Natural Gas Exports: Updated Guidance and Regulations Could Improve Facility Permitting Processes

GAO-20-619 Published: Aug 06, 2020. Publicly Released: Aug 06, 2020.
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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

boats docked at a facility

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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)

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.

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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)
Open
In February 2022, FERC officials stated that FERC has met with some of the agencies with which it has agreements and agreed upon tentative updates that are currently under review. Officials stated that FERC plans to coordinate the eventual updates with the Council on Environmental Quality and complete the updates by the end of calendar year 2022. We will continue to track the status of this recommendation.
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)
Open
In February 2022, FERC officials stated that FERC's Office of Energy Projects--the office responsible for conducting the environmental review of proposed infrastructure projects, including LNG export facilities--is developing a process to conduct regular reviews of interagency agreements that fall under its jurisdiction. FERC plans to formalize this process by summer 2022. We will continue to track the status of this recommendation.
Federal Energy Regulatory Commission FERC should review its LNG regulations and replace the reference to the outdated 1984 earthquake standard. (Recommendation 3)
Open
In February 2022, FERC officials stated that FERC has drafted a notice of proposed rulemaking that would replace the reference to the 1984 earthquake standard--the only standard related to LNG export facilities in the FERC regulations we reviewed--with updated guidance developed by FERC. The notice of proposed rulemaking is currently under Commission review. We will continue to track the status of this recommendation.
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)
Open
In February 2022, FERC officials stated that FERC is still planning to include the agency's LNG regulations in its existing biennial regulatory review process in which it reviews significant or otherwise important regulations to determine if they need to be modified, streamlined, expanded, or repealed.
Pipeline and Hazardous Materials Safety Administration
Priority Rec.
This is a priority 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)
Open
As of March 2022, DOT officials told us that the agency's efforts to update the eight outdated LNG standards we identified are continuing. The officials said that PHMSA plans to issue a notice of public rulemaking in September 2022.
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)
Closed – Implemented
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.
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)
Open
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. We are following up with the Coast Guard about the status of the other regulation we reviewed in our report.
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)
Open
In March 2022, a Coast Guard official stated that updates to Coast Guard's policy "Standards Program For Marine Safety, Security, and Environmental Protection Programs" are in progress, and that these updates will establish timeframes for completing standards-specific reviews per OMB Circular A-119. The Coast Guard expects to promulgate the updated policy by summer 2022.
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)
Open
In March 2022, a Coast Guard official stated that the Coast Guard is updating the Manpower Requirements Plan, and expects to submit the updated plan to Congress within fiscal year 2022. Once the plan has been promulgated, the Coast Guard plans to implement workforce planning for the Office of Operating and Environmental Standards that addresses the four remaining key principles for strategic workforce planning discussed in our report. We will continue to track the status of this recommendation.

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