Congress Should Demote the DOE and Unleash LNG Exports

At the same time, liberalization did not put significant upward pressure on domestic gasoline prices: As the US Government Accountability Office explained in a 2020 report, “[b]ecause gasoline prices are largely determined on the global market, U.S. refiners could not pass on to consumers the additional costs associated with the increase in crude oil prices.” Even though last Friday’s action affects only pending LNG export applications and thus leaves current approved capacity unaffected, all US natural gas producers and exporters deserve this same freedom, to the benefit of not only these market players but also global energy markets, the US economy, and US foreign policy.

Congress seems poised to act. For example, Senator Tim Scott’s (R‑S.C.) Unlocking Domestic LNG Potential Act of 2024 removes the “public interest” determination from the DOE’s purview and hands it—in a stricter form—to the Federal Energy Regulatory Commission (FERC). This would be a positive move in at least two respects.

First, Congress should not let the DOE play politics the way it did last week—it should take back the authority the DOE so clearly abused. Second, returning the authority to FERC is consistent with past practice (recall that the original authority in the Natural Gas Act of 1938 went to the Federal Power Commission, renamed to FERC in 1977), would give LNG exporters a one‐stop‐shop for environmental and public interest review, and would mitigate against future political abuse.

Although FERC is not perfect, it has been a bulwark against Executive Branch politics, as it demonstrated in rejecting a 2018 DOE proposal to bail out coal and nuclear power plants. An additional reform that would make the transport and trade of natural gas the default policy would be to allow some Natural Gas Act filings to go into effect by operation of law, as with Federal Power Act filings, rather than languish at a deadlocked or understaffed FERC.

Of course, it’s not just the Natural Gas Act that needs reform. As I noted this week (and repeatedly in the past), US trade law is littered with measures that let the Executive Branch—and thus politics— decide the fate of private commercial transactions that just‐so‐happen to cross national borders. The Trump‐era Department of Justice, in fact, went so far as to claim in court that one of those laws—Section 232 of the Trade Enforcement Act of 1962—would let the president ban imported peanut butter on subjective “national security” grounds. And US courts have been loath to question such declarations, even when the president himself admits that the laws’ conditions haven’t been met.

Other potential declarations of national emergency have crept into the energy space, including proposals to use Section 202(c) of the Federal Power Act (another DOE function) to prop up coal‐fired power plants. At one point in President Trump’s efforts to boost the domestic coal industry, invoking the Defense Production Act was on the table.

Because the risk of politicization is ever‐present, these laws need reform too. But, as the LNG pause demonstrates (and given the stakes involved), the Natural Gas Act is a great place to start.

Scott Lincicome is the vice president of general economics and Cato’s Herbert A. Stiefel Center for Trade Policy Studies. Travis Fisher, Cato’s Director of Energy and Environmental Policy Studies, contributed to this article. This article, originally posted to the Cato Institute website, is published courtesy of the Cato Institute.