[Federal Register Volume 81, Number 234 (Tuesday, December 6, 2016)]
[Notices]
[Pages 87915-87917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29206]


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DEPARTMENT OF ENERGY


Record of Decision and Floodplain Statement of Findings for the 
Magnolia LNG, LLC Application To Export Liquefied Natural Gas to Non-
Free Trade Agreement Countries

AGENCY: Office of Fossil Energy, Department of Energy.

ACTION: Record of Decision.

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SUMMARY: The U.S. Department of Energy (DOE) announces its decision in 
Magnolia LNG, LLC (Magnolia LNG), DOE/FE Docket No. 13-132-LNG, to 
issue DOE/FE Order No. 3909, granting final long-term, multi contract 
authorization for Magnolia LNG to engage in the export of domestically 
produced liquefied natural gas (LNG) from the proposed Magnolia LNG 
facility located near Lake Charles, Calcasieu Parish, Louisiana, in a 
volume equivalent to 394.2 Bcf/yr (equal to 1.08 Bcf/day) of natural 
gas for a term of 25 years. Magnolia LNG is seeking to export LNG from 
the terminal to countries with which the United States has not entered 
into a free trade agreement (FTA) that requires national treatment for 
trade in natural gas, and with which trade is not prohibited by U.S. 
law or policy (non-FTA countries). Order No. 3909 is issued under 
section 3 of the Natural Gas Act (NGA) and 10 CFR part 590 of DOE's 
regulations. DOE participated as a cooperating agency with the Federal 
Energy Regulatory Commission (FERC) in preparing an environmental 
impact statement (EIS) \1\ analyzing the potential environmental 
impacts resulting from the proposed LNG facility.
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    \1\ Final Environmental Impact Statement for the Magnolia LNG 
and Lake Charles Expansion Projects, Docket Nos. CP14-347-000 and 
CP14-511-000, FERC/EIS--0260F (Nov. 2015).

ADDRESSES: The EIS and this Record of Decision (ROD) are available on 
DOE's National Environmental Policy Act (NEPA) Web site at: http://energy.gov/nepa/downloads/eis-0498-final-environmental-impact-statement. Order No. 3909 is available on DOE/FE's Web site at: http://www.fossil.energy.gov/programs/gasregulation/authorizations/2013_applications/Magnolia_LNG%2C_LLC_-_FE_Dkt._No._13-132-L.html. For 
additional information about the docket in these proceedings, contact 
Larine Moore, U.S. Department of Energy, Office of Regulation and 
International Engagement, Office of Oil and Natural Gas, Office of 
Fossil Energy, Room 3E-042, 1000 Independence Avenue SW., Washington, 
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DC 20585.

FOR FURTHER INFORMATION CONTACT: To obtain additional information about 
the EIS or the ROD, contact Mr. Kyle W. Moorman, U.S. Department of 
Energy, Office of Regulation and International Engagement, Office of 
Oil and Natural Gas, Office of Fossil Energy, Room 3E-042, 1000 
Independence Avenue SW., Washington, DC 20585, (202) 586-5600, or Mr. 
Edward Le Duc, U.S. Department of Energy, Office of the Assistant 
General Counsel for Environment, 1000 Independence Avenue SW., 
Washington, DC 20585.

SUPPLEMENTARY INFORMATION: DOE prepared this ROD and Floodplain 
Statement of Findings pursuant to the National Environmental Policy Act 
of 1969 (42 United States Code [U.S.C.] 4321, et seq.), and in 
compliance with the Council on Environmental Quality (CEQ) implementing 
regulations for NEPA (40 Code of Federal Regulations [CFR] parts 1500 
through 1508), DOE's implementing procedures for NEPA (10 CFR part 
1021), and DOE's ``Compliance with Floodplain and Wetland Environmental 
Review Requirements'' (10 CFR part 1022).

Background

    Magnolia LNG, a Delaware limited liability company with its 
principal place of business in Houston, Texas, proposes to construct 
liquefaction facilities in Lake Charles, Calcasieu Parish Louisiana 
(Magnolia LNG Project). The Magnolia LNG Project will connect to the 
U.S. natural gas pipeline and transmission system through a proposed 
pipeline system modification and upgrade project (Lake Charles 
Expansion Project) to an interstate natural gas pipeline owned by 
Kinder Morgan Louisiana Pipeline LLC (KMLP).
    On October 15, 2013, Magnolia LNG filed the application 
(Application) with DOE/FE seeking authorization to export domestically 
produced LNG. Magnolia LNG proposes to export this LNG to non-FTA 
countries in a total volume equivalent to 394.2 billion cubic feet per 
year (Bcf/yr) of natural gas.
    Magnolia LNG has also submitted two applications to DOE/FE for 
authorizations to export LNG to FTA countries, each in the amount of 
197.1 Bcf/yr (0.54 Bcf/day) for a 25-year term, for a combined total 
authorized FTA export volume of 394.2 Bcf/yr (1.08 Bcf/day). DOE/FE 
subsequently granted these FTA applications.\2\ The authorized

[[Page 87916]]

FTA export volumes are not additive to the export volumes requested in 
this proceeding. Therefore, DOE's grant of the pending non-FTA export 
application in this proceeding will not provide Magnolia LNG with the 
authority to export more than 394.2 Bcf/yr of natural gas from the 
Magnolia LNG Project.
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    \2\ Magnolia LNG, LLC, Order Granting Long-Term Multi-Contract 
Authorization to Export Liquefied Natural Gas by Vessel from the 
Proposed Magnolia LNG Terminal in Lake Charles, Louisiana to Free 
Trade Agreement Nations, DOE/FE Order No. 3245, February 26, 2013 
(FE Docket No 12-183-LNG); Magnolia LNG, LLC, Order Granting Long-
Term Multi-Contract Authorization to Export Liquefied Natural Gas by 
Vessel from the Proposed Magnolia LNG Terminal in Lake Charles, 
Louisiana to Free Trade Agreement Nations, DOE/FE Order No. 3406, 
March 5, 2014 (FE Docket No 13-131-LNG).
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    In addition to its Application to DOE/FE for export authority, on 
April 30, 2014, Magnolia LNG submitted an applications to FERC under 
sections 3 of the NGA for the siting, construction, and operation of 
the Magnolia LNG Project and, on June 30, 2014, KMLP submitted an 
application under section 7 of the NGA for approval of the Lake Charles 
Expansion Project. FERC issued an order granting Magnolia LNG its 
requested Section 3 authorization and KMLP its requested certificate of 
public convenience and necessity under Section 7 (c) on April 15, 2016 
(the ``FERC Order'').\3\
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    \3\ Order Granting Authorization Under Section 3 of the Natural 
Gas Act and Issuing Certificates, FERC Docket Nos. CP14-347-000 and 
CP14-511-000, 155 FERC ] 61,033 (issued April 15, 2016).
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Project Description

    The Magnolia LNG Project will include a new liquefaction facility 
consisting of four liquefaction trains, two LNG storage tanks with a 
capacity of approximately 160,000 cubic meters each, a LNG vessel 
loading berth, and a LNG truck loading area. The Lake Charles Expansion 
Project will require varying lengths/diameters of new pipeline/pipeline 
facilities in Acadia, Calcasieu and Evangeline Parishes, Louisiana, to 
supply natural gas to the liquefaction facility from existing gas 
transmission pipelines. This pipeline project includes the construction 
of approximately 6,400 feet of 36-inch-diameter and 700 feet of 24-
inch-diameter header pipelines in existing KMLP right-of-way along with 
one new compressor station.

EIS Process

    FERC was the lead federal agency and initiated the NEPA process by 
publishing a Notice of Intent (NOI) to prepare an EIS for the Magnolia 
LNG Project in FERC Docket No. PF13-9 on June 18, 2013, and for the 
Lake Charles Expansion Project in CP14-511 on August 11, 2014. FERC 
conducted a single environmental review process, that addressed both of 
these projects and DOE was a cooperating agency. FERC issued the draft 
EIS for the Liquefaction and Expansion Projects on July 17, 2015 and 
published in the Federal Register a notice of availability (NOA) for 
the draft EIS on July 24, 2015 (80 FR 44093). FERC issued the final EIS 
on November 13, 2015 and published a NOA for the final EIS on November 
19, 2015 (80 FR 72431). The final EIS addresses comments received on 
the draft EIS. Among other resource areas, the final EIS addresses 
groundwater, water resources, socioeconomics, air quality and noise, 
reliability and safety, and cumulative impacts.
    The final EIS recommended that FERC subject any approval of the 
Magnolia LNG and Lake Charles Expansion Projects to 114 conditions to 
reduce the environmental impacts that would otherwise result from the 
construction and operation of the project. Accordingly, FERC issued an 
Order authorizing the Projects on April 15, 2016, subject to 115 
environmental conditions contained in Appendix H of that Order.\4\
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    \4\Within its Order, FERC included an additional condition to 
the 114 conditions listed in the EIE related to commissioning 
volumes to its environmental mitigation measures. See Appendix H of 
the FERC Order for more details.
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    In accordance with 40 CFR 1506.3, after an independent review of 
FERC's final EIS, DOE/FE adopted FERC's final EIS (DOE/EIS-0498). The 
U.S. Environmental Protection Agency published a notice of the adoption 
on September 30, 2016 (81 FR 67348).

Addendum to Environmental Review Documents Concerning Exports of 
Natural Gas From the United States (Addendum)

    On June 4, 2014, DOE/FE published the Draft Addendum to 
Environmental Review Documents Concerning Exports of Natural Gas from 
the United States (Draft Addendum) for public comment (79 FR 32258). 
The purpose of this review was to provide additional information to the 
public concerning the potential environmental impacts of unconventional 
natural gas exploration and production activities, including hydraulic 
fracturing. Although not required by NEPA, DOE/FE prepared the Addendum 
in an effort to be responsive to the public and to provide the best 
information available on a subject that had been raised by commenters 
in this and other LNG export proceedings.
    The 45-day comment period on the Draft Addendum closed on July 21, 
2014. DOE/FE received 40,745 comments in 18 separate submissions, and 
considered those comments in issuing the Final Addendum on August 15, 
2014. DOE provided a summary of the comments received and responses to 
substantive comments in Appendix B of the Addendum. DOE/FE has 
incorporated the Draft Addendum, comments, and Final Addendum into the 
record in this proceeding.

Alternatives

    The EIS assessed alternatives that could achieve the Magnolia LNG 
and Lake Charles Expansion Projects' objectives. The range of 
alternatives analyzed included the No-Action alternative, system 
alternatives, site alternatives, and process alternatives. Alternatives 
were evaluated and compared to the Magnolia LNG and Lake Charles 
Expansion Projects to determine if the alternatives were 
environmentally preferable.
    In analyzing the No-Action Alternative, the EIS reviewed the 
effects and actions that could result if the proposed Magnolia LNG and 
Lake Charles Expansion Projects were not constructed. FERC determined 
that other LNG export projects could be developed in the Gulf Coast 
region or elsewhere in the U.S., resulting in both adverse and 
beneficial environmental impacts. LNG terminal developments and 
pipeline system expansion of similar scope and magnitude to the 
proposed projects would likely result in environmental impacts of 
comparable significance, especially those projects in similar regional 
settings.
    The EIS evaluated system alternatives which included an evaluation 
of the LNG terminal design as well as the pipeline system. For the LNG 
terminal, the EIS evaluated nine existing LNG terminals with approved, 
proposed, or planned status and 19 greenfield LNG terminals that are 
approved, proposed, or planned along the Gulf Coast of the U.S. In 
order to be a compatible alternative, it would have to meet Magnolia 
LNG's purpose and objective: To construct and operate a terminal to 
serve both domestic and export markets for LNG. The alternatives each 
lacked infrastructure to support LNG truck loading facilities and/or 
the proposed liquefaction volume capacity, and were therefore not 
further considered as viable alternatives.
    For the alternatives to the pipeline system, the EIS evaluated 
three major natural gas pipeline systems within three miles of the 
proposed site. Although the proposed pipeline expansion requires 
reconfiguration (e.g. new metering station and new interconnect 
pipeline), the three alternatives either do not meet the necessary 
capacity requirements or require the construction of longer pipeline 
connections.

[[Page 87917]]

    The EIS evaluated four site alternatives. In order to meet the 
stated objectives of Magnolia LNG Project, the EIS considered following 
factors when identifying the site that would most likely pose some 
environmental advantage to the proposed terminal site: Waterfront 
access; property size; existing land use; site availability; natural 
gas pipelines and transmission lines; population center/residences; 
distance to an interstate highway; and wetlands. After evaluating each 
of the site alternatives, the EIS concluded that the proposed site 
would have less impact on wetlands, greater separation between 
population center/residences, and greater optimization of existing land 
use.
    For the process alternatives, the EIS considered several 
liquefaction technologies in addition to the proposed Optimized Single 
Mixed Refrigerant (OSMR) [supreg] Process by LNG Technology). Although 
the OSMR[supreg] Process uses anhydrous ammonia, which present several 
safety hazards, methods of mitigating the safety hazards are well 
understood and subject to additional federal regulation. The EIS 
determined that none of the alternatives would have a significant 
safety or environmental advantage over the OSMR[supreg] Process when 
considering additional mitigation measure outlined in LNG Facility 
Siting Requirements at section 4.12.5 of the EIS.

Environmentally Preferred Alternative

    When compared against the other action alternatives assessed in the 
EIS, as discussed above, the proposed Magnolia LNG and Lake Charles 
Expansion Projects are the environmentally preferred alternative. While 
the No-Action Alternative would avoid the environmental impacts 
identified in the EIS, adoption of this alternative would not meet the 
Magnolia LNG and Lake Charles Expansion Projects objectives.

Decision

    DOE has decided to issue Order No. 3909 authorizing Magnolia LNG to 
export domestically produced LNG by vessel from the Magnolia LNG 
terminal located in Lake Charles, Calcasieu Parish, Louisiana to non-
FTA countries, in a volume up to the equivalent to 394.2 Bcf/yr of 
natural gas for a term of 25 years to commence on the earlier of the 
date of first export or seven years from the date that the Order is 
issued.
    Concurrently with this Record of Decision, DOE is issuing Order No. 
3909 in which it finds that the requested authorization has not been 
shown to be inconsistent with the public interest, and the Application 
should be granted subject to compliance with the terms and conditions 
set forth in the Order, including the environmental conditions 
recommended in the EIS and adopted in the FERC Order at Appendix H. 
Additionally, this authorization is conditioned on Magnolia LNG's 
compliance with any other mitigation measures imposed by other federal 
or state agencies.

Basis of Decision

    DOE's decision is based upon the analysis of potential 
environmental impacts presented in the EIS, and DOE's determination in 
Order No. 3909 that the opponents of Magnolia LNG's Application have 
failed to overcome the statutory presumption that the proposed export 
authorization is not inconsistent with the public interest. Although 
not required by NEPA, DOE/FE also considered the Addendum, which 
summarizes available information on potential upstream impacts 
associated with unconventional natural gas activities, such as 
hydraulic fracturing.

Mitigation

    As a condition of its decision to issue Order No. 3909 authorizing 
Magnolia LNG to export LNG to non-FTA countries, DOE is imposing 
requirements that will avoid or minimize the environmental impacts of 
the project. These conditions include the environmental conditions 
recommended in the EIS and adopted in the FERC Order at Appendix H. 
Mitigation measures beyond those included in Order No. 3909 that are 
enforceable by other Federal and state agencies are additional 
conditions of Order No. 3909. With these conditions, DOE/FE has 
determined that all practicable means to avoid or minimize 
environmental harm from the Magnolia LNG and Lake Charles Expansion 
Projects have been adopted.

Floodplain Statement of Findings

    DOE prepared this Floodplain Statement of Findings in accordance 
with DOE's regulations, entitled ``Compliance with Floodplain and 
Wetland Environmental Review Requirements'' (10 CFR part 1022). The 
required floodplain assessment was conducted during development and 
preparation of the EIS (see Section 4.1.3.3 of the EIS). DOE determined 
that the majority of the LNG terminal site is outside the 500-year 
floodplain and the pipeline facilities are outside the 100- and 500-
year floodplains. However, placement of some project components within 
floodplains would be unavoidable. Overall, the current design for the 
Magnolia LNG and Lake Charles Expansion Projects minimizes floodplain 
impacts to the extent practicable.

    Issued in Washington, DC, on November 30, 2016.
Christopher A. Smith,
Assistant Secretary, Office of Fossil Energy.
[FR Doc. 2016-29206 Filed 12-5-16; 8:45 am]
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