The tighter formaldehyde limits now apply to 250 turbines in the U.S. that had been exempt under the stay since 2004, including 62 at Cheniere’s Sabine Pass and Corpus Christi facilities, the majority of whose cargoes are bound for Europe. The EPA gave companies until September to comply.
It was an unusual solution to an unusual problem, said Gary Kruse, who tracks policies affecting the energy industry for the firm Arbo. He said he expects the EPA will work to make case-by-case exceptions to companies based on “good faith efforts” to comply.
“For the Biden administration to force Cheniere to reduce shipments at this critical time, coming into the winter, given what is going on in Ukraine and Europe,” he said, “it would be very harmful for all kinds of reasons.”
The rule change took an unusual course because of the decades-long stay, Kruse said. Typically when a change of this magnitude is made, existing turbines would have more time to comply even as new turbines coming online must immediately comply.
Cheniere may be the loudest but is not the only company balking at the change. Pipeline companies Williams Cos. and TC Energy of Canada have filed a joint petition with the U.S. Court of Appeals to review the decision.
“Unfortunately the rule creates some significant operational uncertainty at a time when Russia’s invasion of Ukraine has shaken global energy markets and threatens to disrupt energy supply to Europe, where U.S. LNG has a significant role to play in providing reliable supplies of natural gas,” Scott Segal, partner of the Houston law firm Bracewell on Cheniere’s behalf, said in a March email to the EPA.
In a follow-up email nine days later, Segal poked the energy elephant in the room. He said he “couldn’t help but notice” that President Joe Biden planned to make an announcement about increasing LNG exports to Europe.
“Resolving this regulatory uncertainty seems consistent with that goal,” he wrote.
Jeffrey Jacoby, deputy director of the Texas Campaign for the Environment, said it’s evidence of how the energy industry believes “they’re above the law.”
“This,” he said, “is an example of the LNG industry taking advantage of the geopolitical moment to get whatever they want.”
