[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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