Nat gas export approval process may violate international law

A former World Trade Organization (WTO) official told lawmakers Tuesday that the current process for federal review of liquefied natural gas exports could violate international law because it gives preferential treatment to some countries.

Under current law, the Department of Energy (DOE) approves all natural gas export applications for the 20 countries with which the United States has free-trade agreements. For all other countries, DOE conducts a thorough review that includes determining whether such exports would be in the public interest.

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But WTO requires equal treatment for exports to all 159 countries in the organization, said Jim Bacchus, the former chairman of WTO’s appeals panel.

“This matters because if our restrictive energy measures are inconsistent with our treaty obligations, the United States risks losing a case with the WTO,” Bacchus said. “Such a loss could cause the WTO to authorize expensive economic sanctions against us.”

Bacchus, a former Democrat who represented Florida in the House in the early 1990s, presented his argument at a hearing of the House Energy and Commerce Committee’s subcommittee on energy and power. They are considering a bill sponsored by Rep. Cory Gardner (R-Colo.) to mandate that DOE quickly approve all natural gas export applications for WTO countries.

While supporters of Gardner’s bill touted the possibility that it could help U.S. allies in Eastern Europe and improve the American economy, Bacchus said the bill might also bring the country into compliance with WTO rules.

The federal government would likely be allowed to do some reviews under WTO rules, such as the process the Federal Energy Regulatory Commission completes for environmental purposes, Bacchus said. But the review cannot take a long time, and regulators cannot consider the effect of exports on domestic manufacturers who use natural gas.