The Government Accountability Office (GAO), an agency that conducts audits, evaluations, and investigations for the United States Congress, issued a report titled “Natural Gas Exports: Updated Guidance and Regulations Could Improve Facility Permitting Processes.” The report examines several aspects of federal agencies’ regulation of liquefied natural gas (LNG) facilities, but of most relevance to LNG operators is the finding that the technical standards that the primary regulators of LNG facilities incorporate into their rules are out of date.
Regulation of LNG facilities involves multiple federal agencies and questions frequently arise as to the efficiency of various agencies involved in the approval and subsequent regulation of these facilities. The purpose of the GAO report was to review how the primary regulators manage their oversight, and how they ensure that their regulations are current, with a focus on the following agencies:
- The Pipeline and Hazardous Materials Safety Administration (PHMSA), which regulates the safety of certain parts of onshore LNG facilities that are in transportation.
- Federal Energy Regulatory Commission (FERC), which authorizes the siting and construction of onshore LNG facilities.
- S. Coast Guard, which regulates certain design, construction, operations, and security of onshore waterfront and deep water LNG facilities.
- The Maritime Administration (MARAD), which issues permits for deep water LNG facilities.
Based on an audit that involved an analysis of federal agencies’ documentation and interviews of agency officials, LNG export company representatives, and other stakeholders, GAO makes the following core finding: PHMSA’s, FERC’s, and U.S. Coast Guard’s LNG regulations that incorporate technical standards are not up to date. Specifically, GAO finds that the majority of PHMSA’s incorporated standards that relate to LNG facilities in Part 193 – eight out of nine– are outdated. GAO additionally points that out of 55 PHMSA regulations applicable to natural gas facilities in Part 192 that incorporate different technical standards, 45 are outdated. All of the U.S. Coast Guard’s (eight) and FERC’s (one) LNG regulations also incorporate outdated technical standards, the report said.
GAO points to the Office of Management and Budget’s (OMB’s) guidance that federal agencies should review regulations that incorporate technical standards every three to five years to determine whether the regulations need to reference the updated standards. GAO explains that referencing outdated standards places unnecessary burden on LNG facilities when, for example, they have to do more to prove compliance of the recently purchased storage tanks with PHMSA-mandated 2001 standard, because manufacturers no longer sell storage tanks that meet the old standard. Similarly, PHMSA requires a 2001 standard for LNG fire protection, which the National Fire Protection Association (NFPA) has updated at least five times, most recently in 2019.
GAO notes that it has communicated this finding to the Department of Transportation (DOT) and received the DOT’s concurrence with the corresponding recommendation to review and update technical standards. PHMSA is in the process of revising its LNG regulations at 49 C.F.R. Part 193 which should include updating relevant standards. The rule has been in varying stages of review within DOT and OMB over the past year, and the status of a final rule is unclear. Lastly, PHMSA agreed to establish a process to ensure that such a review is conducted for its regulations as suggested by the OMB’s guidance.
The GAO report should put even more emphasis on the need for PHMSA to update its LNG regulations. Generally speaking, PHMSA’s LNG regulations have not been substantively revised since they were promulgated in the 1980s. The need for updated regulations should be even more compelling in light of the fact that the type and purpose of LNG facilities has changed significantly with a shift from LNG import facilities to export facilities and to include large scale facilities as well as small scale facilities.
 The Report also analyzes the role of CEQ. While not directly involved into regulation of LNG facilities, CEQ oversees federal agencies’ implementation of NEPA and Executive Order 13807, also known as One Decision, with respect to proposed LNG projects.