In November, the Biden administration, represented by attorneys from the Department of Justice (DOJ), filed an appeal with the Fifth Circuit Court of Appeals, seeking to overturn a decision requiring the Department of Energy (DOE ) of the United States to resume licensing for liquefied natural gas (LNG) exports. The appeal challenges a preliminary injunction issued in July by a district court in Louisiana, which ruled in favor of several Republican states challenging the suspension of these permits.
In their argument, DOJ attorneys assert that the District Court lacked jurisdiction to handle disputes over LNG export orders, which are exclusively a matter for federal appeals courts under the Natural Gas Act ( Natural Gas Act). They add that the 16 complaining states have no direct interest in the pending permit applications and have not demonstrated financial harm linked to a possible delay.
Context and Issues of the Moratorium on Permits
The suspension of LNG export authorizations only concerns destinations without free trade agreements with the United States. However, these markets represent the majority of global LNG demand. The DOE justified this moratorium, announced last January, by the need to review its economic and environmental studies to assess the impact of additional exports on the public interest. Since this decision, several LNG projects have been blocked, causing uncertainty about the competitiveness of the United States on the global market.
Administration lawyers argue that this review is not a final decision, but a process of updating the DOE’s evaluation criteria, and that the States’ complaint generally targets the department’s methodology, which does not may be challenged under the United States Administrative Procedure Act.
Political Position and Perspectives for 2025
The situation of LNG export permits has become a major issue in the context of American energy policy, in the run-up to the 2024 presidential election. On the one hand, former President Donald Trump promised to end the moratorium on his first day in office if he is re-elected. On the other hand, Vice President Kamala Harris, the Democratic candidate, could also lift the suspension while applying potentially stricter criteria to environmental assessments.
The current moratorium, however, is expected to end by 2025, regardless of the electoral outcome, according to statements by DOE officials. In August, however, the department granted export authorization for a limited LNG supply project in Mexico, marking an exception to the existing freeze.
Reactions and Consequences on the Sector
Since the establishment of this moratorium, the LNG sector in the United States has experienced a slowdown, as investors and business partners wait for a favorable legislative or regulatory outcome. Some analysts believe that even if the injunction is overturned, the DOE could impose additional studies or new guidelines to ensure exports align with national environmental goals.
According to the DOJ, the current update process does not constitute a final action by the agency and therefore should not be subject to prosecution. They recall that this type of review had already been used in 2012, when the DOE suspended the issuance of permits during an in-depth economic study.
The results of this legal proceeding will have a significant impact on the energy strategy of the United States, particularly with regard to the export of LNG to non-contracted markets. The DOE has already announced that economic and environmental impact studies remain the pillars of its decision on the public interest, emphasizing that these standards have been in force for more than ten years.
