65078 Federal Register / Vol. 83, No. 243 / Wednesday, December 19, 2018 / Rules and Regulations 

1The authority to regulate the imports and 

exports of natural gas, including liquefied natural 

gas, under section 3 of the NGA (15 U.S.C. 717b) 

has been delegated to the Assistant Secretary for 

Fossil Energy in Redelegation Order No. 00–006.02, 

issued on November 17, 2014. 

2 15 U.S.C. 717b(c). The United States currently 

has FTAs requiring national treatment for trade in 

natural gas with Australia, Bahrain, Canada, Chile, 

Colombia, Dominican Republic, El Salvador, 

Guatemala, Honduras, Jordan, Mexico, Morocco, 

Nicaragua, Oman, Panama, Peru, Republic of Korea, 

and Singapore. FTAs with Israel and Costa Rica do 

not require national treatment for trade in natural 

gas. 

3See Sierra Club v. U.S. Dep’t of Energy, 867 F.3d 

189, 203 (D.C. Cir. 2017) (‘‘We have construed 

[NGA section 3(a)] as containing a ‘general 

presumption favoring [export] authorization.’ ’’) 

(quoting W. Va. Pub. Serv. Comm’n v. U.S. Dep’t 

of Energy, 681 F.2d 847, 856 (D.C. Cir. 1982)). 

4See id. (‘‘there must be ‘an affirmative showing 

of inconsistency with the public interest’ to deny 

the application’’ under NGA section 3(a)) (quoting 

Panhandle Procedures & Royalty Owners Ass’n v. 

Econ Regulatory Admin., 822 F.2d 1105, 1111 (D.C. 

Cir. 1987)). 

5 10 CFR 590.404 (emphasis added). 

6The terms ‘‘authorization’’ and ‘‘order’’ are used 

interchangeably for purposes of this policy 

statement. 

DEPARTMENT OF ENERGY 

10 CFR Part 590 

Eliminating the End Use Reporting 

Provision in Authorizations for the 

Export of Liquefied Natural Gas 

AGENCY: Office of Fossil Energy, 

Department of Energy. 

ACTION: Policy statement. 

SUMMARY: The Department of Energy’s 

Office of Fossil Energy (DOE/FE) is 

discontinuing its practice, adopted in 

2016, of including an ‘‘end use’’ 

reporting provision in orders 

authorizing the export of domestically 

produced natural gas, including 

liquefied natural gas (LNG), issued 

under section 3 of the Natural Gas Act 

(NGA). Under this practice, many 

authorization holders are currently 

required to track and report the country 

(or countries) of destination into which 

their exported LNG or natural gas was 

‘‘received for end use.’’ Due to practical 

concerns about this reporting 

requirement and a reconsideration of 

the need for the requirement given those 

concerns, DOE/FE has determined that 

it is prudent to discontinue this 

requirement in export authorizations 

going forward. DOE/FE will revert to its 

prior practice of requiring authorization 

holders to report, in relevant part, the 

country (or countries) into which the 

exported LNG or natural gas ‘‘was 

actually delivered.’’ DOE/FE believes 

this action will enhance the accuracy of 

information provided by authorization 

holders and will reduce administrative 

burdens for the U.S. LNG export market. 

This policy statement affects only future 

export authorizations issued by DOE/ 

FE. However, concurrently with the 

issuance of this policy statement, DOE/ 

FE is issuing a blanket order removing 

the end use provision from applicable 

existing export authorizations issued 

from February 2016 to present. 

DATES: This policy statement is effective 

on December 19, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Amy Sweeney, U.S. Department of 

Energy (FE–34), Office of Regulation, 

Analysis, and Engagement, Office of 

Fossil Energy, Forrestal Building, Room 

3E–042, 1000 Independence Avenue 

SW, Washington, DC 20585, (202) 586– 

2627, email: amy.sweeney@hq.doe.gov; 

or Cassandra Bernstein or Shawn Flynn, 

U.S. Department of Energy (GC–76), 

Office of the Assistant General Counsel 

for Electricity and Fossil Energy, 

Forrestal Building, Room 6D–033, 1000 

Independence Avenue SW, Washington, 

DC 20585, (202) 586–9793 or (202) 586– 

5359, email: cassandra.bernstein@

hq.doe.gov or shawn.flynn@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Statutory Background 

II. Regulatory Background 

III. Policy Statement 

IV. Administrative Benefits 

V. Approval of the Office of the Secretary 

I. Statutory Background 

The Department of Energy is 

responsible for authorizing exports of 

natural gas to foreign nations pursuant 

to section 3 of the NGA, 15 U.S.C. 

717b.1 Under section 3(c) of the NGA, 

exports of natural gas to countries with 

which the United States has entered 

into a free trade agreement (FTA) 

requiring national treatment for trade in 

natural gas and with which trade is not 

prohibited by U.S. law or policy (FTA 

countries) are ‘‘deemed to be consistent 

with the public interest.’’ Therefore, 

applications authorizing natural gas and 

LNG exports to FTA countries must be 

granted ‘‘without modification or 

delay.’’ 2 Section 3(a) of the NGA 

governs exports to any other country 

with which trade is not prohibited by 

U.S. law or policy (non-FTA countries). 

DOE has consistently interpreted 

section 3(a) of the NGA as creating a 

rebuttable presumption that a proposed 

export of natural gas to non-FTA 

countries is in the public interest.3

Accordingly, DOE conducts an informal 

adjudication and grants the application 

unless DOE finds that the proposed 

exportation to non-FTA countries will 

not be consistent with the public 

interest.4

II. Regulatory Background 

DOE’s regulations implementing 

section 3 of the NGA are codified at 10 

CFR part 590. Under 10 CFR 590.404, 

DOE/FE has broad authority to ‘‘issue a 

final opinion and order and attach such 

conditions thereto as may be required by 

the public interest after completion and 

review of the final record.’’ 5 In the longterm and short-term export 

authorizations issued by DOE/FE to date 

(both to FTA and non-FTA countries), 

DOE/FE imposes conditions on the 

authorization holder.6 These conditions 

include certain reporting requirements, 

including those described below. 

A. Long-Term LNG Export 

Authorization Orders—2011 to January 

2016 

In 2011, DOE/FE issued its first longterm export authorization to a LNG 

export project to be located in the lower48 states. From that time through 

January 2016, DOE included two 

reporting provisions in every long-term 

LNG export authorization order that are 

relevant here. 

First, DOE/FE required the long-term 

LNG export authorization holder to 

include the following provision in any 

agreement or other contract for the sale 

of LNG exported pursuant to its 

authorization: 

Customer or purchaser acknowledges and 

agrees that it will resell or transfer U.S.- 

sourced natural gas in the form of LNG 

purchased hereunder for delivery to the 

countries identified . . ., and/or to 

purchasers that have agreed in writing to 

limit their direct or indirect resale or transfer 

of such LNG to such countries. Customer or 

purchaser further commits to cause a report 

to be provided to [the long-term LNG export 

authorization holder] that identifies the 

country of destination, upon delivery, into 

which the exported LNG or natural gas was 

actually delivered, and to include in any 

resale contract for such LNG the necessary 

conditions to insure that [the long-term LNG 

export authorization holder] is made aware of 

all such actual destination countries. 

Second, as part of the monthly 

reporting requirements imposed as a 

condition in these long-term LNG export 

authorization orders, DOE/FE required 

the authorization holder to report, for 

each LNG cargo, ‘‘the country (or 

countries) of destination into which the 

exported LNG was actually delivered.’’ 

Importantly, for all the orders issued 

during this timeframe, this language 

remains in effect. DOE/FE did not 

amend those orders to change these two 

reporting provisions and is not doing so 

through this policy statement. However, 

beginning in February 2016, DOE/FE 

incorporated different language for these 

two reporting provisions in long-term 


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Federal Register / Vol. 83, No. 243 / Wednesday, December 19, 2018 / Rules and Regulations 65079 

7See Bear Head LNG Corp. and Bear Head LNG 

(USA), DOE/FE Order No. 3770, FE Docket No. 15– 

33–LNG, Opinion and Order Granting Long-Term, 

Multi-Contract Authorization to Export U.S.- 

Sourced Natural Gas by Pipeline to Canada for 

Liquefaction and Re-Export in the Form of 

Liquefied Natural Gas to Non-Free Trade Agreement 

Countries (Feb. 5, 2016); Pieridae Energy (USA) 

Ltd., DOE/FE Order No. 3768, FE Docket No. 14– 

179–LNG, Opinion and Order Granting Long-Term, 

Multi-Contract Authorization to Export U.S.- 

Sourced Natural Gas Natural Gas by Pipeline to 

Canada for Liquefaction and Re-Export in the Form 

of Liquefied Natural Gas to Non-Free Trade 

Agreement Countries (Feb. 5, 2016). 

8See, e.g. Pieridae Energy (USA) Ltd., DOE/FE 

Order No. 3639, FE Docket No. 14–179–LNG, Order 

Granting Long-Term, Multi-Contract Authorization 

to Export Natural Gas to Canada and to Other Free 

Trade Agreement Nations (May 22, 2015) at 3 n. 7. 

9Sempra LNG & Midstream, LLC, Info. Collection 

Extension, OMB Control No. 1901–0294, Form FE– 

746R Natural Gas Imports and Exports, at 4 (Oct. 

29, 2018). 

10 Id. at 5. 

11See, e.g., Internat’l Gas Union, 2018 World LNG 

Report, at 7, available at: https://www.igu.org/sites/ 

default/files/node-document-field_file/IGU_LNG_

2018_0.pdf (‘‘Globally-traded LNG volumes 

increased by 35.2 [million tons] MT in 2017, setting 

a new annual record of 293.1 MT. . . . After 

remaining stable during 2016, global re-export 

activity dropped by 39% [year-on-year], with only 

2.7 MT re-exported by 11 countries during the year 

. . . .’’). 

(and some short-term) LNG export 

authorization orders, as explained 

below. 

B. Long-Term LNG Export Authorization 

Orders—February 2016 to Present 

On February 5, 2016, DOE/FE granted 

the applications of certain Canadian 

companies requesting authorization to 

export U.S.-sourced natural gas by 

pipeline to Canada, where the 

companies planned to export U.S. 

natural gas to Canada by pipeline, then 

liquefy the U.S. natural gas and export 

it in the form of LNG to other countries.7

These applications raised novel legal 

and policy considerations. In particular, 

DOE/FE was concerned about the 

potential for U.S.-sourced natural gas to 

be exported to a neighboring FTA 

country (Canada or Mexico), then reexported as LNG from those countries to 

non-FTA countries without DOE/FE 

having knowledge of the final 

destination country. Such a situation 

could lead to a company attempting to 

circumvent the public interest review 

requirement of NGA section 3(a) by 

transiting U.S.-sourced natural gas 

through a FTA country to a non-FTA 

country. Additionally, as the U.S. LNG 

export market developed, DOE/FE 

sought greater transparency about where 

U.S.-sourced natural gas was being 

delivered and used around the world. 

To address these issues, DOE/FE 

began adding an ‘‘end use’’ reporting 

requirement as a condition to all longterm (and some short-term) LNG export 

authorizations issued on or after 

February 5, 2016. At that time, DOE/FE 

did not find that the addition of this end 

use provision required notice in the 

Federal Register. 

Under this provision, authorization 

holders are currently required to 

include the following provision in any 

agreement or other contract for the sale 

or transfer of LNG exported pursuant to 

its long-term LNG export authorization: 

Customer or purchaser acknowledges and 

agrees that it will resell or transfer U.S.- 

sourced natural gas in the form of LNG 

purchased hereunder for delivery to the 

countries identified in . . . and/or to 

purchasers that have agreed in writing to 

limit their direct or indirect resale or transfer 

of such LNG to such countries. Customer or 

purchaser further commits to cause a report 

to be provided to [the long-term LNG export 

authorization holder] that identifies the 

country of destination (or countries) into 

which the exported LNG or natural gas was 

actually delivered and/or received for end 

use, and to include in any resale contract for 

such LNG the necessary conditions to insure 

that [the long-term LNG export authorization 

holder] is made aware of all such actual 

destination countries. 

Likewise, as part of the monthly 

reporting requirements, authorization 

holders are required to report, for each 

LNG cargo, ‘‘the country (or countries) 

of destination into which the exported 

LNG was actually delivered and/or 

received for end use.’’ 

In its orders, DOE/FE has defined 

‘‘end use’’ to mean ‘‘combustion or 

other chemical reaction conversion 

process (e.g., conversion to 

methanol).’’ 8 To date, DOE/FE has 

included this end use provision in more 

than 40 export authorization orders. 

III. Policy Statement 

DOE/FE has become aware that it is 

impracticable, if not impossible, for 

authorization holders to comply with 

the end use reporting requirement. For 

example, a cargo of LNG could be 

offloaded and regasified in one country, 

and a portion of the U.S. natural gas 

could be re-exported by pipeline to 

another country or countries—without 

the direct knowledge or control of the 

parties to the initial export from the 

United States. As another example, an 

offloaded volume of U.S. LNG could be 

commingled with non-U.S. LNG before 

it is delivered to the end user. Some 

portion of this mixture could be 

reloaded and relocated to another 

country or countries before it is 

delivered to the end user, again without 

the direct knowledge or control of the 

parties to the initial U.S. export. In light 

of these possibilities, companies have 

expressed concern that the end use 

provision could put their export 

authorization(s) in jeopardy if they 

cannot strictly comply with it—i.e., if 

they are unable to determine exactly 

where their exports were ‘‘received for 

end use.’’ 

Most recently, on October 29, 2018, 

Sempra LNG & Midstream, LLC 

(Sempra) filed comments in a different 

DOE/FE proceeding but preemptively 

raised the following concern about the 

end use reporting requirement: 9

[A]uthorization holders and Registrants 

may have limited visibility into the final end 

use country once a cargo of LNG has been 

delivered[.] . . . The inherent fungibility of 

natural gas poses a particular challenge for 

authorization holders, Registrants, and their 

customers in tracking molecules of the 

commodity to their ultimate end use 

destination.’’ 10

Upon review of this issue, DOE/FE 

has determined that it is prudent to 

revert to the original (i.e., pre-February 

2016) destination language, which 

requires authorization holders to report 

the country (or countries) into which 

the exported LNG or natural gas ‘‘was 

actually delivered’’— not ‘‘received for 

end use.’’ 

Based on its analysis of the LNG 

export market, DOE/FE believes this 

change is in the public interest. DOE has 

determined that, for the reasons 

described herein, there is currently 

insufficient concern about authorization 

holders attempting to circumvent the 

public interest review process for nonFTA exports to justify an end-use 

reporting requirement—particularly 

given the compliance difficulties 

encountered by authorization holders. 

Among other reasons, all U.S. LNG 

export terminals operating or currently 

under construction have long-term 

authorization to export to both FTA and 

non-FTA countries. Second, presently 

there is no LNG ‘‘hub’’ located in a FTA 

country. Although the development of a 

LNG hub that facilitates physical trades 

in a FTA country could present an 

opportunity to transit U.S.-sourced 

natural gas through a FTA country to a 

non-FTA country, DOE/FE believes this 

risk is small given the development and 

transparency of the LNG export market 

at this time. Finally, re-exports of all 

LNG cargoes represent a very small 

percentage of LNG trade.11

For these reasons, DOE gives notice 

that DOE/FE is discontinuing its 

practice of including an end use 

provision in any export authorizations 

issued pursuant to section 3 of the NGA. 

In future long-term LNG export 


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12See U.S. Dep’t of Energy, DOE/FE Order No. 

4322, FE Docket Nos. 14–179–LNG, et al., Order 

Removing End Use Reporting Provision from 

Existing Export Authorizations (Dec. 13, 2018). 13 Id. (Appendix). 

authorization orders, DOE/FE will revert 

to its prior practice of requiring 

authorization holders to report, in 

relevant part, the country (or countries) 

into which the exported LNG or natural 

gas ‘‘was actually delivered.’’ In keeping 

with current practice, if a cargo of LNG 

exported from the United States makes 

multiple physical deliveries (a ‘‘split 

cargo’’), each country receiving delivery 

of U.S. LNG must be reported as a 

destination. 

This policy statement applies only to 

future orders. Concurrently with this 

policy statement, DOE/FE is issuing a 

blanket order to remove the end use 

provision from existing authorizations 

issued on or after February 5, 2016.12

DOE/FE has included a list of the 

affected export authorizations in that 

blanket order.13

IV. Administrative Benefits 

In this policy statement, DOE/FE is 

not proposing any new requirements for 

applicants or authorization holders 

under 10 CFR part 590. Rather, DOE/ 

FE’s intent is twofold: To enhance the 

accuracy of LNG reporting information 

provided by authorization holders, and 

to minimize administrative burdens on 

authorization holders in the U.S. LNG 

export market and those who may 

purchase U.S. LNG. 

V. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this policy statement. 

Signed in Washington, DC, on December 

13, 2018. 

Steven E. Winberg, 

Assistant Secretary for Fossil Energy Office 

of Fossil Energy. 

[FR Doc. 2018–27449 Filed 12–18–18; 8:45 am] 

BILLING CODE 6450–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2018–0486; Airspace 

Docket No. 18–ASO–11] 

RIN 2120–AA66 

Establishment of Class E Airspace; 

Hardinsburg, KY 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This action establishes Class 

E airspace extending upward from 700 

feet above the surface at Breckinridge 

County Airport, Hardinsburg, KY, to 

accommodate new area navigation 

(RNAV) global positioning system (GPS) 

standard instrument approach 

procedures serving the airport. 

Controlled airspace is necessary for the 

safety and management of instrument 

flight rules (IFR) operations at this 

airport. 

DATES: Effective 0901 UTC, February 28, 

2019. The Director of the Federal 

Register approves this incorporation by 

reference action under Title 1 Code of 

Federal Regulations part 51, subject to 

the annual revision of FAA Order 

7400.11 and publication of conforming 

amendments. 

ADDRESSES: FAA Order 7400.11C, 

Airspace Designations and Reporting 

Points, and subsequent amendments can 

be viewed on line at http://www.faa.

gov/air_traffic/publications/. For further 

information, you can contact the 

Airspace Policy Group, Federal Aviation 

Administration, 800 Independence 

Avenue SW, Washington, DC, 20591; 

telephone: (202) 267–8783. The Order is 

also available for inspection at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of FAA 

Order 7400.11C at NARA, call (202) 

741–6030, or go to https://

www.archives.gov/federal-register/cfr/ 

ibr-locations.html. 

FAA Order 7400.11, Airspace 

Designations and Reporting Points, is 

published yearly and effective on 

September 15. 

FOR FURTHER INFORMATION CONTACT: John 

Fornito, Operations Support Group, 

Eastern Service Center, Federal Aviation 

Administration, 1701 Columbia Ave, 

College Park, GA 30337; telephone (404) 

305–6364. 

SUPPLEMENTARY INFORMATION: 

Authority for This Rulemaking 

The FAA’s authority to issue rules 

regarding aviation safety is found in 

Title 49 of the United States Code. 

Subtitle I, Section 106 describes the 

authority of the FAA Administrator. 

Subtitle VII, Aviation Programs, 

describes in more detail the scope of the 

agency’s authority. This rulemaking is 

promulgated under the authority 

described in Subtitle VII, Part A, 

Subpart I, Section 40103. Under that 

section, the FAA is charged with 

prescribing regulations to assign the use 

of airspace necessary to ensure the 

safety of aircraft and the efficient use of 

airspace. This regulation is within the 

scope of that authority as it establishes 

Class E airspace at Breckinridge County 

Airport, Hardinsburg, KY, to support 

IFR operations in standard instrument 

approach procedures at this airport. 

History 

The FAA published a notice of 

proposed rulemaking in the Federal 

Register (83 FR 45863, September 11, 

2018) for Docket No. FAA–2018–0486 to 

establish Class E airspace extending 

upward from 700 feet above the surface 

at Breckinridge County Airport, 

Hardinsburg, KY. Interested parties 

were invited to participate in this 

rulemaking effort by submitting written 

comments on the proposal to the FAA. 

No comments were received. 

Class E airspace designations are 

published in paragraph 6005 of FAA 

Order 7400.11C dated August 13, 2018, 

and effective September 15, 2018, which 

is incorporated by reference in 14 CFR 

part 71.1. The Class E airspace 

designations listed in this document 

will be published subsequently in the 

Order. 

Availability and Summary of 

Documents for Incorporation by 

Reference 

This document amends FAA Order 

7400.11C, Airspace Designations and 

Reporting Points, dated August 13, 

2018, and effective September 15, 2018. 

FAA Order 7400.11C is publicly 

available as listed in the ADDRESSES

section of this document. FAA Order 

7400.11C lists Class A, B, C, D, and E 

airspace areas, air traffic service routes, 

and reporting points. 

The Rule 

This amendment to Title 14 Code of 

Federal Regulations (14 CFR) part 71 

establishes Class E airspace extending 

upward from 700 feet above the surface 

within a 7-mile radius of Breckinridge 

County Airport, Hardinsburg, KY, 

providing the controlled airspace 

required to support the new RNAV 

(GPS) standard instrument approach 

procedures. These changes are 

necessary for continued safety and 

management of IFR operations at this 

airport. 

Regulatory Notices and Analyses 

The FAA has determined that this 

regulation only involves an established 

body of technical regulations for which 

frequent and routine amendments are 

necessary to keep them operationally 

current. It, therefore: (1) Is not a 

‘‘significant regulatory action’’ under 

Executive Order 12866; (2) is not a 

‘‘significant rule’’ under DOT 

Regulatory Policies and Procedures (44 

FR 11034; February 26, 1979); and (3) 


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