US DOJ asks appeals court to set aside order lifting pause on LNG export permits

The Biden administration has asked a federal appeals court to set aside an order for the US Department of Energy to lift its “pause” on issuing LNG export approvals, arguing that a challenge by Republican-led states against the permitting suspension should also be dismissed for lack of jurisdiction.

US Department of Justice attorneys representing administration officials and the DOE in the case filed the brief Nov. 1 at the US Court of Appeals for the Fifth Circuit, outlining their arguments in seeking a reversal to a July decision by a federal district judge in Louisiana that halted the permitting freeze. Under the Natural Gas Act, only federal appeals courts have jurisdiction over claims related to the DOE’s export orders, the US government attorneys said.

“This court should vacate the district court’s order and instruct the district court to dismiss the complaint for lack of jurisdiction,” they argued.

The DOJ also said that the plaintiffs -- 16 states – lacked standing to sue because they “have no direct stake in the pending export applications, and they identify no direct financial injury from a temporary delay” in permit decisions.

The July 1 preliminary injunction that ordered the DOE to end the pause, issued by Judge James Cain of the US District Court for the Western District of Louisiana, found that the states who argued the permitting pause was unlawful were likely to succeed on the merits of their case. But several analysts viewed the ruling as unlikely to kickstart DOE approvals on its own.

The election-year permitting suspension applies to authorizations of LNG exports to countries that lack free trade agreements with the US. The approvals are critical for projects because such non-FTA countries represent most of the global LNG import market. The DOE announced the pause in January, saying it needed time to update the economic and environmental studies it uses to decide whether approving additional exports is in the public interest.

Contracting tied to US LNG projects slowed after the move by the DOE, which has left several projects in regulatory limbo and created uncertainty about the long-term market share of US supply.

Since the district court order, the DOE has approved one non-FTA export application: a five-year authorization issued in August for a small offshore project in Mexico, which required the approval because it sources feedgas from the US.

Export approvals are expected to resume in 2025 regardless of who wins the US presidential election on Nov. 5, but the manner is unclear.

Former President Donald Trump has promised to approve LNG projects and end the DOE permitting freeze as a “day one” priority. Vice President Kamala Harris is also expected to end the pause, although there could be additional scrutiny or new criteria applied to permitting reviews.

DOE officials under the current administration have said the pause will be over by early 2025.

The recent DOJ filing offered little indication of the status of the efforts to update the DOE’s permitting reviews or a timeframe for resuming approvals. But the attorneys said the DOE sometimes “defers final decisions on pending applications” when it updates the information it relies on to process them. In 2012, the agency postponed decisions on 15 export applications while it finished developing a new economic study, according to the filing.

The ongoing updates and the pause do not represent a final agency action that can be challenged, the DOJ argued. Instead, the administration characterized the states’ suit as broadly challenging the DOE’s general approach to export application reviews, an approach it said courts have found is not permitted under the Administrative Procedure Act.

“The department’s consideration of economic and environmental standards in the update is not new—they are the same standards that the department has considered in making public interest determinations for more than a decade, and which courts have affirmed,” the attorneys said. "A binding agency decision will come only at the end of the department’s process, when it issues final orders on pending applications."