Natural gas
- Document symbol
- G/LIC/N/3/USA/21
- Original language
- English
- Published on
- 16/10/2024
Outline of Systems
Q1. Give a brief description of each licensing system as a whole and, with respect to each, reply to the following questions as relevant, placing all of the material with respect to a given system in sequence together, and using cross references as appropriate when elements which have already been described are also present in another system.
Imports of natural gas, whether by pipeline or as liquefied natural gas (LNG), are regulated under Section 3 of the Natural Gas Act (NGA) (15 U.S.C. 717b), which provides that "no person shall ... import any natural gas from a foreign country without first having secured an order ... authorizing it to do so." Section 3 also provides that such orders shall be issued unless, after opportunity for hearing, it is found that the proposed importation will not be consistent with the public interest. Authority over imports of natural gas rests with the Secretary of Energy. The authority to regulate natural gas imports under Section 3 of the Natural Gas Act, as amended, has been delegated to the Under Secretary for Science and Innovation pursuant to Delegation Order No. S1-DEL-S4-2023-2 (30 May 2023). This authority has been further re-delegated from the Under Secretary to the Assistant Secretary for Fossil Energy and Carbon Management under Redelegation Order No. S4-DEL-FE1-2023, issued on 10 April 2023.
On 24 October 1992, the Energy Policy Act of 1992 (EPACT 92) was enacted. Section 201 of EPACT 92 amended Section 3 of the NGA by adding subsections (b) and (c), which in effect eliminates the Department of Energy's (DOE) need to make a public interest finding for natural gas imports from "a nation with which there is in effect a free trade agreement requiring national treatment for trade in natural gas," and for imports of liquefied natural gas (LNG). Pursuant to the amendment, imports of natural gas (and LNG) from countries with which the United States has a free trade agreement calling for national treatment for trade in natural gas, and LNG imports from other countries, are "deemed to be consistent with the public interest, and applications for such importation… shall be granted without modification or delay."
Currently, virtually all natural gas import applications filed with DOE are reviewed under Section 3(c) of the NGA. DOE is not required to evaluate these applications to determine whether they are "in the public interest". In these cases, the agency does not solicit public comments, or conduct a review of the application under the National Environmental Policy Act. Rather, after these import applications are reviewed for completeness and legal sufficiency, DOE prepares and issues the authorizations as requested. These applications take less time to process than cases that do not fall under Section 3(c) of the NGA.
In addition, with respect to the import or export of natural gas (including LNG), the Secretary of Energy has delegated authority to the Federal Energy Regulatory Commission (FERC) (Delegation Order No. S1-DEL-FERC-2006 (16 May 2006)) to approve or disapprove the construction and operation of particular facilities, the site at which such facilities shall be located, and, with respect to natural gas that involves the construction of new domestic facilities, the place of entry.
Purposes and Coverage of Licensing
Q2. Identify each licensing system maintained and state what products, appropriately grouped, are covered.
The products covered are natural gas, including liquefied natural gas (LNG), and compressed natural gas (CNG).
Q3. The system applies to goods originating in and coming from which countries?
The system applies to goods originating from any country.
Q4. Is the licensing intended to restrict the quantity or value of imports, and if not, what are its purposes? Have alternative methods of accomplishing the purposes been considered and if so which? Why have they not been adopted?
The licensing is not intended to restrict the quantity or value of natural gas imports.
Q5. Cite the law, regulation and/or administrative order under which the licensing is maintained. Is the licensing statutorily required? Does the legislation leave designation of products to be subjected to licensing to administrative discretion? Is it possible for the government (or the executive branch) to abolish the system without legislative approval?
See response to Question 1. Licensing is statutorily required.
Procedures
Q6. For products under restriction as to the quantity or value of imports (whether applicable globally or to a limited number of countries or whether established bilaterally or unilaterally):
Q6.I. Is information published, and where, concerning allocation of quotas and formalities of filing applications for licences? If not, how is it brought to the attention of possible importers? Of governments and export promotion bodies of exporting countries and their trade representatives? Is the overall amount published? The amount allocated to goods from each country? The maximum amount allocated to each importer? How to request any exceptions or derogations from the licensing requirement?
Q6.II. How is the size of the quotas determined: on a yearly, six-monthly or quarterly basis? Are there cases where the size of quota is determined on a yearly basis but licences are issued for imports on a six-monthly or quarterly basis? In the latter case, is it necessary for importers to apply for fresh licence on a six-monthly or quarterly basis?
Q6.III. Are licences allotted for certain goods partly or only to domestic producers of like goods? What steps are taken to ensure that licences allocated are actually used for imports? Are unused allocations added to quotas for a succeeding period? Are the names of importers to whom licences have been allocated made known to governments and export promotion bodies of exporting countries upon request? If not, for what reason? (Indicate products to which replies relate.)
Q6.IV. From the time of announcing the opening of quotas, as indicated in I above, what is the period of time allowed for the submission of applications for licences?
Q6.V. What are the minimum and maximum lengths of time for processing applications?
Q6.VI. How much time remains, at a minimum, between the granting of licences and the date of opening of the period of importation?
Q6.VII. Is consideration of licence applications effected by a single administrative organ? Or must the application be passed on to other organs for visa, note or approval? If so, which? Does the importer have to approach more than one administrative organ?
Q6.VIII. If the demand for licences cannot be fully satisfied, on what basis is the allocation to applicants made? First come, first served? Past performance? Is there a maximum amount to be allocated per applicant and, if so, on what basis is it determined? What provision is made for new importers? Are applications examined simultaneously or on receipt?
Q6.IX. In the case of bilateral quotas or export restraint arrangements where export permits are issued by exporting countries, are import licences also required? If so, are licences issued automatically?
Q6.X. In cases where imports are allowed on the basis of export permits only, how is the importing country informed of the effect given by the exporting countries to the understanding between the two countries?
Q6.XI. Are there products for which licences are issued on condition that goods should be exported and not sold in the domestic market?
Q7. Where there is no quantitative limit on importation of a product or on imports from a particular country:
Q7.a. How far in advance of importation must application for a licence be made? Can licences be obtained within a shorter time-limit or for goods arriving at the port without a licence (for example, owing to inadvertency)?
DOE regulations (10 CFR Part 590) specify that an applicant for a natural gas import authorization should apply 90 days prior to the anticipated date for start-up of the import. However, the issuance of an import authorization normally takes less than four weeks if reviewed under Section 3(c) of the NGA.
Q7.b. Can a licence be granted immediately on request?
An authorization to import natural gas can be granted as soon as an applicant has filed a legally sufficient application, and as soon as that application is reviewed and processed.
Q7.c. Are there any limitations as to the period of the year during which application for licence and/or importation may be made? If so, explain.
There are no limitations as to the period of the year during which an application for authorization to import natural gas may be made.
Q7.d. Is consideration of licence applications effected by a single administrative organ? Or must the application be passed on to other organs for visa, note or approval? If so, which? Does the importer have to approach more than one administrative organ?
Licensing applications are considered by a single administrative office, the Office of Fossil Energy, U.S. Department of Energy and Carbon Management, the Forrestal Building, 1000 Independence Avenue, S.W., Washington D.C. 20585.
Q8. Under what circumstances may an application for a licence be refused other than failure to meet the ordinary criteria? Are the reasons for any refusal given to the applicant? Have applicants a right of appeal in the event of refusal to issue a licence and, if so, to what bodies and under what procedures?
There are no circumstances under which an import authorization under Section 3(c) of the NGA can be refused, as long as an applicant has submitted a legally sufficient application. Information which must be contained in the application is specified in 10 CFR 590.202.
Eligibility of Importers to Apply for Licence
Q9. Are all persons, firms and institutions eligible to apply for licences: (If not, is there a system of registration of persons or firms permitted to engage in importation? What persons or firms are eligible? Is there a registration fee? Is there a published list of authorized importers?) a) under restrictive licensing systems? b) under non-restrictive systems?
All persons, firms, and institutions are eligible to apply for authorization to import natural gas. Traditionally, entities applying for such authorizations have been natural gas pipeline companies, natural gas producers, natural gas marketers, and utility companies.
Documentational and Other Requirements for Application for Licence
Q10. What information is required in applications? Submit a sample form. What documents is the importer required to supply with the application?
Import authorization proceedings are initiated by the filing of an application. The application is not a standard form, but rather an individual document incorporating basic information about the proposed import arrangement, and exhibits required by the rules covering such applications set forth in DOE regulation (10 CFR Part 590). NGA Sections 3(b) and (c) have necessitated creation of a bifurcated process in the manner in which DOE reviews applications to import natural gas. Applications that involve gas imports from nations with which the United States has a free trade agreement requiring national treatment for trade in natural gas (free trade agreement countries) and LNG imports from other countries must be granted by DOE "without modification or delay". As a result, DOE's action of issuing such import authorizations is ministerial in nature.
For applications involving gas (other than LNG) imports from nations with which the United States does not have a free trade agreement requiring national treatment for trade in natural gas, DOE must determine whether the import proposal is "in the public interest". Those applications are subject to the administrative procedures specified in 10 CFR Part 590.
Q11. What documents are required upon actual importation?
DOE's application procedures are described at the following website: https://www.energy.gov/fecm/how-obtain-authorization-import-andor-export-natural-gas-and-lng
Q12. Is there any licensing fee or administrative charge? If so, what is the amount of the fee or charge?
A filing fee of US$50 is charged for each application.
Q13. Is there any deposit or advance payment requirement associated with the issue of licences? If so, state the amount or rate, whether it is refundable, the period of retention and the purpose of the requirement.
There is no deposit or advance payment requirement associated with the issuance of an order to import natural gas.
Conditions of Licensing
Q14. What is the period of validity of a licence? Can the validity of a licence be extended? How?
The duration of a natural gas import authorization usually is specified in the Order issued by DOE and depends upon the particular circumstances of the import arrangement. An import authorization can be extended upon application to DOE.
Q15. Is there any penalty for the non-utilization of a licence or a portion of a licence?
There is no penalty for non-utilization of an order to import natural gas.
Q16. Are licences transferable between importers? If so, are any limitations or conditions attached to such transfer?
Authorizations to import natural gas are not transferable between importers without approval.
Q17. Are any other conditions attached to the issue of a licence? a) for products subject to quantitative restriction? b) for products not subject to quantitative restriction?
No conditions are attached to an authorization to import natural gas from free trade agreement countries or authorizations to import LNG from any country.
Other Procedural Requirements
Q18. Are there any other administrative procedures, apart from import licensing and similar administrative procedures, required prior to importation?
Each import authorization order requires natural gas importers to report sales information monthly to DOE. Information reported includes volume, price, names of sellers and buyers, and other details of the import transactions on Form FE-746R.