How can Germany achieve its plan to build LNG terminals quickly?

In the wake of the Ukraine crisis, Chancellor Olaf Scholz announced the rapid construction of LNG terminals in Brunsbüttel and Wilhelmshaven in the German Bundestag on Sunday, Feb. 27, 2022. The term LNG stands for Liquefied Natural Gas. It is natural gas that has been liquefied by cooling it to between -161°C and -164°C. LNG has only about one-third of its volume. LNG has only about one-six-hundredth of the volume of gaseous natural gas. It can be transported worldwide by tankers from gas producers such as the U.S. or Qatar.

No LNG terminals so far

Germany has no LNG terminals to date. However, there are several terminals in other EU countries - for example, in Rotterdam's port, from where small quantities of liquefied natural gas have so far also found their way to Germany.
Germany is therefore highly dependent on Russian natural gas supplies. In the Ukraine crisis, this dependence has a massive negative impact on Germany and Europe. Therefore, LNG is intended to reduce reliance on imports from Russia. For this reason, two terminals are now to be built as quickly as possible at locations in northern Germany. These terminals are then to receive climate-friendly green hydrogen in the future.
The German Chancellor expressed ambitious plans in parliament and against which he is now being measured. But is it legally possible to now raise such terminals at lightning speed, and can the administration handle it? And if not, what needs to be done?

Complex approval procedures

The gas industry has already complained in the past that legal framework conditions have also stood in the way of the construction of LNG terminals in Germany so far. And above all: the long duration of the approval procedures. Every administrative law expert will raise an eyebrow: The approval procedures for an LNG terminal are highly complex. They are likely to take more than a year in regular times, but more likely several years. Add to that construction, and such a project can take many years. A whole range of legal matters plays a role. These include, for example:

• Construction planning law: In Germany, this regulates which (industrial) facilities may be located in a particular area at all. The corresponding construction planning procedures are complex. Many concerns have to be considered, and citizens and public interest groups have to be consulted.

• Federal Immission Control Act (BimSchG): If the construction planning law is complied with, an additional immission control permit is usually required. Large LNG terminals, such as those envisaged by the German government require approval under the Federal Immission Control Act. A whole range of technical and legal aspects is examined in such a complex procedure (see the following points).

• If a procedure is carried out following the Federal Immission Control Act, it has a concentration effect. This is because the immission control permit also includes other licenses. For example, a separate building permit is not required. However, the concentration-effect does not mean that the other legal matters are not examined. Instead, the concentration-effect merely means that the responsible approval authority also deals with the other legal issues. These may include:

  • Environmental Impact Assessment Act (UVPG): under this Act, projects are assessed that may have a significant impact on the environment due to their nature, size, or location. The law is based on European legal requirements. Therefore, it requires extensive reviews before a project is approved - and public participation.

  • The Industrial Safety Ordinance: This serves to ensure occupational safety in the plant and is also based on European law.

  • Building law: More extensive building regulations must also be complied with, even if building planning law allows the plant's construction on principle. For example, building regulations, as a special safety law, place requirements on the condition of structural facilities to avoid hazards to life and health. In addition, as unique structures, the construction of LNG terminals requires compliance with stringent building code requirements.

The consequence of the complex legal situation? In the case of an LNG terminal, many technical and legal issues have to be examined. Instead, public concerns must also be considered, and public participation carried out. Complex environmental protection issues also arise. For this reason, approval procedures under federal immission control law in Germany often take years because:

• All the documents required for a permit must first be compiled in the first place. Of course, highly specialized experts often help here. But so many documents have to be submitted that it simply takes time to compile them. Setting such high requirements for plants in-laws and ordinances imposes high hurdles on future plant operators even before submitting their applications.

• If any documents are required, the authorities will inevitably take a long time to process them. This is because the principle of official investigation applies in administrative, procedural law. The administration must investigate the facts of the case ex officio and thus also examine everything that is submitted. As a result, anyone who writes remains in the approval process for a long time.

• The authorities must involve many third parties - other authorities, but also, if necessary, neighbors directly affected by the plant's construction. In addition, there is public participation. This results in a large number of comments.

• Any queries from the authorities then further delay the approval.

Even without any knowledge of the law, it should be clear that under normal circumstances, it will take a long time for the approval to be granted for such a sensitive project as the construction of LNG terminals with many technical questions and checks on the impact on the environment. But Germany does not have time, according to the Chancellor.
 

Early start of action as a remedy?

It could be objected that Section 8a BimSchG can provide a remedy. According to this, it is possible to grant provisional approval for the plant even before the permit has been issued if

• First: a decision in favor of the applicant can be expected,

• Secondly: there is a public interest or a justified interest of the applicant in the early start, and

• Third: the applicant undertakes to compensate for all damage caused by the granting of the facility up to the time of the decision and - if the facility is later not approved after all - to restore it to its previous condition.

In practice, it will be easy to argue that the first and second conditions are met in light of current world political events. Public interest in an LNG terminal should undoubtedly be affirmed. But which investor will accept the uncertainties associated with the third condition, i.e., the risk of dismantling or compensation for damage? How can the administration counter this risk?

The public law contract?

This is where public law contracts will help. These are ways the federal, state, and local governments can support significant projects, including under administrative law. Because of the importance of LNG terminals, such contracts will likely be concluded between the federal government or the federal states on the one hand and the potential LNG terminal operators on the other so that the LNG operators are secured in the investment. Here, for example, the state can promise specific quantities in the future or other benefits. In this context, it could be considered that the federal states, for example, assume the obligation to pay damages according to § 8a BimSchG (or indemnify the operator) and also cover the costs of a possible dismantling.
This all sounds good, but such public-law contracts will also have to be measured against high legal standards. Nothing promised in them may violate higher-ranking law. Of course, this includes German statutory regulations - and thus also federal immission control law. But, of course, this also contains European law regulations: Therefore, there is no chance of undermining European law with such a treaty.

Processing time and administrative assistance

But let's assume that the path of early commencement of measures is to be taken. It will still be the case. However, specific preliminary questions of legal significance will have to be examined in advance. After all, provisional approval following Section 8a of the BimSchG presupposes that a decision in favor of the applicant can be expected. A prognosis is therefore required. This means that the project must be sufficiently specified, and the application documents must be available. Here, too, much can be agreed in advance with the responsible authorities, and specific legally significant questions can be clarified with a preliminary decision (Section 9 BimSchG). So, in principle, it is possible to move a lot.
But who is to examine the documents? Predictably, the responsible authorities will not be prepared for a quick procedure. But the COVID-19 pandemic has shown that civil service law instruments make it possible to send qualified personnel where needed. For example, civil service laws recognize the remedy of secondment: the temporary transfer of activity to personnel in another department. The key here will be to act quickly and ensure that civil servants are willing to lend a hand. Whether this will succeed - and whether there are even that many specialist civil servants who can be seconded - remains to be seen.
And finally, it will also depend on the excellent organization. In practice, for example, the "caretaker principle" can come into play here: According to this, the project is also given central management on the part of the state, where the threads come together, which organizes the communication of different departments and sets tight deadlines as well as monitors their compliance. Apart from the written law, this will require a substantial rethinking of the responsible administration with solid political support.

Objections and lawsuits

But with all this, it will be impossible to avoid a variety of objections and also lawsuits. Indeed, this aspect also depends on the political and military situations - the greater the threat, the less resistance can be expected from the population. But environmental groups will undoubtedly run up a storm nonetheless. LNG is highly controversial, primarily since gas from the U.S. obtained by fracking may end up in the terminals. So regardless of the geopolitical situation, resistance is undoubted to be expected.
 
Objections raised in public participation must be examined, answered, and archived. Here, too, a lot of personnel will be needed. Digital solutions can help quickly sort objections according to categories of arguments and prepare standardized responses adapted in individual cases.
But there will also be court actions - that's for sure. Now, permits under federal immission control law are usually enforceable immediately, at least by official orders, i.e., objections and actions for avoidance have no suspensive effect in these cases. So even if there are legal remedies, construction can proceed for the time being. However, environmental associations and affected citizens can still initiate summary administrative proceedings and apply for an order of suspensive effect. And the less scrutiny there is, the more likely courts could be inclined to grant such urgent applications - even if the political situation dictates a different decision. In particular, the Higher Administrative Court of Lower Saxony in Lüneburg also makes politically unpopular decisions if it considers such decisions legally required - as was recently the case with Corona. A dichotomy for the administration: If too much is examined, (provisional) approval takes too long. If too little is reviewed, there is a risk of legal defeat. Projects must therefore also be prepared for legal proceedings.

Legislative changes?

This raises the question of the "big shot" in difficult times: Legislative changes. If a broad coalition backs the projects, the federal legislature could amend federal law for LNG plants - and give them special privileges because of their importance for the security of supply in the Federal Republic. Constitutionally, this would be permissible, which is often overlooked. After all, the constitution does not stipulate how much public participation there must be, how in-depth reviews must be, or how much approval requirements can be lowered. At this point, the Federal Constitutional Court repeatedly emphasizes that the legislature has a broad scope for decision-making. It is precisely this that should be brought to bear in such difficult political times.
This may then be a challenging course for some parties. But it would be constitutionally permissible to amend federal immission control law to grant special privileges to LNG facilities. Of course, individual case laws are constitutionally prohibited, but no "lex Brunsbüttel or Wilhelmshaven will be. However, an abstract-general regulation for significant projects in the national interest, for which the approval procedure is greatly simplified, is certainly conceivable. This, in turn, will then have an impact on court proceedings: If the modernized technical law does not oppose the plant, the administrative courts will then have to examine (only?) constitutional law, such as the impairment of fundamental rights. As an experienced executive, procedural law, I know: this hurdle is much harder to clear. And by the time the Federal Constitutional Court decides at some point, the plants will already be in operation.
Where European law takes precedence over German law, the question will again arise as to whether the European regulations will not also have to be amended in the short term. It is true that here, too, there are specific consultation requirements that could stand in the way of a rapid amendment of the directive. But if there is a consensus among the member states, the European Commission will not avoid this either.
 

So what is to be done?

Mere politics will not be enough. The administration will have to do a lot and deviate from usual procedures and ways of working to enable the rapid construction of LNG terminals. A Herculean task lies ahead, which political actors must fully support. Public-law contracts must be concluded quickly and the approval procedures initiated so that (provisional) permits can be issued as far as possible in parallel with construction. Objections can be expected in many cases and must be handled with the help of modern technology. Legal action and summary proceedings must be prepared for from the outset, and these must be factored into an overall strategy accordingly.
However, changing the existing legal situation can be even more helpful, provided it is politically desired. An honest stocktaking is now necessary. Is the current legal framework sufficient to achieve rapid approval and cushion legal proceedings, even with the best possible administrative practices? The author doubts it. Those who want the LNG terminals quickly must also ask themselves to change the legal framework, thereby actively supporting the administration and operators legislatively. This will be politically unpleasant and a rocky road. But special times call for extraordinary measures.
 

About the author

Dennis Hilleman is a partner in the administrative law team at Fieldfisher Hamburg and advises various institutions in the public sector, for example in the area of the Freedom of Information Act, but also on transactions, technology projects and state aid and subsidy law.