US federal court returns Commonwealth LNG to FERC

The startup of Commonwealth LNG LLC’s proposed 9.5 million tonne/year (tpy) plant in Cameron Parish, Louisiana, could be delayed after a U.S. Court of Appeals for the D.C. Circuit told the Federal Energy Regulatory Commission (FERC) on July 17 to reevaluate its approval of the project to include climate impacts.

The FERC review and perhaps reapproval of the certificate will take some time, ClearView Energy Partners said in a note. “We expect the earliest Commonwealth LNG can expect a revised certificate” and Department of Energy (DOE) approval of a non-FTA authorization will be “late in the first quarter of 2025, even if FERC and DOE act quickly,” ClearView said.

The court did not overturn FERC’s approval of the project in 2022 but ordered the commission to reevaluate the plant’s greenhouse gas and other emissions impact. Commonwealth has not made a final investment decision but has reached agreements for about half of its capacity. The company expected to begin LNG shipments in 2027 from the 150-acre site in the Calcasieu Ship Channel, which also includes six LNG storage tanks, a marine facility consisting of an LNG vessel berth and a barge dock, and utilities for electricity generation (OGJ Online, Sept. 5, 2023).

Environmental groups, including the Sierra Club, sued to block the project shortly after it won FERC approval. In the July 16 ruling, Judge Brad Garcia, writing for the three-judge panel, said FERC had “inadequately explained its failure to determine the environmental significance of the project’s greenhouse gas emissions, and had failed to adequately assess the cumulative effects of the project’s nitrogen dioxide emissions.” He wrote that FERC should “reevaluate its public interest determination” after it completes its new analysis.

FERC reauthorization “reasonably likely”

“We believe it is ‘reasonably likely’ that, upon remand, the commission will be able to correct the flaws in its GHG emissions and cumulative effects analyses and still authorize the project,” Garcia wrote, adding that the court decided not to throw out the Commonwealth’s certificate because it would “unnecessarily disrupt” the company’s construction plans and business operations.

Commonwealth first received FERC approval in November 2022 but is awaiting DOE authorization to export LNG. That process was halted in January when the White House ordered a pause on new export licenses pending a DOE review of the climate and economic impacts of increased LNG exports (OGJ Online, Jan. 26, 2024).

Earlier this month, a U.S. federal court judge in Louisiana overturned the LNG pause and ordered the reviews to resume. However, there is no timeline for the DOE review (OGJ Online, July 2, 2024).

While the Commonwealth certificate is still valid, ClearView said it was “highly unlikely” that the DOE under the Biden administration would issue an export authorization pending FERC review.

In a statement, Sierra Club senior attorney Nathan Matthews called the review a victory for communities. “Commonwealth LNG would be just one of eight terminals proposed or operating in southwest Louisiana. FERC’s own modeling shows that air pollution in the area will exceed national standards.”

On July 17, FERC said it does not comment on court-related matters.

In a statement, Commonwealth LNG spokesman Lyle Hanna said the company has worked “constructively and cooperatively with FERC” throughout the plant’s development “and will continue to provide all relevant data during the re-evaluation process” and that a final investment decision on the project is still planned for the first half of 2025, which would allow for LNG production in 2028.

Hanna reiterated that the court did not overturn FERC’s approval and instead suggested that after the review, it is “reasonably likely” that FERC will reauthorize the project.