US judge halts 'pause' on LNG export licenses

A federal judge in Louisiana has ordered President Joe Biden's administration to end its five-month-old "pause" on the approval process for new LNG export licenses until the resolution of a lawsuit by states that said the policy is unlawful.

The US Department of Energy (DOE) and other administration officials are immediately "enjoined and restrained" from "halting and/or pausing the approval process" for LNG export applications requesting licenses to export to countries without a free trade agreement with the US, federal district court judge James Cain wrote today.

DOE did not immediately respond to a request for comment.

The court's ruling is a potential blow for the Biden administration, which had said it would need until the first quarter of 2025 — after the November elections — to finish a more thorough review of the economic and climate-related effects of fully licensing LNG terminals, beyond the 48 Bcf/d of US liquefaction capacity that is fully permitted today. DOE officials have cited concerns that licensing more LNG projects could end up increasing natural gas prices for consumers.

"So much has changed, including the volumes of what we're exporting," US deputy energy secretary David Turk said last week at a congressional hearing. "So we said, 'Let's take a step back, let's update our economic analysis."

Biden announced the LNG licensing pause in January, delighting climate groups that have argued that approving additional projects would amount to a "climate bomb." But the pause enraged gas industry officials that worried the pause could threaten investments in a set of projects that were nearing a final investment decision. The pause raised uncertainty on the status of LNG export projects that have yet to obtain licenses, including Venture Global's proposed 28mn t/yr CP2 project in Louisiana that last week cleared a key part of the federal permitting process.

The court's ruling does not explicitly require DOE to issue new LNG export licenses, or set an explicit deadline for the agency to take final action on pending applications. But the judge said that under the Natural Gas Act, DOE is required to act "expeditiously" once it receives an export application. Before Biden formally announced the pause, some LNG export applications were already subject to reviews that industry officials said amounted to a de facto freeze.

In the ruling, Cain said that Louisiana and other states that challenged the LNG licensing pause were likely to succeed on the merits in showing Biden's policy was arbitrary and capricious, in part because DOE failed to provide a "detailed explanation" for its halt of the approval process. Cain said that DOE had made a "complete reversal" from its position in July 2023, when it defended its licensing process in its rejection of a complaint from environmentalists.

By Chris Knight