Natural Gas Exports: Updated Guidance and Regulations Could Improve Facility Permitting Processes
Fast Facts
In 2019, about 39% of U.S. natural gas exports went through export facilities—in which the gas is liquefied and loaded onto ships for transport. Multiple federal agencies regulate export facility design. Federal guidance says that agencies should review regulations every 3-5 years and, if needed, adopt current technical standards for safety and environmental protection.
But some regulations haven't been updated. For example, one agency requires export facilities to comply with a 1994 fire extinguisher standard that includes some obsolete extinguisher types. We recommended that agencies establish a process to regularly update regulations.
Onshore Liquefied Natural Gas Export Facilities
Highlights
What GAO Found
Federal agencies have incorporated most but not all key collaboration practices in the permitting processes for export facilities for liquefied natural gas (LNG). GAO has identified seven key practices that can help sustain collaboration among federal agencies, including reviewing and updating written guidance and agreements. The Maritime Administration (MARAD) and the U.S. Coast Guard (Coast Guard), which jointly lead the permitting process for LNG export facilities in federal waters, have incorporated all seven key practices. The Federal Energy Regulatory Commission (FERC), which leads the permitting process for LNG export facilities located on land or in state waters (facilities in both places are referred to as onshore facilities), has incorporated six of the key practices. However, FERC does not regularly review and update its interagency agreements, which outline agencies' roles and responsibilities in the onshore permitting process, because it does not have a process to do so. Establishing a process to regularly review and update FERC's agreements with other agencies would help FERC ensure that, in the near term, other agencies clearly understand and consistently implement the permitting process and, for the longer term, the agreements address policy changes that may affect the process.
FERC's, the Pipeline and Hazardous Materials Safety Administration's (PHMSA), and the Coast Guard's regulations for permitting LNG export facilities do not incorporate all current technical standards. For example, FERC's regulations cite an outdated 1984 earthquake standard, PHMSA's regulations cite outdated fire safety standards from 2001, and the Coast Guard's regulations cite an outdated 1994 standard for fire extinguishers. Guidance from the Office of Management and Budget states that agencies should conduct a standards-specific review of regulations that cite technical standards every 3 to 5 years and update the regulations with updated standards, if necessary. However, FERC, PHMSA, and the Coast Guard have not recently conducted such a review and FERC and PHMSA do not have processes in place to regularly do so. The Coast Guard has a process for conducting such reviews but it does not specify how frequently the reviews should occur. Without processes to conduct a standards-specific review of regulations every 3 to 5 years, the agencies cannot be assured that the regulations remain effective at ensuring safety.
Onshore Export Facilities for Liquefied Natural Gas (LNG)
Why GAO Did This Study
As U.S. natural gas production has increased, exports of natural gas have increased as well, and in 2017, the nation became a net exporter of natural gas. In 2019, about 39 percent of natural gas exports were transported by ship as LNG, and exports of LNG are expected to grow. FERC, MARAD, and the Coast Guard issue permits required for companies to construct or operate an LNG export facility. The Coast Guard, along with PHMSA, also has issued regulations on safety and technology requirements for these facilities. These regulations incorporate technical standards that are developed and updated by standards-developing organizations.
GAO was asked to review how federal agencies manage the permitting processes. This report examines, among other things, the extent to which (1) federal agencies collaborate in the permitting processes for LNG export facilities and (2) regulations for such facilities incorporate current technical standards. GAO analyzed agency documents and interviewed agency officials, LNG export company representatives, and other stakeholders.
Recommendations
GAO is making nine recommendations, including that FERC establish a process to regularly review and update its agreements with other agencies for the onshore facility permitting process and that FERC, PHMSA, and the Coast Guard establish processes to conduct standards-specific reviews of regulations every 3 to 5 years. The agencies agreed with GAO's recommendations and identified actions to address them.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Energy Regulatory Commission | FERC should review its current interagency agreements that pertain to its onshore LNG permitting process, and implement any needed updates. FERC's review should include input from cooperating agencies and CEQ. (Recommendation 1) |
In January 2024, FERC officials stated that FERC had completed a review of the two agreements cited in our report regarding permitting liquefied natural gas (LNG) export facilities. FERC conducted a review in 2022 and found that one of the agreements remained relevant and did not require further updates. With regard to the second agreement, officials stated that FERC is collaborating with the other agencies cited in the agreement to finalize an updated agreement. We believe FERC's actions demonstrate progress toward implementing our recommendation, and we will consider closing the recommendation once FERC has finalized the updated agreement.
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| Federal Energy Regulatory Commission | Once FERC has completed the review and implemented any necessary updates to interagency agreements, FERC should establish a process to regularly conduct such reviews and, as necessary, update the agreements. (Recommendation 2) |
In April 2022, FERC's Office of Energy Projects-the office responsible for conducting the environmental review of proposed infrastructure projects, including LNG export facilities-implemented a new process to conduct regular reviews of interagency agreements that fall under its jurisdiction. According to the standard operating procedures for the process, the process includes steps for reviewing the office's interagency agreements for ongoing relevance and, as necessary, updating them. We believe FERC's actions satisfy our recommendation.
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| Federal Energy Regulatory Commission | FERC should review its LNG regulations and replace the reference to the outdated 1984 earthquake standard. (Recommendation 3) |
Following a review of its LNG regulations, on October 23, 2023, FERC issued a final rule that revised its LNG regulations under 17 CFR Parts 153 and 380. The revised regulations removed references to the outdated 1984 earthquake standard and codified in its place the requirement that applicants identify all standards that apply to their project-specific and site-specific proposal. FERC staff will then evaluate applications for LNG facilities on a case-by-case basis. We consider FERC's action to keep its regulation updated to meet the spirit of our recommendation and consider this recommendation implemented.
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| Federal Energy Regulatory Commission | FERC should establish a process to conduct a standards-specific review of regulations that incorporate standards every 3 to 5 years and to update the regulations, if necessary. (Recommendation 4) |
Following a review of its LNG regulations, on October 23, 2023, FERC issued a final rule that revised its LNG regulations under 17 CFR Parts 153 and 380.The updated regulations remove reference to the outdated standard we discussed in our report. FERC officials stated that while FERC did not establish a regular review process to review its LNG regulations every 3 to 5 years, there is no longer a need for such a process because FERC's updated LNG regulations no longer contain specific standards and, according to FERC officials, likely will not in the future. While we maintain that OMB's guidance regarding review of incorporated standards still applies to FERC as an agency in general, our recommendation focused solely on FERC's LNG regulations. We therefore agree that FERC's action to update its LNG regulations by removing incorporated standards meets the intent of this recommendation and consider this recommendation to be implemented.
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| Pipeline and Hazardous Materials Safety Administration |
Priority Rec.
The Administrator of PHMSA should conduct a standards-specific review of regulations that incorporate standards and, if necessary, update the regulations or document its decision for not updating them. (Recommendation 5) |
PHMSA agreed with this recommendation. As of February 2024, according to PHMSA officials and documents, the agency is conducting a standards-specific review of the eight liquefied natural gas standards incorporated into its regulations by reference and plans to update regulations that use those standards by issuing a proposed rule in September 2024. However, PHMSA has repeatedly delayed its review and regulatory update; originally, the agency planned to complete these actions 2 years earlier. A standards-specific review considers updates to technical standards used by federal agencies to ensure the safe design and operation of export facilities for liquefied natural gas. To fully implement this recommendation, PHMSA should complete and document its standards-specific review and update the regulations as necessary. Without reviewing and updating regulations, PHMSA cannot ensure its regulations remain effective at ensuring safety.
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| Pipeline and Hazardous Materials Safety Administration | The Administrator of PHMSA should establish a process to conduct a standards-specific review of regulations that incorporate standards every 3 to 5 years and to update the regulations, if necessary. (Recommendation 6) |
In January 2021, PHMSA adopted a process for conducting standards-specific reviews approximately every 2 to 3 years. According to PHMSA officials, the new process will ensure that a sufficient review is conducted and that PHMSA makes an appropriate determination about whether to update the standard.
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| United States Coast Guard | The Commandant of the Coast Guard should conduct a standards-specific review of the Coast Guard's regulations that incorporate standards and, if necessary, update the regulations or document its decision for not updating them. (Recommendation 7) |
In February 2022, the Coast Guard issued a final rule amending one of its two regulations for waterfront liquefied natural gas facilities. The amended regulation updates the technical standards identified in our report. In March 2024, Coast Guard officials explained that the Coast Guard has initiated rulemaking to update the other regulation discussed in our report. Officials stated that the Coast Guard is committed to completing the rulemaking but there is no formal timeline to do so. In the meantime, officials stated the Coast Guard allows applicants to propose newer versions of technical standards that the Coast Guard will consider during application review. We feel the Coast Guard's actions demonstrate progress toward implementing our recommendation, and we will consider closing the recommendation once the updated rule has been finalized.
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| United States Coast Guard | The Commandant of the Coast Guard should update the agency's process for conducting standards-specific reviews to include time frames for completing such reviews every 3 to 5 years. (Recommendation 8) |
In September 2022, the Coast Guard finalized updates to the Coast Guard's policy "Standards Program For Marine Safety, Security, and Environmental Protection Programs." The updated policy, which became effective September 22, 2022, requires the Coast Guard Chief of Standards Evaluation and Development to coordinate a standards-specific review of Coast Guard regulations at least every once every 5 years to confirm the standards' currency and continued applicability. We believe the Coast Guard's actions satisfy our recommendation.
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| United States Coast Guard | The Commandant of the Coast Guard should develop and implement workforce planning for the Office of Operating and Environmental Standards that addresses the four remaining key principles for strategic workforce planning. (Recommendation 9) |
As of February 2024, the Coast Guard has made some progress addressing the workforce planning principles discussed in our report but has not taken key actions needed to fully implement our recommendation. Specifically, Coast Guard officials provided documentation that the Coast Guard offers special incentives (such as student loan repayment) to fill specific positions in the Office of Operating and Environmental Standards (OES), and has used such incentives to address vacancies in OES since fiscal year 2022. However, Coast Guard officials stated that while the Coast Guard intends to conduct manpower requirement analyses for about 20 units over the next five years, OES was not included in this list as it was not a critical mission priority. As we stated in our report, determining OES's critical skill requirements will help the coast Guard better ensure that OES has the right number of staff with the right expertise to perform future work related to permitting LNG export facilities. Addressing this principle must be done before the remaining three principles-and our recommendation-can be fully addressed.
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