Natural Gas Exports:

Updated Guidance and Regulations Could Improve Facility Permitting Processes

GAO-20-619: Published: Aug 6, 2020. Publicly Released: Aug 6, 2020.

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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

boats docked at a facility

Additional Materials:

Contact:

Frank Rusco
(202) 512-3841
ruscof@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

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)

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.

What GAO Recommends

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.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: In FERC's comments on a draft of our report, the Chairman of the Commission agreed with our findings and recommendations and stated that he has directed FERC staff to develop appropriate steps to implement the recommendations.

    Recommendation: 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)

    Agency Affected: Federal Energy Regulatory Commission

  2. Status: Open

    Comments: In FERC's comments on a draft of our report, the Chairman of the Commission agreed with our findings and recommendations and stated that he has directed FERC staff to develop appropriate steps to implement the recommendations.

    Recommendation: 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)

    Agency Affected: Federal Energy Regulatory Commission

  3. Status: Open

    Comments: In FERC's comments on a draft of our report, the Chairman of the Commission agreed with our findings and recommendations and stated that he has directed FERC staff to develop appropriate steps to implement the recommendations.

    Recommendation: FERC should review its LNG regulations and replace the reference to the outdated 1984 earthquake standard. (Recommendation 3)

    Agency Affected: Federal Energy Regulatory Commission

  4. Status: Open

    Comments: In FERC's comments on a draft of our report, the Chairman of the Commission agreed with our findings and recommendations and stated that he has directed FERC staff to develop appropriate steps to implement the recommendations.

    Recommendation: 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)

    Agency Affected: Federal Energy Regulatory Commission

  5. Status: Open

    Comments: In the Department of Transportation's comments on a draft of our report, the department concurred with our recommendation and said that PHMSA is currently developing a proposed rule that would incorporate updated standards, as described in our report.

    Recommendation: 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)

    Agency Affected: Department of Transportation: Pipeline and Hazardous Materials Safety Administration

  6. Status: Open

    Comments: In the Department of Transportation's comments on a draft of our report, the department concurred with our recommendation and said that PHMSA has established a timeline for conducting a standards-specific review of LNG facility regulations every 3 to 5 years. We plan to follow-up on the status of the recommendation.

    Recommendation: 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)

    Agency Affected: Department of Transportation: Pipeline and Hazardous Materials Safety Administration

  7. Status: Open

    Comments: In the Department of Homeland Security's comments on a draft of our report, the department concurred with our recommendation and stated that it conducts such reviews as part of its ongoing public rulemaking process. We plan to follow-up on the status of the recommendation.

    Recommendation: 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)

    Agency Affected: Department of Homeland Security: United States Coast Guard

  8. Status: Open

    Comments: In the Department of Homeland Security's comments on a draft of our report, the department concurred with our recommendation and stated that the Coast Guard is in the process of updating its policy, "Standards Program For Marine Safety, Security, and Environmental Protection Programs," with timeframes for completing standards-specific reviews. The department estimated this would be completed in September 2021.

    Recommendation: 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)

    Agency Affected: Department of Homeland Security: United States Coast Guard

  9. Status: Open

    Comments: In the Department of Homeland Security's comments on a draft of our report, the department concurred with our recommendation and stated that it is in the process of updating its Manpower Requirements Plan to include timeframes and milestones for completing manpower requirements analyses and determinations for positions and units. The Coast Guard anticipates promulgating the updated plan in March 2022.

    Recommendation: 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)

    Agency Affected: Department of Homeland Security: United States Coast Guard

 

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