LNG were clear, noting that despite US natural gas demand nearly doubling in the past decade, Henry Hub natural gas prices were $2.54/MMbtu, the second lowest level in over 35 years. Europe pays $9.81/MMbtu for natural gas, while Asia pays $11.52/MMbtu, Cain added. “It does not require a mathematical genius….to determine that exporting LNG is economically beneficial to the United States,” he wrote.
Cain also said that the export halt “departs from DOE’s past policies and precedents,” noting that DOE “has NEVER found an LNG export application to be inconsistent with the public interest and has approved every other past LNG export application.” Companies relied upon those precedents when making investment decisions. Lost revenues and delayed investments due to the pause lends support to the states’ case, Cain said.
Louisiana Attorney General Liz Murrill lauded the order. "This is great news for Louisiana, our 16 state partners in this fight, and the entire country. As Judge Cain mentioned in his ruling, there are roughly $61 billion of pending infrastructure at risk to our state from this illegal pause."
Evergreen Action vice-president Craig Segall suggested that the ruling "should have no impact on [DOE]’s statutory authority" over what must be included in a public interest determination. "Pause or no pause, the science is clear: No sound analysis that accounts for the climate and environmental harm inflicted by LNG exports could possibly determine that these deadly facilities are in the public interest," Segall said in a July 1 statement. He urged the Biden administration to appeal.
The Biden administration said it is weighing its next steps. DOE expressed disappointment with the ruling, noting that US LNG export operating capacity, already the world's largest at 14 bcfd, is already authorized to grow three-fold to 48 bcfd in coming years. It said the administration remains committed to strong economic and environmental analysis.
Cain’s ruling comes less than a week after the Federal Energy Regulatory Commission approved Venture Global LNG Inc.’s 20-millon tonne/year Calcasieu Pass 2 (CP2) LNG plant in Cameron Parish, La. (OGJ Online, June 27, 2024). The project, which, if built, would be the largest LNG plant in the nation, still requires a DOE export license. The department halted the review of the pending application with the issuance of the LNG pause.
