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We Gotta Get Out of This Place - Court Decision Helps Supply Access to LNG Export Facilities

Europe is trying to wean itself off Russian natural gas, and few things would help it more than an expansion of U.S. LNG export capacity. But LNG projects don't just need long-term commitments for their output, they also need pipelines to transport natural gas from the Marcellus/Utica and other distant production areas to their coastal liquefaction plants. And, in case you hadn't noticed, new interstate gas pipelines face a lot of hurdles during the regulatory review process these days — getting a pipeline approved is tougher than snagging a Saturday morning tee time. Which brings us to, of all things, an important court ruling. In today's RBN blog, we discuss the implications of the DC Circuit's decision in City of Oberlin v. FERC

On July 8, the U.S. Court of Appeals for the District of Columbia Circuit (a.k.a. the DC Circuit) updated a decision that could have a significant impact on the supply of feedgas to LNG export facilities. In the case of City of Oberlin, Ohio v. FERC, the DC Circuit reversed an earlier finding that the Federal Energy Regulatory Commission (FERC) had not explained why export volumes on a proposed interstate pipeline project can be used to help justify approval of the new pipe projects. The case involved the city of Oberlin's challenge to FERC's approval of the NEXUS pipeline, carrying natural gas from the Utica Shale in eastern Ohio to the gas hub in Dawn, ON (among other destinations). The project sponsors had included the gas flows to Dawn as support for approval of the pipeline, to help meet the requirements of FERC’s “certificate policy” that a public benefit had to be shown for pipeline construction to be authorized.

In what the DC Circuit now refers to as its "Oberlin I" decision, the court, in 2019, found that FERC needed to explain why volumes on NEXUS going to Canada were a benefit to the U.S. public. That decision had been used by LNG opponents, such as Sierra Club, to claim that the same issue affects feedgas pipelines built to serve LNG export terminals. They argued that such pipelines shouldn’t receive certificates to allow construction or the eminent domain rights that automatically go with those certificates if they didn’t show a benefit to the U.S. public. The DC Circuit's decision last month (“Oberlin II”) reversed Oberlin I, finding that FERC has now explained itself well enough and that, yes, natural gas exports can provide public benefits in the U.S. So, does this reversal clear the way for LNG feedgas pipelines to be built without running into legal roadblocks? Well, it pretty much knocks down one potential roadblock, but that’s a start.

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