[Federal Register Volume 86, Number 7 (Tuesday, January 12, 2021)]
[Rules and Regulations]
[Pages 2243-2246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28599]



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 Rules and Regulations
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  Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules 
and Regulations  

[[Page 2243]]



DEPARTMENT OF ENERGY

10 CFR Part 590


Including Short-Term Export Authority in Long-Term Authorizations 
for the Export of Natural Gas on a Non-Additive Basis

AGENCY: Office of Fossil Energy, Department of Energy.

ACTION: Policy statement.

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SUMMARY: The Department of Energy's (DOE) Office of Fossil Energy (FE) 
is discontinuing its practice of issuing separate long-term and short-
term authorizations for exports of domestically produced natural gas 
from the same facility (or facilities). DOE is instead establishing a 
practice that certain long-term authorizations to export domestically 
produced natural gas--including liquefied natural gas (LNG), compressed 
natural gas, and compressed gas liquid--include additional authority to 
export the same approved volume pursuant to transactions with terms of 
less than two years on a non-additive basis (including non-additive 
commissioning volumes). By consolidating this authority in a single 
authorization without any increase in total approved export volumes, 
this action will streamline DOE's regulatory process and reduce 
administrative burdens. This policy statement affects only future long-
term export authorizations issued by DOE under the Natural Gas Act 
(NGA). DOE is concurrently issuing a blanket order amending existing 
export authorizations consistent with this policy statement.

DATES: This policy statement is effective on January 12, 2021.

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 protected]; Bill Cody, U.S. Department of Energy (GC-70), 
Associate General Counsel, Forrestal Building, Room 6B-222, 1000 
Independence Avenue SW, Washington, DC 20585; (202) 586-6918; email: 
[email protected]; Cassandra Bernstein, 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; email: 
[email protected].

SUPPLEMENTARY INFORMATION: 
    Acronyms and Abbreviations. Frequently used acronyms and 
abbreviations are set forth below for reference.

DOE U.S. Department of Energy
EA Environmental Assessment
EIS Environmental Impact Statement
FE Office of Fossil Energy
FTA Free Trade Agreement
LNG Liquefied Natural Gas
NEPA National Environmental Policy Act of 1969
NGA Natural Gas Act

Table of Contents

I. Statutory Background
II. Regulatory Background
    A. DOE Regulations Involving Contract Terms
    B. Long-Term Export Authority
    C. Short-Term Export Authority
III. Policy Statement
IV. Administrative Benefits
V. Approval of the Office of the Secretary

I. Statutory Background

    DOE is responsible for authorizing exports of domestically produced 
natural gas--including LNG, compressed natural gas, and compressed gas 
liquid \1\--to foreign countries under section 3 of the NGA.\2\ 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 (FTA countries) 
are ``deemed to be consistent with the public interest.'' \3\ 
Therefore, applications authorizing exports of natural gas to FTA 
countries must be granted ``without modification or delay.'' \4\ 
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).\5\ 
DOE, as affirmed by the U.S. Court of Appeals for the District of 
Columbia Circuit, has consistently interpreted NGA section 3(a) as 
creating a rebuttable presumption that a proposed export of natural gas 
is in the public interest.\6\ Accordingly, DOE will conduct an informal 
adjudication and grant a non-FTA application unless DOE finds that the 
proposed exportation will not be consistent with the public 
interest.\7\
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    \1\ In referring to natural gas in this policy statement, DOE 
refers primarily, but not exclusively, to LNG. Several DOE 
proceedings have involved other types of natural gas: Compressed 
natural gas (or CNG) in FE Docket Nos. 13-157-CNG and 20-57-CNG, and 
compressed gas liquid (or CGL) in FE Docket Nos. 14-83-CGL, 16-22-
CGL, and 19-147-CGL. See 15 U.S.C. 717a(5) (definition of natural 
gas); 10 CFR 590.102(i) (same).
    \2\ 15 U.S.C. 717b. The authority to regulate the imports and 
exports of natural gas, including LNG, under NGA section 3 has been 
delegated to the Assistant Secretary for FE in Redelegation Order 
No. 00-002.04G, issued on June 4, 2019.
    \3\ Id. at 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.
    \4\ Id.
    \5\ Id. at 15 U.S.C. 717b(a).
    \6\ See 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)).
    \7\ See id. (``there must be `an affirmative showing of 
inconsistency with the public interest' to deny the application'' 
under NGA section 3(a)) (quoting Panhandle Producers & Royalty 
Owners Ass'n v. Econ. Regulatory Admin., 822 F.2d 1105, 1111 (D.C. 
Cir. 1987)). Additionally, qualifying small-scale exports of natural 
gas to non-FTA countries are deemed to be consistent with the public 
interest under NGA section 3(a). See 10 CFR 590.102(p); 10 CFR 
590.208(a); see also U.S. Dep't of Energy, Small-Scale Natural Gas 
Exports; Final Rule, 83 FR 35106 (July 25, 2018).
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    Before reaching a final decision on a non-FTA application, DOE must 
also comply with the National Environmental Policy Act of 1969 
(NEPA).\8\ DOE's environmental review process under NEPA may result in 
the preparation or adoption of an environmental impact statement (EIS) 
or environmental assessment (EA) describing the potential environmental 
impacts associated with the application.\9\ In other cases, DOE may

[[Page 2244]]

determine that an application is eligible for a categorical exclusion 
from the preparation or adoption of an EIS or EA, pursuant to DOE's 
regulations implementing NEPA.\10\
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    \8\ 42 U.S.C. 4321 et seq.
    \9\ Typically, the federal agency responsible for permitting the 
export facility--either the Federal Energy Regulatory Commission or 
the U.S. Department of Transportation's Maritime Administration--
serves as the lead agency in the NEPA review process, and DOE serves 
as a cooperating agency. Where no other federal agency is 
responsible for permitting the export facility, DOE serves as the 
lead agency in the NEPA review process.
    \10\ See 10 CFR part 1021, subpart D, appendix B (listing of 
categorical exclusions from preparation of either an EA or EIS under 
NEPA).
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II. Regulatory Background

A. DOE Regulations Involving Contract Terms

    DOE's regulations implementing section 3 of the NGA are codified in 
10 CFR part 590. In relevant part, any person applying to export 
natural gas from the United States or to amend an existing export 
authorization \11\ is required to provide DOE with ``a copy of all 
relevant contracts and purchase agreements'' \12\ and to identify any 
``contract volumes'' related to the supply of natural gas to be 
exported.\13\ DOE's regulations, however, do not address the terms of 
contracts for the supply or export of natural gas, or distinguish 
between types of export authorizations based on the contract term.
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    \11\ 10 CFR 590.201(a). For purposes of this policy statement, 
DOE uses the terms ``authorization'' and ``order'' interchangeably.
    \12\ Id. at 10 CFR 590.202(c).
    \13\ Id. at 10 CFR 590.202(b)(2).
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B. Long-Term Export Authority

    Because of the time, complexity, and expense of commercializing, 
financing, and constructing LNG export terminals, authorization holders 
typically apply to DOE for long-term authority to export LNG (or other 
types of natural gas) from their export facility to FTA and non-FTA 
countries.\14\ Since 2010, DOE has issued more than 100 long-term 
authorizations approving the export of natural gas in the form of LNG, 
compressed natural gas, or compressed gas liquid to either FTA 
countries, non-FTA countries, or both under consolidated FTA and non-
FTA orders. These long-term authorizations--which originally ranged in 
duration from 20 to 30 years (depending on the type of order) and which 
now may extend through the year 2050 \15\--are supported by the 
authorization holders' natural gas supply and sales contracts that 
often have similarly lengthy terms. In the long-term orders issued to 
date, DOE specifies that the authorization holder is authorized to 
export the natural gas ``pursuant to one or more long-term contracts (a 
contract greater than two years).'' \16\
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    \14\ This policy statement does not apply to long-term export 
authorizations involving modes of transport other than by marine 
vessel, including but not limited to orders authorizing exports of 
natural gas by pipeline.
    \15\ Effective August 25, 2020, DOE discontinued its practice of 
granting a standard 20-year export term for long-term authorizations 
to export domestically produced natural gas from the lower-48 states 
to non-FTA countries. DOE adopted a term through December 31, 2050, 
as the standard export term for long-term non-FTA authorizations, 
unless a shorter term is requested by the applicant. See U.S. Dep't 
of Energy, Extending Natural Gas Export Authorizations to Non-Free 
Trade Agreement Countries Through the Year 2050, Notice of Final 
Policy Statement and Response to Comments, 85 FR 52237 (Aug. 25, 
2020) [hereinafter Term Extension Policy Statement].
    \16\ See, e.g., Epcilon LNG LLC, DOE/FE Order No. 4629, FE 
Docket No. 20-31-LNG, Opinion and Order Granting Long-Term 
Authorization to Export Natural Gas to Mexico for Liquefaction, and 
to Re-Export U.S.-Sourced Natural Gas in the Form of Liquefied 
Natural Gas from Mexico to Free Trade Agreement and Non-Free Trade 
Agreement Nations, at 55 (Dec. 8, 2020) (Ordering Para. A).
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C. Short-Term Export Authority

    In 2015, DOE received the first application requesting short-term 
(or ``blanket'') authorization to export domestically produced LNG over 
a two-year period to both FTA and non-FTA countries under NGA section 
3.\17\ In the application, filed by Sabine Pass Liquefaction, LLC 
(Sabine Pass), Sabine Pass noted that it held (at that time) two long-
term FTA orders and one long-term non-FTA order authorizing it to 
export domestically produced LNG from the Sabine Pass Liquefaction 
Project, then under construction in Cameron Parish, Louisiana.\18\ 
Sabine Pass requested to export a subset of its total export volume 
approved under its long-term authorizations for the two-year period. 
Sabine Pass explained that, in anticipation of the start of 
liquefaction operations at the Liquefaction Project, it sought ``to 
engage in short-term exports of LNG produced both prior to commercial 
operations as well as subsequent to commercial operations if and when 
appropriate market opportunities arise.'' \19\ Sabine Pass further 
stated that the requested short-term authorization would provide it 
with ``enhanced operational flexibility and the ability to export 
produced LNG cargoes that may be rejected by customers under one or 
more long-term contracts.'' \20\
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    \17\ Sabine Pass Liquefaction, LLC, FE Docket No. 15-171-LNG, 
Application for Blanket Authorization to Export Liquefied Natural 
Gas (Nov. 6, 2015).
    \18\ Id. at 2-3.
    \19\ Id. at 4.
    \20\ Id. at 6.
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    In January 2016, in DOE/FE Order No. 3767, DOE granted Sabine 
Pass's application to export LNG by vessel ``on a short-term or spot 
market basis'' from the Sabine Pass Liquefaction Project.\21\ In 
evaluating the non-FTA portion of the application, DOE stated that it 
already had ``conducted a full public interest review under NGA section 
3(a)'' for Sabine Pass's long-term non-FTA authorization.\22\ Next, DOE 
noted that Sabine Pass was seeking only to export a non-additive 
portion of its total export volume over the two-year period. DOE found:
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    \21\ Sabine Pass Liquefaction, LLC, DOE/FE Order No. 3767, FE 
Docket No. 15-171-LNG, Order Granting Blanket Authorization to 
Export Liquefied Natural Gas by Vessel from the Sabine Pass LNG 
Terminal Located in Cameron Parish, Louisiana, at 2 (Jan. 13, 2016).
    \22\ Id. at 9.

    Provided that the volumes proposed for export . . . when added 
to any volumes exported under Sabine Pass' long-term export 
authorization, do not exceed [the approved long-term export volume] 
on an annual (i.e., consecutive 12 month) basis, the public interest 
impacts of the total exports will not increase as a consequence of 
our approval of the Application in this proceeding.\23\
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    \23\ Id. at 9-10 (emphasis added).

On this basis, DOE concluded that ``no additional public interest 
review beyond that conducted in the earlier non-FTA export proceedings 
is warranted.'' \24\
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    \24\ Id. at 10.
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    In the ordering paragraphs for Sabine Pass's short-term order, DOE 
specified that Sabine Pass was authorized to export the requested LNG 
``pursuant to transactions that have terms of no longer than two 
years.'' \25\ DOE also required that ``[t]he volume of LNG authorized 
for export to non-FTA countries in this Order, when combined with the 
volume of LNG approved for export in [Sabine Pass's long-term non-FTA 
order] shall not exceed [the total approved non-FTA volume] during any 
consecutive 12-month period.'' \26\
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    \25\ Id. at 13 (Ordering Para. A).
    \26\ Id. at 13-14 (Ordering Para. B).
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    Under this framework, DOE has issued 13 additional short-term 
authorizations to supplement one or more existing long-term 
authorizations for the same facility (or facilities) and authorization 
holder. To maintain this export authority, authorization holders are 
required to apply for new short-term orders--and DOE is required to 
process and review those applications--every two years.\27\ Five of 
these short-term orders are currently active, including Sabine Pass's 
most recent short-term

[[Page 2245]]

order issued in January 2020.\28\ As indicated, each of these orders 
approves the requested short-term exports on a non-additive basis to 
the previously approved long-term exports for each authorization 
holder--meaning without any increase in the total export volume for the 
respective facility (or facilities).
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    \27\ See U.S. Dep't of Energy, Office of Fossil Energy, ``How to 
Obtain Authorization to Import and/or Export Natural Gas and LNG--
Types of Authorizations and Requests,'' available at: https://www.energy.gov/fe/services/natural-gas-regulation/how-obtain-authorization-import-andor-export-natural-gas-and-lng.
    \28\ Sabine Pass Liquefaction, LLC, DOE/FE Order No. 4487, FE 
Docket No. 19-133-LNG, Order Granting Blanket Authorization to 
Export Liquefied Natural Gas to Free Trade Agreement and Non-Free 
Trade Agreement Nations, at 14-15 (Jan. 15, 2020) (Ordering Paras. 
A, B).
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    Additionally, in every short-term order issued for non-FTA exports 
under NGA section 3(a), DOE has evaluated its obligations under NEPA. 
In each order, DOE determined that the approval of the application 
``will not result in any incremental environmental impacts as compared 
to the environmental impacts previously reviewed'' for the 
corresponding long-term authorization(s).\29\ DOE also found that 
approval of each application would not require additional construction 
or modification to the previously approved facilities.\30\ Accordingly, 
in every short-term order for non-FTA exports to date, DOE has granted 
the non-FTA portion of the application, in part, based on a categorical 
exclusion from the preparation of an EA or EIS under NEPA \31\ 
(specifically, categorical exclusion B5.7 under DOE's regulations at 10 
CFR part 1021, subpart D, appendix B).\32\
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    \29\ See, e.g., id. at 12.
    \30\ See, e.g., id. at 12-13.
    \31\ See, e.g., id. at 12-13, 14 (Findings Para. (3)).
    \32\ 10 CFR part 1021, Subpt. D, App. B, Categorical Exclusion 
B5.7) (providing a categorical exclusion where approvals or 
disapprovals of authorizations to import or export natural gas under 
NGA section 3 involve minor operational changes, but not new 
construction). DOE notes that, on January 4, 2021, an amended form 
of this B5.7 categorical exclusion will take effect. See U.S. Dep't 
of Energy, National Environmental Policy Act Implementing 
Procedures; Final Rule, 85 FR 78197 (Dec. 4, 2020) (effective date 
of Jan. 4, 2021).
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III. Policy Statement

    Nearly five years ago, in January 2016, DOE issued its first short-
term LNG export authorization to Sabine Pass to supplement its existing 
long-term LNG export authorizations.\33\ Since that time, the U.S. 
market for natural gas--and, in particular, the LNG export market--has 
matured, as has DOE's understanding of the administrative burdens 
associated with implementing its regulatory program under NGA section 
3. Upon review, DOE has determined that it is no longer necessary to 
issue separate long-term and short-term authorizations to export 
natural gas from the same facility (or facilities) for the same 
authorization holder. If an authorization holder has a long-term export 
order tied to contracts of two years or longer, but wishes to export a 
subset of that approved volume on a short-term or spot market basis 
under transactions with terms of less than two years (including 
commissioning volumes prior to the start of a facility's commercial 
operations \34\), DOE finds that it is beneficial to provide both types 
of authority in a single consolidated order going forward.
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    \33\ See supra note 21.
    \34\ Cf. U.S. Dep't of Energy, Office of Fossil Energy, LNG 
Monthly, at 38 (Nov. 2020), available at: https://www.energy.gov/sites/prod/files/2020/11/f80/LNG%20Monthly%202020_4.pdf (defining 
``commissioning cargoes'' as ``pre-commercial cargos loaded while 
export facility operations are still undergoing final testing and 
inspection,'' and stating that ``[c]ommissioning cargos may occur 
multiple times for the same facility as individual LNG trains enter 
service'').
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    As an initial matter, DOE's regulations implementing NGA section 3 
do not address the terms of an applicant's natural gas supply or sales 
contracts, nor do they distinguish between types of export authority on 
this basis.\35\ Therefore, there is no legal requirement for DOE to 
continue issuing separate short-term and long-term authorizations on a 
non-additive basis from the same facility.
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    \35\ See supra Sec.  II.A (discussing DOE's regulations 
implementing NGA section 3 at 10 CFR part 590).
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    DOE also finds that there are no practical benefits to continuing 
to separate these types of authorizations. DOE developed this approach 
in 2016 during a rapidly evolving regulatory period for exports of LNG 
and other forms of natural gas. At this point, however, DOE's 
regulatory practice is well established, U.S. companies have been 
exporting domestically produced LNG from the lower 48-states around the 
globe for nearly five years,\36\ and the need for U.S. exporters to 
have operational flexibility to compete in the global marketplace is 
greater than ever.\37\ Based on its analysis of the U.S. natural gas 
market, DOE/FE believes this action is in the public interest under NGA 
section 3.
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    \36\ Indeed, after four years exporting at market-based levels, 
the United States has become one of the top three LNG exporters in 
the world. See Term Extension Policy Statement, 85 FR 52244 (Aug. 
25, 2020).
    \37\ DOE recently discussed the benefits associated with 
increasing operational flexibility for U.S. exporters, including but 
not limited to providing economic benefits and improving energy 
security for the United States and its allies. See id. at 85 FR 
52244 (Aug. 25, 2020).
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    Accordingly, under this policy statement, DOE is establishing that 
certain long-term authorizations to export domestically produced 
natural gas--including LNG, compressed natural gas, and compressed gas 
liquid--will include authority to export the same approved volume 
pursuant to transactions with terms of less than two years on a non-
additive basis (including non-additive commissioning volumes to be 
exported prior to the start of a facility's commercial operations).
    This policy statement applies only to future long-term 
authorizations to export natural gas.\38\ Concurrently with this policy 
statement, DOE is issuing a blanket order that (i) amends existing 
long-term export authorizations to include short-term export authority 
under NGA section 3(a) and (c), and (ii) vacates DOE's existing short-
term orders (and short-term export authority granted in other orders) 
in light of DOE's action to consolidate this authority in each 
corresponding long-term authorization.\39\ DOE has included a list of 
the affected export authorizations in that order.
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    \38\ As noted, this policy statement does not apply to long-term 
export authorizations involving modes of transport other than by 
marine vessel, including but not limited to orders authorizing 
exports of natural gas by pipeline.
    \39\ See U.S. Dep't of Energy, DOE/FE Order No. 4641, FE Docket 
Nos. 10-85-LNG, et al., Order Amending Long-Term Authorizations for 
the Export of Natural Gas to Include Short-Term Export Authority on 
a Non-Additive Basis, and Vacating Related Short-Term Authority in 
Separate Orders (Dec. 18, 2020).
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IV. Administrative Benefits

    In this policy statement, DOE is not proposing any new requirements 
for applicants or authorization holders under 10 CFR part 590. Rather, 
DOE's objective to streamline DOE's administrative process and to 
minimize administrative burdens and uncertainty on the U.S. natural gas 
industry by conserving resources that would be utilized to apply for 
and process short-term export authorizations, respectively, without any 
incremental benefit to the public.

V. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this policy 
statement.

Signing Authority

    This document of the Department of Energy was signed on December 
18, 2020, by Steven Winberg, Assistant Secretary, Office of Fossil 
Energy, pursuant to delegated authority from the Secretary of Energy. 
That document with the original signature and date is maintained by 
DOE. For administrative purposes only, and in compliance with 
requirements of the Office of the Federal Register, the undersigned DOE 
Federal Register Liaison Officer has been authorized to sign and submit 
the

[[Page 2246]]

document in electronic format for publication, as an official document 
of the Department of Energy. This administrative process in no way 
alters the legal effect of this document upon publication in the 
Federal Register.

    Signed in Washington, DC, on December 21, 2020.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2020-28599 Filed 1-11-21; 8:45 am]
BILLING CODE 6450-01-P