[Senate Report 115-248]
[From the U.S. Government Publishing Office]
Calendar No. 412
115th Congress } { Report
SENATE
2d Session } { 115-248
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SMALL SCALE LNG ACCESS ACT OF 2017
_______
May 10, 2018.--Ordered to be printed
_______
Ms. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 1981]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1981) to amend the Natural Gas Act to
expedite approval of exports of small volumes of natural gas,
and for other purposes, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
Purpose
The purpose of S. 1981 is to amend the Natural Gas Act
(NGA) to expedite approval of exports of small volumes of
natural gas, and for other purposes.
Background and Need
The Department of Energy exercises regulatory authority
under the section 3 of the NGA to review and approve
applications for the export of natural gas. Section 3(a) of the
NGA provides, inter alia, that no person shall export natural
gas from the United States to a foreign country without first
having secured an order authorizing it to do so. It also
requires that the Secretary of Energy issue the order
authorizing the export unless he finds the export will not be
consistent with the public interest.
Section 3(c) of the NGA currently provides a statutory
determination that exports of natural gas to any nation with
which there is in effect a free trade agreement requiring
national treatment for trade in natural gas are in the public
interest, eliminating any need for the Secretary of Energy to
make that determination on a case-by-case basis. In addition,
section 3(c) requires the Secretary to issue an order for the
export of natural gas to nations with which there is a free
trade agreement in effect ``without modification or delay.''
Legislation is needed to extend the statutory public
interest determination and the requirement that an export order
be granted without modification or delay to exports of small
volumes of natural gas to any nation not subject to trade
sanctions. The bill is intended to enable U.S. exports to
compete more effectively to serve emerging markets for
liquefied natural gas (LNG).
The growth in natural gas production, including from shale,
has reduced natural gas prices for domestic consumers and
provided an opportunity for LNG exports. The United States
currently has two major LNG export terminals operating, five
under construction, and four more that are fully permitted. The
International Energy Agency projects that by 2022, the United
States will have the capacity to become the world's second
largest exporter of LNG, just behind Australia, and ahead of
Qatar. Although some are concerned that exporting too much
domestic natural gas may increase costs for domestic consumers,
to date additional demand for natural gas exports appears to
have been met by a commensurate increase in supply.
LNG exports from the United States can provide a diversity
of supply, for example, in Central and Eastern Europe (where
Russia is often the sole supplier), the Caribbean countries,
Central and South America, and in Asia. Cargoes of LNG from the
first operating export terminal, Sabine Pass, for example, have
been delivered to two dozen nations in Latin America, Europe,
Asia and the Middle East. In addition, Poland's state-owned gas
company recently signed a five-year deal to buy LNG from Sabine
Pass.
Legislative History
S. 1981 was introduced by Senators Cassidy and Rubio on
October 18, 2017, and referred to the Senate Energy and Natural
Resources Committee. The Subcommittee on Energy held a hearing
on S. 1981 on December 5, 2017.
A companion measure, H.R. 4370, was introduced in the House
of Representatives by Representative Yoho, on November 9, 2017,
and referred to the House Committee on Energy and Commerce.
The Committee on Energy and Natural Resources met in open
business session on March 8, 2018, and ordered S. 1981
favorably reported.
Committee Recommendation
The Committee on Energy and Natural Resources, in open
business session on March 8, 2017, by a majority vote of a
quorum present, recommends that the Senate pass S. 1981.
The roll call vote on reporting the measure was 13 yeas, 10
nays, as follows:
YEAS NAYS
Ms. Murkowski Ms. Cantwell
Mr. Barrasso Mr. Wyden*
Mr. Risch* Mr. Sanders*
Mr. Lee Ms. Sanders
Mr. Flake Mr. Heinrich*
Mr. Daines Ms. Hirono*
Mr. Gardner Mr. King
Mr. Alexander* Ms. Duckworth
Mr. Hoeven Ms. Cortez Masto
Mr. Cassidy Ms. Smith*
Mr. Portman*
Mrs. Capito
Mr. Manchin
*Indicates vote by proxy
Section-by-Section Analysis
Section 1. Short title
Section 1 contains the short title.
Section 2. Expedited approval of export of certain volumes of natural
gas
Section 2 amends section 3(c) of the NGA (15 U.S.C.
717b(c)), which currently deems licenses to import or export
natural gas to a nation with which there is a free trade
agreement in effect to be consistent with the public interest
and requires the Secretary of Energy to grant them without
modification or delay.
Section 2 redesignates section 3(c) of the NGA as paragraph
(1) and adds two new paragraphs. New paragraph (2) provides
that any application for the exportation of natural gas in a
volume that is equal to or less than 51.1 billion cubic feet
per year of natural gas, shall be deemed to be consistent with
the public interest and shall be granted without modification
or delay, without regard to whether there is a free trade
agreement in effect with the nation to which the natural gas
will be exported.
New paragraph (3) provides a statutory determination that
the export will be consistent with the public interest and
requires that an application be granted without modification or
delay in paragraph (1) (as redesignated) and new paragraph (2)
shall not apply to exports to any nation that is subject to
sanctions that are imposed by the United States.
Cost and Budgetary Consideration
The following estimate of the costs of this measure has
been provided by the Congressional Budget Office:
S. 1981 would require the Department of Energy (DOE) to
approve any application to export less than 51.1 billion cubic
feet of natural gas in a year to any non-sanctioned country
with which the United States does not have an applicable free
trade agreement (FTA). That volume represents roughly 1 percent
of total approved natural gas exports to non-FTA countries to
date. From 2012 through 2017, DOE received eight applications
to export natural gas to non-FTA countries in amounts at or
below the bill's threshold. CBO expects that expediting the
applications would reduce the time to approve them by several
months, which could increase both the number of applications
and the volume of gas exported. However, based on information
provided by individuals working in the gas industry, CBO
estimates those effects would be small.
Changes in the price of gas, in the production of gas on
federal lands, or a combination of the two could change the
payments associated with the production of gas on federal
lands. (Those payments are recorded as decreases in direct
spending.) CBO expects that any additional demand for gas
exports under the bill would be met by a commensurate increase
in supply, which would result in no significant change in the
price of gas. In addition, CBO expects that any increase in the
production of gas would probably occur in states that accounted
for more than 80 percent of gas exports over the 2012-2016
period. Because those states, including Michigan, Texas, and
New York, contain only small amounts of federal land (between
0.5 percent and 10 percent of the total land area in each
state), we estimate that any increase in the production of gas
on federal lands would be small.
Because enacting S. 1981 could decrease direct spending
from payments associated with the production of gas on federal
lands pay-as-you-go procedures apply. However, CBO estimates
that any such effects would not be significant in any year.
Enacting the bill would not affect revenues.
CBO estimates that enacting S. 1981 would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
The CBO staff contact for this estimate is Jeff LaFave. The
estimate was approved by H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 1981.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 1981 as ordered reported.
Congressionally Directed Spending
S. 1981, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
Executive Communications
The testimony provided by the Department of Energy at the
December 5, 2017, hearing on S. 1981 follows:
Testimony of Under Secretary Mark Menezes, U.S. Department of Energy,
Before the U.S. Senate Committee on Energy and Natural Resources,
Subcommittee on Energy
S. 1981--Small Scale LNG Access Act of 2017
Currently, all exports of natural gas, regardless of
quantity, are subject to review and approval by the Department
through its regulatory authority under the Natural Gas Act
(NGA). Applications are made under NGA Section 3(a) for exports
of natural gas to non-free trade agreement countries or NGA
Section 3(c) for exports of natural gas to free trade agreement
countries. This bill amends Section 3(c) to expedite approval
of exports of small volumes of natural gas. The effect of this
bill would be to have qualifying applications granted
automatically, saving several months of review time at a
minimum.
This bill appears to be similar to the volume criteria DOE
laid out in a recent DOE Notice of Proposed Rulemaking (NOPR)
concerning small-scale natural gas exports published on
September 1, 2017. The NOPR sought to revise DOE's regulations
in 10 CFR 590 concerning its role in administering the NGA.
DOE's NOPR proposed that natural gas export applications to
non-free trade agreement countries that proposed to export up
to and including 0.14 billion cubic feet per day (or 51.75
billion cubic feet per year) would be deemed to be consistent
with the public interest. The Department looks forward to
working with the Committee to determine the technical aspects
of the bill.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1981, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
THE NATURAL GAS ACT
Act of June 21, 1938, as amended
* * * * * * *
EXPORTATION OR IMPORTATION OF NATURAL GAS; LNG TERMINALS
SEC. 3.
(a) * * *
[(c) For purposes of] (c) Expedited Application and
Approval Process._
(1) Free trade agreements in effect._For purposes of
subsection (a), the importation of the natural gas
referred to in subsection (b), or the exportation of
natural gas to a nation with which there is in effect a
free trade agreement requiring national treatment for
trade in natural gas, shall be deemed to be consistent
with the public interest, and applications for such
importation or exportation shall be granted without
modification or delay.
(2) Small-scale natural gas exports.--For purposes of
subsection (a), any application for the exportation of
natural gas in a volume that is equal to or less than
51,100,000,000 cubic feet per year of natural gas shall
be--
(A) deemed to be consistent with the public
interest; and
(B) granted without modification or delay.
(3) Exclusions.--Paragraphs (1) and (2) shall not
apply to any nation subject to sanctions imposed by the
United States.
* * * * * * *
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