Sixteen Republican-led US states sue federal government over ban on LNG permits

FILE PHOTO: Illustration shows model of LNG tanker and the U.S. flag

By Clark Mindock

NEW YORK (Reuters) -Sixteen Republican-led states on Thursday filed a lawsuit to challenge the federal government's ban on approving applications to export liquefied natural gas (LNG), saying the federal government lacks the authority to broadly deny those permits.

The lawsuit was filed in federal court in Lake Charles, Louisiana, by the Republican attorneys general of a coalition of states including Texas, Louisiana and Florida that claim the U.S. Department of Energy's (DOE) pause on exports will harm the U.S. economy and undermine efforts to supply foreign allies in Europe with steady supplies of LNG as the region seeks to wean itself off piped gas from Russia.

The Biden administration said in January the pause will allow officials to review its process for analyzing economic and environmental impacts of projects seeking approval to export LNG to Europe and Asia where the fuel is in high demand.

The states said the pause on new approvals for LNG exports oversteps DOE’s authority under the Natural Gas Act, which they said requires the agency to affirmatively show projects are inconsistent with the public interest before denying applications.

The states also argued the ban jeopardizes billions of dollars in investments planned to build export facilities.

The DOE did not immediately respond to a request for comment.

The initial review is expected to last months.

The last U.S. review of LNG export projects was in 2018 when export capacity was 4 billion cubic feet per day (bcfd). Capacity has since tripled and is set to shoot higher by 2030 with projects under construction.

Environmentalists and youth groups, an important part of Democratic President Joe Biden's base, had urged the administration over the last year to slow down or stop approvals for LNG export projects, which they claim can harm local communities with pollution and will lock in global reliance on climate change-causing fossil fuels for decades.

Domestic industries including chemical, steel and agriculture businesses, have also opposed unrestricted exports, which they say can raise concerns about the reliability of U.S. domestic supply and fuel prices.

Before the lawsuit was filed, efforts by Republicans in Congress to strip the DOE’s power to approve the exports and leave the Federal Energy Regulatory Commission with the sole responsibility for approving LNG projects had stalled.

(Reporting by Clark Mindock in New York and Kanishka Singh in Washington; Editing by Dan Whitcomb, Alexia Garamfalvi and Jamie Freed)