February 8, 2024 Reading Time: 5 minutes
A liquid natural gas tanker in the Baltic Sea.

On January 26, 2024, the Biden administration announced a temporary pause on new approvals of exports of Liquefied Natural Gas (LNG) to countries with whom we do not have non-free trade agreements (FTAs). The administration blamed this pause on the current permitting process failing to “adequately account for considerations like potential energy cost increases for American consumers and manufacturers” or the “latest assessment of the impact of greenhouse gas emissions.”

Future projects are clearly at stake — but so are those already approved but not yet exporting. The Department of Energy lists 22 of these projects. If an approved project fails to commence exports by the deadline specified, the exporter will need to re-apply under this hostile new approval process. Billions of dollars in investments could be stranded by the change.

Why did the administration single out exports to non-FTA countries? A basic familiarity with the Natural Gas Act of 1938 is required. The Natural Gas Act — passed by Congress in 1938 and codified into law as 15 U.S. Code § 717 — requires exporters of natural gas to obtain a permit from the Department of Energy. Congress instructed the Federal Energy Regulatory Commission that it “shall issue” such a permit unless the commission finds that the exportation “will not be consistent with the public interest.” Congress mandated that exportation to a nation with which we have a free trade agreement “shall be deemed to be consistent with the public interest.” Thus, the administration has no choice but to continue to approve permits to FTA countries.

But what of these exports to non-FTA countries? Not once since the passage of the Natural Gas Act has the federal government declined to grant a natural gas export permit on the basis that such exportation is not consistent with the “public interest.”

A close look at any of the listed approvals shows the tortuous process already endured by these natural gas exporters — a process fraught with satisfying the demand of federal regulators and battling litigation brought by well-funded environmental activists. In each instance, the Department of Energy issued the export permit.

The administration’s claim that a permitting pause is necessary to “adequately account for considerations like potential energy cost increases” and “the latest assessment of the impact of greenhouse gas emissions” is a red herring. Arguably, the DOE is already breaching statutory authority by forcing exporters to justify the global impact of eventual greenhouse gas emissions. But even if carbon emissions were a valid determinant of a project’s being consistent with the public interest, The Department of Energy’s Life Cycle Greenhouse Gas Perspective on Exporting Liquefied Natural Gas from the United States clearly explains the emissions impact of exported natural gas relative to energy sources likely to be consumed by recipient countries in the absence of US exports. Developing nations like India, deprived of natural gas imports, will burn oil and coal, resulting in even greater emissions. Contributions to climate change cannot be not a valid rationale to block LNG exports under the guise of “public interest.”

Furthermore, the construction and operation of the export facility still must meet all applicable guidelines under the National Environmental Policy Act (NEPA). To deny an export permit for a project that meets NEPA requirements due to the administration’s additional climate change emissions concerns is tantamount to the executive branch (agency) seizing legislative power from Congress.

Clearly, the relationship between the United States and the destination country is a viable factor. Supplying Iran, Cuba, Russia, or another hostile power could easily be deemed a violation of the public interest. But these exports provide energy to non-hostile nations and effectively stymie the flow of oil revenue to hostile producers like Iran or Russia, who would use this revenue to fund terror and dictatorship.

But the destination country cannot be a factor in export approvals on the basis that exported natural gas may exacerbate climate change. The administration’s logic presumes that emissions from natural gas exported to Canada or Mexico (FTA counties) are consistent with the “public interest” while emissions from natural gas exported elsewhere, but burned identically, magically DO violate the public interest. How farcical. 

On the economic front, the increase in natural gas exports has not induced higher domestic prices. Despite the extremists’ best efforts, natural gas extraction continues to boom, doubling since 2005 and on track for a new record this year. Exports surged more than 1000 percent during this period — likely hitting an all-time high for the ninth consecutive year in 2023. Meanwhile, natural gas prices plunged by 50 percent, trending against consistent rising prices for other kinds of products. Development of our natural gas resources has helped offset the economic damage created by ever-expanding regulations, declining labor-force participation, and a gluttonous federal spending.  

The facts underlying the prior analyses determining export permits to be “consistent with the public interest” have not changed. Needlessly diverting limited resources on less efficient “renewable” energy production means fewer resources available to meet other market desires. This serves an ideological interest entirely at odds with the “public interest.” Chilling investment and artificially reducing supply serves to artificially drive demand for the far more expensive “renewables” favored by the ideological Left. The true aim is not “combatting climate change,” but diminishing global economic output and consumption based on the false notion that humanity is a scourge on the planet.

This is par for the course for the Biden administration, which in its first week terminated the Keystone XL pipeline approval. The administration is pushing forward to pave millions of acres of wilderness with taxpayer subsidized solar panels while blocking uranium extraction in Arizona vital to nuclear energy production and considering moves to block oil development in ANWR that would only require only 2000 acres of surface operation to produce potentially 800,000 barrels of oil per day. The current administration’s ultimate aim is fully “transitioning” us off not only fossil fuels but low-cost, zero-emission nuclear power — leaving reserves capable of meeting our needs for hundreds of years trapped under the ground.

The Biden administration’s recent freeze on new LNG export permits is an affront to the rule of the law. Sierra Club executive director Ben Jealous gleefully boasts that revising the natural gas export review process “would end the rubber-stamping of these projects.” He is correct — but this desired result runs counter to Congress’s instructions to the Department of Energy to “rubber-stamp” these approvals anytime a natural gas export project is in the public interest.  The proposed regime inverts Congress’ clear instructions by seeking to only approve projects that are in the administration’s own ideological interest. By restricting natural gas exports, the administration seeks to impose its vision for the future on the rest of the world — depriving us of an affordable, abundant form of energy essential to boosting prosperity.

This is yet another iteration of the administrative state: the executive branch usurping the role of Congress by creating the law, rather than enforcing the law. For too long, Congress has unconstitutionally surrendered its responsibility to legislate by granting agencies vaguely defined or overly broad powers. Courts too often defer to the edict of these agencies in defiance of constitutional separation of powers. The EPA’s attempt to regulate carbon emissions from electricity production by misconstruing the Clean Power Act and its attempt to regulate ponds and swampland by twisting the meaning of the Waters of the US in the Clean Water Act. And, lest we forget, a slough of federal agencies used vague emergency powers during the COVID-19 pandemic to forbid evictions, freeze student loan payments, impede travel, and trample on civil rights. In each instance, administrative state overreach eroded private property rights, individual liberties, and the rule of law.

Congress — in accordance with its constitutional authority to regulate international commerce — long ago instructed the executive branch to issue permits for LNG exports if consistent with the public interest. Allowing the executive branch to target the energy sector via regulatory edict sends a clear signal to private capital: Invest resources in exploration, extraction, and delivery infrastructure at a heightened risk. Families, businesses, and investors all suffer. Joe Biden promised to “end fossil fuels.” This is one promise that should not be kept. Let’s hope the courts and Congress thwart these aims.

Joel Griffith

Joel is a Research Fellow in the Thomas A. Roe Institute for economic policy studies at The Heritage Foundation.

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