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Strategic Gas

The foreign policy case for U.S. energy exports.

Apr 29, 2013, Vol. 18, No. 31 • By GARY SCHMITT
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It doesn’t help that, under U.S. law, there are multiple layers of state and federal regulatory bodies that can stop, or slow down, exploration or the construction of the infrastructure necessary for exporting. Nor is it helpful that, when it comes to determining the American strategic interest in exporting gas, the final decision currently resides with the Department of Energy. Indeed, under the original governing statute, the Natural Gas Act of 1938, exports are only allowed if the DOE determines those exports would be in the “public interest”​—​with the only modification coming in 1992 when the Energy Policy Act stipulated that exports to countries with which Washington has a free-trade agreement would prima facie be considered in the public interest. This means that export requests to key allies, such as Japan and the United Kingdom, with no trade agreement on the books, face greater scrutiny.

Efforts have been made to change this system. Former senator Richard Lugar had proposed to put NATO allies on equal footing with free-trade states when it comes to LNG export licenses. More recently, Senators John Barrasso (R-Wyo.) and Mark Begich (D-Alaska) have sponsored a bill that would expand the NATO exception to Japan and, no less important, would require DOE to approve exports if the State Department, in conjunction with the Defense Department, determines that they would “promote the national security interests of the United States.” So far, the bill hasn’t made much headway in the Democrat-controlled Senate, but there is recognition at last that gas exports not only are an economic issue but also have potentially significant strategic implications.

For now, the Energy Department, the Federal Energy Regulatory Commission, and the Environmental Protection Agency will continue to rule the roost when it comes to gas exports​—​with no doubt a hidden hand from the White House. Meanwhile, the owners of Cove Point​—​in yet another twist in the plant’s history​—​have recently submitted a 12,000-page application to the government to reconfigure the plant’s terminal from an import facility to an export facility. Approval of their application will depend on whether the energy secretary agrees that the planned LNG exports to Japan and India are in the “public interest”​—​no matter the undeniable and obvious fact that they are.

Gary Schmitt is director of the Marilyn Ware Center for Security Studies at the American Enterprise Institute.

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