Daron Threet is a Partner and Andrew Emerson is an Associate in the Washington D.C. office

HIGHLIGHTS:

  • On May 7, 2015, the Maritime Administration (MARAD) issued its final policy regarding the review and processing of applications for the export of oil and natural gas from offshore deepwater port facilities under the Deepwater Port Act.
  • The final policy provides that MARAD and the Coast Guard will use the existing licensing framework and regulations at 33 CFR Parts 148, 149 and 150 to evaluate and process export license applications and clarifies the regulatory requirements for converting import facilities to export facilities.
  • The process began on Oct. 16, 2014, when MARAD issued a notice seeking public comments on its draft policy.

The Maritime Administration (MARAD) issued its final policy on May 7, 2015, regarding the review and processing of applications for the export of oil and natural gas from offshore deepwater port facilities under the Deepwater Port Act (DWPA). Under the final policy, MARAD and the Coast Guard will use the existing deepwater port licensing framework and regulations found at 33 CFR Parts 148, 149 and 150 to evaluate and process export license applications. While the Coast Guard is currently in the process of overhauling these regulations (see Holland & Knight alert, " Coast Guard Proposes to Revise LNG Deepwater Port Regulations," April 14, 2015), the final policy addresses the overall approach MARAD and the Coast Guard will use to review new export applications, which is not specifically addressed in the Coast Guard's proposed regulatory changes. The process began on Oct. 16, 2014, when MARAD issued a notice in the Federal Register seeking public comments on its draft policy (see Holland & Knight alert, " MARAD Issues Proposed Policy on Oil and Gas Exports from Offshore Facilities," Oct. 16, 2014).

The DWPA is the federal law governing the licensing and operation of offshore facilities used to import or export oil or natural gas (usually in the form of liquefied natural gas (LNG)). While MARAD's authority to approve deepwater port projects was initially limited to import facilities, the Coast Guard and Maritime Transportation Act of 2012 amended the definition of deepwater port to include shipments "from" any state. This legislative change authorized MARAD to license export facilities, such as floating liquefaction units, located in federal waters (the Federal Energy Regulatory Commission (FERC) retains jurisdiction over near-shore facilities located in state waters under the Natural Gas Act).

Processing of Export Applications Clarified

The final policy clarifies a few key points regarding the processing of export applications. Importantly, MARAD will treat all requests for export authorization, including the conversion of existing facilities, as new license applications requiring a comprehensive review and public engagement process. For the conversion of existing facilities, a new environmental impact statement (EIS) under the National Environmental Policy Act (NEPA) may be required. However, MARAD noted that a supplemental EIS (SEIS) or environmental assessment (EA) may potentially be used instead to meet NEPA review requirements. In that case, the SEIS or EA would focus on analyzing the differences in impacts of regasification and liquefaction technologies and operations, or impacts from bi-directional operations. Other requirements outlined in the final policy include the submission of revised operations manuals, and securing commodity-related approvals from the Department of Energy to export natural gas or from the Department of Commerce for crude oil exports.

MARAD's final policy – together with the Coast Guard's current rulemaking clarifying and updating the deepwater port regulations – provide a more comprehensive framework that will bring additional certainty to the complex permitting process for offshore oil and LNG export facilities.

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