Illustration; Source: API

Biden administration hit with one more lawsuit over LNG permitting freeze

There seems to be no end in sight for the saga over the Biden administration’s pause on pending approvals of liquefied natural gas (LNG) exports to non-free trade agreement (FTA) countries, as hammered home by another lawsuit filed by the Pelican Institute for Public Policy and Liberty Justice Center to challenge the ban in the United States District Court for the Western District of Louisiana in New Orleans.

Illustration; Source: API

Come January 26, 2024, the Biden administration’s complete halt to all new approvals of LNG exports to countries not covered by free trade agreements, took the world by surprise as it signified an unexpected shift in American energy policy, given the energy security concerns that permeated the world in the wake of the Ukraine crisis.

Dubbed the ‘LNG export ban,’ the decision marked what some have deemed to be a dramatic reversal from the U.S. Department of Energy’s (DOE) stance just six months earlier when it reaffirmed the continuation of LNG export approvals.

When the Ukraine crisis gripped the world in its clutches in 2022, the U.S. not only supplied its domestic markets but also sent over 800 LNG cargoes to Europe, a 141% increase from 2021, to help blunt the impact of what was considered to be Russia’s weaponization of energy supplies.

Considering the different impacts the LNG freeze could have, the American Petroleum Institute (API), a U.S. trade association representing the oil and gas industry, filed an application for rehearing to overturn the decision. Offshore Energy’s recent interview with a representative from Bureau Veritas spotlighted that renewables and hydrogen were positioned to reap the benefits from the U.S. LNG permitting pause.

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However, many are unwilling to leave the LNG permitting freeze in place, thus, they are leaving no stone unturned in their quest to remove this ban, which is expected to be temporary until a review of the environmental and economic impacts of LNG export facilities to non-FTA countries is carried out.

To this end, Pelican Institute and Liberty Justice Center, representing the Oil & Gas Workers Association, a nonprofit trade association for oil and gas workers, filed a complaint on May 16, 2024, in the United States District Court for the Western District of Louisiana.

According to the Pelican Institute, the Oil & Gas Workers Association has taken “a bold stand” by filing a lawsuit against the Biden administration’s ban, as it is interpreted that the ban’s impact extends beyond mere regulatory compliance issues, striking at the heart of the economic livelihood of thousands of Americans and the operational stability of an entire industry.

The lawsuit argues that the sudden policy change destabilizes a critical component of the U.S. economy and raises significant legal concerns, contravening the 1938 Natural Gas Act, which mandates that the DOE should approve LNG export applications unless such applications are inconsistent with the public interest.

James Baehr, Special Counsel at the Pelican Institute for Public Policy, commented: “This export ban is unconstitutional and indefensible. In addition to the harm it will do to the economy and to tens of thousands of working Americans across the country, it also disregards federal law, flouts the standard rule-making procedure, and threatens our constitutional structure.”

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Moreover, the conservative think tank and its legal arm claim that this determination is not being made if all applications are rejected. In addition, the imposition of the ban without the requisite notice and opportunity for public comment is said to violate the procedures mandated by the Administrative Procedure Act (APA), exhibiting federal administrative overreach and a disregard for the constitutional separation of powers.

“This legal challenge seeks to reverse the ban and restore lawful, reasoned policy making that considers projects on a case-by-case basis and preserves the interests and the security of American energy workers and consumers. As we move forward with this lawsuit, it is a fight not just for the future of the LNG industry, but for the integrity of our constitutional framework,” highlighted the Pelican Institute.

While the Pelican Institute and Liberty Justice Center lawsuit is the latest legal step taken to oppose the LNG permitting freeze, it is not the only legal challenge to the ban, as sixteen states have also jointly filed suit through their attorneys general.

Matt Coday, Plaintiff and President of the Oil & Gas Workers Association, underscored: “Tens of thousands of hardworking oil and gas workers across the country depend on the LNG export industry to put food on the table for their families. This ban will have devastating consequences on their lives and livelihoods unless the court steps in to put an end to the administration’s overreach.”