House GOP supports critical report on LNG, coal export policy

The Republican majority on the House Energy and Commerce Committee on Dec. 4 issued a statement supporting a new report from the National Association of Manufacturers which found the Obama Administration’s “unreasonable” delays in approving export projects for liquefied natural gas (LNG) and coal could conflict with World Trade Organization (WTO) agreements.

A key provision of the WTO agreements bans certain export restrictions, and the report, authored by former WTO Appellate Body Chairman and former Democratic member of the House James Bacchus, concluded that “the implementation of U.S. rules in ways that unnecessarily impede exports of LNG and coal likely violate WTO trade rules.”

Bacchus found that in the case of LNG, the chief obstacle confronting export projects is a federal determination of whether the export of gas is consistent with the “public interest.” In the case of coal, he found that federal law imposes no significant restrictions on the export of coal itself. However, coal export projects are confronting delays related to analysis of their potential environmental impacts.

“In both instances, the implementation of U.S. laws and related delays in licensing and permitting are impeding these projects and risk running afoul of our international obligations under the WTO,” Bacchus wrote.

The House Energy and Power Subcommittee has been examining barriers to exports and the need for updated policies as America enters a new age of energy abundance. NAM and other stakeholders have urged the federal government to allow the free market to govern exports rather than distorting legal and regulatory barriers.

Full committee Chairman Fred Upton, R-Mich., stated previously at a hearing: “The cumbersome federal approval process is out of step with where we are as an energy-producing nation today. … The private sector has made rapid progress in unlocking our energy abundance. What the American people now need is a regulatory process that can keep up with this evolving energy landscape.”

Report cites slow review of dwindling number of coal export projects

Said the report: “Federal law does not restrict the export of coal to overseas markets. However, to export coal mined in the Powder River Basin area of Montana and Wyoming to Asian markets, additional port facilities must be constructed. The siting and construction of these facilities must be reviewed and permitted by the Army Corps of Engineers under the authority provided in the Rivers and Harbors Act, the Clean Water Act and the National Environmental Policy Act (NEPA). Furthermore, under various state laws, state and local agencies also have the authority to review and evaluate port facilities. Currently, three marine terminal projects are under various stages of permitting and review in the Pacific Northwest.”

The scope of the environmental review has been determined for two of the three coal export projects. For both the Morrow Pacific Terminal in Oregon and the Gateway Pacific Terminal in Washington State, the Corps indicated that its review will be limited to the local impact of the terminals and will not include the impact of burning coal or of interstate rail transport. Due to its small size, the Morrow Pacific project will receive a streamlined “Environmental Assessment” process, while the larger Gateway Pacific Terminal will receive a more involved “Environmental Impact Statement” (EIS) review from the Corps.

By contrast, the Washington Department of Ecology and Whatcom County announced that the scope of their reviews for the Gateway Pacific Terminal will be more expansive and will encompass the global impacts of the transportation and the ultimate use of coal. The scoping process for the third and final project, Millennium Bulk Terminals in Washington State, is ongoing but will likely result in a split federal and state review much like the Gateway project, the report said.

It is expected that the draft EIS will take approximately two years to complete, and the preparation of the final EIS will take an unknown amount of additional time. The projects must also secure various other state and local permits prior to construction. “However, the vastly expanded scope of the Washington State environmental review appears poised to cause significant additional delays or restrictions to the projects—delays that could stretch well beyond what is customary or reasonable,” the report added. “Prolonged delay, according to supporters of the projects, will have detrimental impacts on the economy without considerable environmental benefits. Already, the potential delays have contributed to at least three terminal projects being scrapped.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.