Cadwalader Advises Bear Head LNG in Obtaining Landmark DOE Natural Gas Orders

Feb 12, 2016

Cadwalader, Wickersham & Taft LLP, a leading counselor to global financial institutions and corporations, has advised Bear Head LNG Corporation and Bear Head LNG (USA), LLC (together, Bear Head LNG) in connection with two recent U.S. Department of Energy (DOE) orders formally announcing DOE’s comprehensive policy for considering applications involving liquefied natural gas (LNG) exports from Eastern Canada to global markets. In obtaining these notable orders, Cadwalader establishes its place at the forefront of U.S. and international LNG projects.

In the first order (the In-Transit Order), DOE determined for the first time that it lacks jurisdiction under Section 3 of the Natural Gas Act (NGA) over proposed imports of Canadian natural gas travelling by pipeline through the United States on its way back to Canada (i.e., in-transit shipments). Prior to the In-Transit Order’s issuance, there was uncertainty regarding how DOE would review Bear Head LNG’s application, given DOE’s request for public comment on which NGA Section 3 standard ought to apply. In disclaiming jurisdiction under Section 3, DOE departed from past practice, and ultimately adopted a laissez-faire policy for in-transit shipments between the U.S. and Canada. Bear Head LNG is required to comply with certain reporting and recordkeeping requirements, imposed by DOE under the authority of NGA Section 16.

The second order (the Non-FTA Order) authorizes Bear Head LNG to export U.S. natural gas by pipeline to Canada, for subsequent re-export as LNG from Bear Head LNG’s proposed liquefaction project in Nova Scotia, to nations with which the U.S. does not have a free trade agreement. Bear Head LNG’s application was among the first two proceedings presenting issues of first impression for DOE. Bear Head LNG’s proposal presented DOE with the challenge of discharging its statutory mandate under the NGA, without running afoul of U.S. trade obligations under the North American Free Trade Agreement. In addition, the project’s location wholly outside of the U.S. raised unique issues with regard to DOE’s compliance with the National Environmental Policy Act (NEPA). In its application, Bear Head LNG presented various legal arguments and technical information to support its request that DOE grant a categorical exclusion (CE) from NEPA. DOE ultimately granted the CE, in proportion with the level of existing cross-border pipeline capacity.

The Cadwalader team was led by Tania Perez, with support from Lamiya Rahman. 



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