Federal Oversight of Liquefied Natural Gas (LNG) Value Chain

Figure 5 U.S. Federal Agencies Involved with the LNG Value Chain.Courtesy of U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration

Several U.S. federal agencies have regulatory responsibilities related to LNG, including the Department of Energy (DOE). Companies that want to import natural gas into or export it from the United States must get authorization to do so from DOE’s Office of Fossil Energy (FE). The Natural Gas Act (NGA) requires FE to make public interest determinations on applications to export LNG to countries where the U.S. does not have existing free trade agreements. FE’s natural gas import-export regulatory program is implemented by the Division of Natural Gas Regulation.

There are two standards of review under the NGA for LNG export applications, based on destination countries.  Completed applications to export LNG to countries with which the United States has a free trade agreement (FTA countries) or to import LNG from any source are deemed automatically in the public interest. The NGA directs DOE to evaluate applications to export LNG to non-FTA countries. DOE is required to grant export authority to non-FTA countries, unless the Department finds that proposed exports will not be consistent with the public interest, or where trade is explicitly prohibited by law or policy. DOE acts on long-term LNG export applications to non-FTA countries after completing a public interest review that includes several criteria, including economic and environmental review of the proposed export.  Typically, the Federal Energy Regulatory Commission (FERC) has jurisdiction over the siting, construction, and operation of LNG export facilities in the U.S.  In these cases, FERC leads the environmental impact assessments of proposed projects consistent with the National Environmental Policy Act, and DOE is typically a cooperating agency as part of these reviews. Obtaining a DOE authorization to export LNG to non-FTA countries is an important step for most projects in their path toward financing and construction. After comprehensive reviews, DOE has issued over two dozen long-term LNG or compressed natural gas (CNG) export authorizations for exports to any country in the world not prohibited by U.S. law or policy.

For more information on the U.S. LNG Export, review the DOE’s LNG Snapshot.

Some of the companies that have LNG export authorizations from DOE have not reached final investment decisions on their projects. Construction of large facilities takes years to complete and can cost billions of dollars. A complete list of long-term LNG export applications and their current status can be found in DOE’s Summary of LNG Export Applications.

FE also promotes market transparency with published reports on LNG export volumes, destinations, and aggregated prices in its LNG Monthly Report. The first-ever exports of domestically-produced LNG from the lower-48 states occurred in February 2016.  

LNG projects that have DOE authorizations report their status and construction progress to the Department twice per year via Semi-Annual Reports. Customers wishing to purchase LNG from the United States can contact one of the companies that is authorized or is seeking export authority, as listed in FE’s Online Docket Room.