Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?
[From the U.S. Government Publishing Office]


113th Congress  }                                      {  Rept. 113-482
  2d Session    }        HOUSE OF REPRESENTATIVES      {         Part 1

=======================================================================
 
                NORTH AMERICAN ENERGY INFRASTRUCTURE ACT 

                                _______
                                

 June 19, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3301]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3301) to require approval for the construction, 
connection, operation, or maintenance of oil or natural gas 
pipelines or electric transmission facilities at the national 
boundary of the United States for the import or export of oil, 
natural gas, or electricity to or from Canada or Mexico, and 
for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     4
Hearings.........................................................     8
Committee Consideration..........................................     8
Committee Votes..................................................     9
Committee Oversight Findings.....................................    13
Statement of General Performance Goals and Objectives............    13
New Budget Authority, Entitlement Authority, and Tax Expenditures    13
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......    13
Committee Cost Estimate..........................................    13
Congressional Budget Office Estimate.............................    13
Federal Mandates Statement.......................................    14
Duplication of Federal Programs..................................    14
Disclosure of Directed Rule Makings..............................    14
Advisory Committee Statement.....................................    14
Applicability to Legislative Branch..............................    14
Section-by-Section Analysis of the Legislation...................    15
Changes in Existing Law Made by the Bill, as Reported............    16
Minority, Additional, or Dissenting Views........................    19

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``North American Energy Infrastructure 
Act''.

SEC. 2. FINDING.

  Congress finds that the United States should establish a more 
uniform, transparent, and modern process for the construction, 
connection, operation, and maintenance of oil and natural gas pipelines 
and electric transmission facilities for the import and export of oil 
and natural gas and the transmission of electricity to and from Canada 
and Mexico, in pursuit of a more secure and efficient North American 
energy market.

SEC. 3. AUTHORIZATION OF CERTAIN ENERGY INFRASTRUCTURE PROJECTS AT THE 
                    NATIONAL BOUNDARY OF THE UNITED STATES.

  (a) Authorization.--Except as provided in subsection (c) and section 
7, no person may construct, connect, operate, or maintain a cross-
border segment of an oil pipeline or electric transmission facility for 
the import or export of oil or the transmission of electricity to or 
from Canada or Mexico without obtaining a certificate of crossing for 
the construction, connection, operation, or maintenance of the cross-
border segment under this section.
  (b) Certificate of Crossing.--
          (1) Requirement.--Not later than 120 days after final action 
        is taken under the National Environmental Policy Act of 1969 
        (42 U.S.C. 4321 et seq.) with respect to a cross-border segment 
        for which a request is received under this section, the 
        relevant official identified under paragraph (2), in 
        consultation with appropriate Federal agencies, shall issue a 
        certificate of crossing for the cross-border segment unless the 
        relevant official finds that the construction, connection, 
        operation, or maintenance of the cross-border segment is not in 
        the public interest of the United States.
          (2) Relevant official.--The relevant official referred to in 
        paragraph (1) is--
                  (A) the Secretary of State with respect to oil 
                pipelines; and
                  (B) the Secretary of Energy with respect to electric 
                transmission facilities.
          (3) Additional requirement for electric transmission 
        facilities.--In the case of a request for a certificate of 
        crossing for the construction, connection, operation, or 
        maintenance of a cross-border segment of an electric 
        transmission facility, the Secretary of Energy shall require, 
        as a condition of issuing the certificate of crossing for the 
        request under paragraph (1), that the cross-border segment of 
        the electric transmission facility be constructed, connected, 
        operated, or maintained consistent with all applicable policies 
        and standards of--
                  (A) the Electric Reliability Organization and the 
                applicable regional entity; and
                  (B) any Regional Transmission Organization or 
                Independent System Operator with operational or 
                functional control over the cross-border segment of the 
                electric transmission facility.
  (c) Exclusions.--This section shall not apply to any construction, 
connection, operation, or maintenance of a cross-border segment of an 
oil pipeline or electric transmission facility for the import or export 
of oil or the transmission of electricity to or from Canada or Mexico--
          (1) if the cross-border segment is operating for such import, 
        export, or transmission as of the date of enactment of this 
        Act;
          (2) if a permit described in section 6 for such construction, 
        connection, operation, or maintenance has been issued;
          (3) if a certificate of crossing for such construction, 
        connection, operation, or maintenance has previously been 
        issued under this section; or
          (4) if an application for a permit described in section 6 for 
        such construction, connection, operation, or maintenance is 
        pending on the date of enactment of this Act, until the earlier 
        of--
                  (A) the date on which such application is denied; or
                  (B) July 1, 2016.
  (d) Effect of Other Laws.--
          (1) Application to projects.--Nothing in this section or 
        section 7 shall affect the application of any other Federal 
        statute to a project for which a certificate of crossing for 
        the construction, connection, operation, or maintenance of a 
        cross-border segment is sought under this section.
          (2) Natural gas act.--Nothing in this section or section 7 
        shall affect the requirement to obtain approval or 
        authorization under sections 3 and 7 of the Natural Gas Act for 
        the siting, construction, or operation of any facility to 
        import or export natural gas.
          (3) Energy policy and conservation act.--Nothing in this 
        section or section 7 shall affect the authority of the 
        President under section 103(a) of the Energy Policy and 
        Conservation Act.

SEC. 4. IMPORTATION OR EXPORTATION OF NATURAL GAS TO CANADA AND MEXICO.

  Section 3(c) of the Natural Gas Act (15 U.S.C. 717b(c)) is amended by 
adding at the end the following: ``No order is required under 
subsection (a) to authorize the export or import of any natural gas to 
or from Canada or Mexico.''.

SEC. 5. TRANSMISSION OF ELECTRIC ENERGY TO CANADA AND MEXICO.

  (a) Repeal of Requirement To Secure Order.--Section 202(e) of the 
Federal Power Act (16 U.S.C. 824a(e)) is repealed.
  (b) Conforming Amendments.--
          (1) State regulations.--Section 202(f) of the Federal Power 
        Act (16 U.S.C. 824a(f)) is amended by striking ``insofar as 
        such State regulation does not conflict with the exercise of 
        the Commission's powers under or relating to subsection 
        202(e)''.
          (2) Seasonal diversity electricity exchange.--Section 602(b) 
        of the Public Utility Regulatory Policies Act of 1978 (16 
        U.S.C. 824a-4(b)) is amended by striking ``the Commission has 
        conducted hearings and made the findings required under section 
        202(e) of the Federal Power Act'' and all that follows through 
        the period at the end and inserting ``the Secretary has 
        conducted hearings and finds that the proposed transmission 
        facilities would not impair the sufficiency of electric supply 
        within the United States or would not impede or tend to impede 
        the coordination in the public interest of facilities subject 
        to the jurisdiction of the Secretary.''.

SEC. 6. NO PRESIDENTIAL PERMIT REQUIRED.

  No Presidential permit (or similar permit) required under Executive 
Order 13337 (3 U.S.C. 301 note), Executive Order 11423 (3 U.S.C. 301 
note), section 301 of title 3, United States Code, Executive Order 
12038, Executive Order 10485, or any other Executive Order shall be 
necessary for the construction, connection, operation, or maintenance 
of an oil or natural gas pipeline or electric transmission facility, or 
any cross-border segment thereof.

SEC. 7. MODIFICATIONS TO EXISTING PROJECTS.

  No certificate of crossing under section 3, or permit described in 
section 6, shall be required for a modification to the construction, 
connection, operation, or maintenance of an oil or natural gas pipeline 
or electric transmission facility--
          (1) that is operating for the import or export of oil or 
        natural gas or the transmission of electricity to or from 
        Canada or Mexico as of the date of enactment of the Act;
          (2) for which a permit described in section 6 for such 
        construction, connection, operation, or maintenance has been 
        issued; or
          (3) for which a certificate of crossing for the cross-border 
        segment of the pipeline or facility has previously been issued 
        under section 3.

SEC. 8. EFFECTIVE DATE; RULEMAKING DEADLINES.

  (a) Effective Date.--Sections 3 through 7, and the amendments made by 
such sections, shall take effect on July 1, 2015.
  (b) Rulemaking Deadlines.--Each relevant official described in 
section 3(b)(2) shall--
          (1) not later than 180 days after the date of enactment of 
        this Act, publish in the Federal Register notice of a proposed 
        rulemaking to carry out the applicable requirements of section 
        3; and
          (2) not later than 1 year after the date of enactment of this 
        Act, publish in the Federal Register a final rule to carry out 
        the applicable requirements of section 3.

SEC. 9. DEFINITIONS.

  In this Act--
          (1) the term ``cross-border segment'' means the portion of an 
        oil or natural gas pipeline or electric transmission facility 
        that is located at the national boundary of the United States 
        with either Canada or Mexico;
          (2) the term ``modification'' includes a reversal of flow 
        direction, change in ownership, volume expansion, downstream or 
        upstream interconnection, or adjustment to maintain flow (such 
        as a reduction or increase in the number of pump or compressor 
        stations);
          (3) the term ``natural gas'' has the meaning given that term 
        in section 2 of the Natural Gas Act (15 U.S.C. 717a);
          (4) the term ``oil'' means petroleum or a petroleum product;
          (5) the terms ``Electric Reliability Organization'' and 
        ``regional entity'' have the meanings given those terms in 
        section 215 of the Federal Power Act (16 U.S.C. 824o); and
          (6) the terms ``Independent System Operator'' and ``Regional 
        Transmission Organization'' have the meanings given those terms 
        in section 3 of the Federal Power Act (16 U.S.C. 796).

                          Purpose and Summary

    H.R. 3301, the ``North American Energy Infrastructure 
Act,'' was introduced by Rep. Upton (R-MI) and Rep. Green (D-
TX) on October 22, 2013. H.R. 3301 would eliminate the need for 
oil and gas pipelines and electric transmission lines that 
cross the U.S. border to Canada or Mexico to obtain a 
Presidential Permit. The legislation replaces the system of 
Executive Orders that pertain to approvals for cross-border oil 
and natural gas pipelines and transmission lines. Developers of 
oil pipelines and transmission lines will now have to obtain a 
``certificate of crossing'' for cross-border projects. Cross-
border natural gas pipelines would still have to receive 
section 3 approvals under the Natural Gas Act (NGA).

                  Background and Need for Legislation

    The three largest countries in North America, the United 
States, Canada, and Mexico, are undergoing an energy 
transformation that is not only reshaping policies and long-
held beliefs in their own respective countries, but also around 
the globe. As Secretary of State John Kerry recently stated, 
``Today, it's clear, the world's new energy map is no longer 
centered in the Middle East, but in the Western 
Hemisphere.''\1\ Oil and gas production in the U.S. and Canada 
has surged rapidly in less than a decade. Mexico is 
implementing new reforms to energy policies that would allow 
for the nation's vast energy potential to be tapped. As fast as 
energy production has grown in North America over the past 
decade, production may grow even faster in the decade to come.
---------------------------------------------------------------------------
    \1\Statement before the Council of the America's, May 7, 2014.
---------------------------------------------------------------------------
    The ability of the U.S., Canada, and Mexico to allow for 
greater trade and utilization of energy resources is key. In 
order for the U.S. to fully benefit from the energy renaissance 
that is underway in North America there must be a recognition 
that cross-border energy projects are in the best interest of 
our nation and should be encouraged, not discouraged by 
regulatory roadblocks. Recognizing the commitments and the 
benefits that are part of the North American Free Trade 
Agreement (NAFTA), Congress must act to reassure both the 
private industry here at home and in Canada and Mexico that a 
modern, transparent, and predictable regulatory process for 
approving cross-border oil and natural gas pipelines and 
transmission lines is a priority.
    Oil and natural gas pipelines and electric transmission 
facilities that cross the national boundaries of the United 
States must receive approval from the Federal government, 
similar to other types of border crossing facilities (e.g., 
communication cables, bridges, border entry facilities, and 
railroads). The current approval process for oil and natural 
gas pipelines and electric transmission facilities are set 
forth in a series of Executive Orders created in an ad hoc 
fashion over multiple Presidential administrations. Congress' 
authority to regulate foreign commerce ``is plainly enumerated 
by the Constitution,'' and can decide how the approval of cross 
border facilities is carried out.\2\ Since Congress has yet to 
exercise its authority to regulate these projects, it has been 
left to the President to authorize these approvals under the 
President's inherent constitutional authority to conduct 
foreign affairs. Currently, one must apply for a Presidential 
Permit, not only for a new project, but for any existing 
project that previously has been approved and undergone a 
change in ownership or modification.
---------------------------------------------------------------------------
    \2\CRS Report, ``Proposed Keystone XL Pipeline: Legal Issues,'' 
March 21, 2013.
---------------------------------------------------------------------------

                CROSS-BORDER ELECTRIC TRANSMISSION LINES

    The U.S. currently has over 40 cross-border electric 
transmission lines carrying power between the U.S. and Canada 
and the U.S. and Mexico.\3\ The majority of these 
interconnections are located at the northern border, which has 
facilitated enhanced system reliability, fuel diversity, and 
efficiencies in system operation, particularly for the New 
England and Midwest regions.\4\ Each of these facilities has 
been issued a Presidential Permit and obtained an export 
authorization from the Secretary of Energy. There are 5 
applications for Presidential Permits pending before the 
Department of Energy (DOE).\5\
---------------------------------------------------------------------------
    \3\CRS Memorandum, ``Presidential Permitting of Border Crossing 
Energy Facilities,'' at Table 3 (Aug. 16, 2013).
    \4\The U.S. and Canadian transmission systems are physically 
interconnected at over 35 points with linkages stretching across the 
border from the Pacific Northwest to New England. Canada is currently 
the United States' largest foreign supplier of electricity, with 
exports to the U.S. typically representing anywhere from 5-10% of 
Canada's total production. In 2012, electricity exports from Canada 
totaled 57,864,640 megawatt-hours.
    \5\DOE, Office of Electricity Delivery and Energy Reliability, 
``Pending Applications.''
---------------------------------------------------------------------------
    Under the current process to construct and operate an 
international cross-border transmission facility, any person 
seeking to construct and operate such facilities must first 
obtain the following from the Secretary of Energy:
          (1) a Presidential Permit pursuant to Executive Order 
        10485 (September 3, 1954), as amended by Executive 
        Order 12038 (February 3, 1978); and
          (2) an export authorization pursuant to section 
        202(e) of the Federal Power Act.\6\
---------------------------------------------------------------------------
    \6\16 U.S.C. Sec. 824a(e).
---------------------------------------------------------------------------
    Executive Order 12038 provides that, before a Presidential 
Permit may be issued, the action must be found to be consistent 
with the public interest. The two criteria used by DOE to 
determine if a proposed project is consistent with the public 
interest are:
          (1) the environmental impact of the project, 
        consistent with the National Environmental Policy Act 
        of 1969 (NEPA); and
          (2) the impact of the project on electric 
        reliability.\7\
---------------------------------------------------------------------------
    \7\In addition, concurrence is required from both the Secretary of 
Defense and the Secretary of State before a Presidential Permit can be 
issued.
---------------------------------------------------------------------------
    With regard to export authorizations, DOE will grant the 
authorization unless it finds that the proposed transmission 
``would impair the sufficiency of electric supply within the 
United States or would impede or tend to impede the 
coordination in the public interest of facilities subject to 
the jurisdiction of the Commission.''\8\ DOE must also comply 
with NEPA before granting authorization to export electric 
energy.
---------------------------------------------------------------------------
    \8\16 U.S.C. Sec. 824a(e).
---------------------------------------------------------------------------
    With respect to evaluating cross-border electric 
transmission facilities, the Department of Energy's regulations 
specifically provide that the construction of transmission 
lines less than 10 miles (or less than 20 miles if within an 
existing right of way) are eligible for a categorical exclusion 
(CE) under NEPA.\9\ DOE has utilized the CE designation in 
approving numerous cross-border projects.\10\ For transmission 
facilities outside the 10 or 20 mile threshold, DOE often 
reaches a conclusion of ``Finding of No Significant Impact'' 
(FONSI) given the limited scope of the project review at the 
national boundary.\11\
---------------------------------------------------------------------------
    \9\10 C.F.R. Sec. 1021.410 (Appendix B4.12).
    \10\See, e.g., ITC Transmission, ``Presidential Permit,'' Order No. 
PP-230-4 (Feb. 24, 2012) (DOE issuance of Presidential Permit with CE 
for electric transmission line and related facilities crossing U.S.-
Canadian border); AEP Texas Central Company, ``Presidential Permit,'' 
Order No. PP-317 (Jan. 22, 2007) (DOE issuance of Presidential Permit 
with CE for electric transmission line crossing U.S.-Mexico border); 
Detroit Edison Company, ``Presidential Permit,'' Order No. PP-221 
(April 27, 2000) (DOE issuance of Presidential Permit with CE for 
electric transmission line crossing U.S.-Canadian border).
    \11\See, e.g., Sharyland Utilities, L.P., ``Presidential Permit,'' 
Order No. PP-285 (Jan. 21, 2005) (DOE issuance of Presidential Permit 
with FONSI for electric transmission line crossing U.S.-Mexico border); 
Northern States Power Company, ``Presidential Permit,'' Order No. PP-
231 (Feb. 6, 2002) (DOE issuance of Presidential Permit with FONSI for 
electric transmission line crossing U.S.-Canadian border).
---------------------------------------------------------------------------

                   CROSS-BORDER NATURAL GAS PIPELINES

    The U.S. currently has 50 operating cross-border natural 
gas pipelines between the U.S. and Canada (29) and the U.S. and 
Mexico (21).\12\ There are 2 additional natural gas pipeline 
projects in Arizona and Texas that have Presidential Permit 
applications currently pending.
---------------------------------------------------------------------------
    \12\CRS Memorandum, ``Presidential Permitting of Border Crossing 
Energy Facilities,'' at Table 1 (Aug. 16, 2013).
---------------------------------------------------------------------------
    Under the current process to construct and operate an 
international cross-border natural gas pipeline, any person 
seeking to construct and operate such facilities must obtain 
from the Federal Energy Regulatory Commission (FERC):
          (1) a Presidential Permit pursuant to Executive Order 
        10485 (September 3, 1954), as amended by Executive 
        Order 12038 (February 3, 1978), and
          (2) an authorization under section 3 of the NGA for a 
        cross-border import and export facility.\13\ Section 3 
        applications are sometimes filed in conjunction with 
        section 7 applications, which are for interstate 
        natural gas pipelines.\14\
---------------------------------------------------------------------------
    \13\15 U.S.C. Sec. 717e.
    \14\15 U.S.C. Sec. 717f.
---------------------------------------------------------------------------
    Executive Order 12038 provides that, before a Presidential 
Permit is issued, there must be a finding that the action is 
consistent with the public interest. The criteria used for 
determining if an application is consistent with the public 
interest is identical to the criteria for approving 
applications for the siting, construction, and operation of 
import and export facilities under section 3 of the NGA.
    For ``border facilities'' subject to Presidential Permit 
and NGA section 3 review, discretion is given to FERC on a 
project-by-project basis to determine the exact scope of the 
project review, and therefore the exact parameters of the 
Presidential Permit and section 3 application. FERC looks for a 
physical feature on a project, such as a valve or meter on the 
interior side of the U.S. border, as an endpoint for what may 
be considered to lie within the Commission's jurisdiction and 
therefore subject to its review procedures. From the physical 
feature, the border crossing facilities would be construed to 
extend to either the U.S./Canada or U.S/Mexico border.\15\ In 
reviewing recent FERC Orders issuing a Presidential Permit and 
granting section 3 authorization, the segment of the project 
deemed jurisdictional ranged from just less than three miles in 
length to another project that was 703 feet.\16\
---------------------------------------------------------------------------
    \15\Discussions with FERC staff, May 2, 2014.
    \16\See e.g., Bakken Hunter, (approved April 24, 2014), Houston 
Pipe Line (approved March 20, 201), and NET Mexico (approved November 
8, 2013).
---------------------------------------------------------------------------
    Additionally, applicants must obtain from DOE an 
authorization to import or export natural gas under section 3 
of the NGA for a nation with whom the U.S. has a free trade 
agreement (FTA).\17\ For applications to FTA countries, such as 
Canada and Mexico, DOE is required to grant these requests 
``without modification or delay.''
---------------------------------------------------------------------------
    \17\15 USC Sec. 717b.
---------------------------------------------------------------------------

                       CROSS-BORDER OIL PIPELINES

    The U.S. currently has 19 operating cross-border oil 
pipelines between the U.S. and Canada (17) and the U.S. and 
Mexico (2).\18\ There are currently 7 pending applications for 
Presidential Permits for either new or existing cross-border 
oil pipelines.\19\
---------------------------------------------------------------------------
    \18\CRS Memorandum, ``Presidential Permitting of Border Crossing 
Energy Facilities,'' at Table 2 (Aug. 16, 2013).
    \19\Department of State, Bureau of Energy Resources ``Pending 
Applications.''
---------------------------------------------------------------------------
    Under the current process to construct and operate an 
international cross-border oil pipeline, any person seeking to 
construct and operate such facilities must obtain a 
Presidential Permit pursuant to Executive Order 13337 from the 
Department of State. Under Executive Order 13337, the Secretary 
of State is to approve cross-border oil pipelines that have 
been determined to ``serve the national interest.'' Although 
the Department of State will not necessarily evaluate the same 
factors for each application for a Presidential Permit, its 
evaluation considers such things as the environmental impacts 
of the proposed project (associated closely with compliance 
with NEPA), stability of trading partners from whom the U.S. 
obtains crude oil, and the security of transport pathways for 
crude oil supplies to the U.S., and the economic benefits to 
the U.S.
    The current processes established by Executive Order create 
a number of problems. First and foremost, a lack of statutory 
guidance allows for a shifting standard of how projects are to 
be approved, the manner in which they are approved, and which 
agency or official makes the final decision on the approval for 
both new projects and existing projects. A lack of certainty 
creates a chilling effect on private investment for these 
projects. Also, given the constructs of the Executive Orders 
and the ultimate determination of the projects being left to 
the President, it is highly unlikely that a decision by the 
President can be challenged in court.\20\ This all puts cross-
border oil pipeline projects at a distinct disadvantage to 
comparable projects that do not have to receive Presidential 
Permit approvals.
---------------------------------------------------------------------------
    \20\See ``Keystone XL: Reviewability of Transboundary Permits in 
the United States,'' Kathy Parker, Colorado Journal of Environmental 
Law and Policy, 2013.
---------------------------------------------------------------------------
    H.R. 3301 would eliminate the need for oil and gas 
pipelines and electric transmission lines that cross the U.S. 
border to Canada or Mexico to obtain a Presidential Permit. The 
legislation replaces the system of Executive Orders that 
pertain to approvals for cross-border oil and natural gas 
pipelines and transmission lines. Developers of oil pipelines 
and transmission lines would now be required to obtain a 
``certificate of crossing'' for the cross-border segment of 
projects that cross the international boundary of the U.S. The 
definition of the cross-border segment, and thus what may be 
considered jurisdictional for the purposes of the certificate 
of crossing review, would be consistent with FERC's established 
procedures for review of NGA section 3 applications.\21\ The 
relevant official would issue the certificate of crossing 
unless it is found that the construction, connection, 
operation, or maintenance of border facilities comprising the 
cross-border segment is not in the public interest of the 
United States. Consistent with FERC's procedures, the cross-
border segment would be identified as the segment spanning from 
the international boundary to a physical feature within close 
proximity, such as a valve or meter. Cross-border natural gas 
pipelines still would be required to receive section 3 
approvals under the NGA. These projects also still would have 
to comply with all applicable federal, State, and local siting 
and environmental laws necessary for constructing and operating 
these projects.
---------------------------------------------------------------------------
    \21\See e.g., Bakken Hunter, (approved April 24, 2014), Houston 
Pipe Line (approved March 20, 201), and NET Mexico (approved November 
8, 2013).
---------------------------------------------------------------------------

                                Hearings

    The Subcommittee on Energy and Power held a hearing on H.R. 
3301, North American Energy Infrastructure Act, on October 29, 
2013. The Subcommittee received testimony from:
          Mr. Jeff C. Wright, Director, Office of 
        Energy Projects, Federal Energy Regulatory Commission;
          Mr. Mark Mills, Senior Fellow, Manhattan 
        Institute;
          Mr. David Mears, Commissioner, Department of 
        Environmental Conservation, State of Vermont;
          Mr. Paul C. Blackburn, Attorney, Regulatory 
        Consultant, Blackcreek Environmental Consulting;
          Mr. Jim Burpee, President and CEO, Canadian 
        Electricity Association;
          Ms. Mary J. Hutzler, Distinguished Senior 
        Fellow, Institute of Energy Research; and,
          Mr. John H. Kyles, Senior Attorney, Plains 
        All American Pipeline, L.P., on behalf of the 
        Association of Oil Pipe Lines.

                        Committee Consideration

    On November 19 and 20, 2013, the Subcommittee on Energy and 
Power met in open markup session and forwarded H.R. 3301, as 
amended, to the full Committee by a roll call vote of 19 yeas 
and 10 nays. On May 7 and 8, 2014, the Committee on Energy and 
Commerce met in open markup session and ordered H.R. 3301 
favorable reported to the House, as amended, by a roll call 
vote of 31 yeas and 19 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Upton to order H.R. 3301 favorably reported to 
the House, as amended, was agreed to by a roll call vote of 31 
ayes and 19 nays. The following reflects the recorded votes 
taken during the Committee consideration:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

         Statement of General Performance Goals and Objectives

    H.R. 3301 would eliminate the need for oil and gas 
pipelines and electric transmission lines that cross the U.S. 
border to Canada or Mexico to obtain a Presidential Permit. The 
legislation replaces the system of Executive Orders that 
pertain to approvals for cross-border oil and natural gas 
pipelines and transmission lines. Developers of oil pipelines 
and transmission lines will now have to obtain a ``certificate 
of crossing'' for cross-border projects. Cross-border natural 
gas pipelines would still have to receive section 3 approvals 
under the Natural Gas Act.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3301 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 3301 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                      May 29, 2014.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3301, the North 
American Energy Infrastructure Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 3301--North American Energy Infrastructure Act

    H.R. 3301 would make changes to permitting requirements for 
pipelines and other energy infrastructure at international 
borders. In particular, the bill would eliminate the existing 
requirement on sponsors of such infrastructure to obtain a 
Presidential permit. Instead, H.R. 3301 would require sponsors 
of oil pipelines and electric transmission projects that cross 
international borders to obtain a certificate of crossing from 
either the Secretary of State or the Secretary of Energy. Under 
H.R. 3301, sponsors of natural gas pipelines would not be 
required to obtain a certificate of crossing.
    CBO estimates that implementing H.R. 3301 would have no 
significant net effect on the federal budget. Relative to 
current law, we expect that any changes to administrative costs 
incurred by agencies responsible for regulating energy 
infrastructure would not exceed $500,000 in any year, assuming 
the availability of appropriated funds. Enacting H.R. 3301 
would not affect direct spending or revenues; therefore, pay-
as-you-go procedures do not apply.
    H.R. 3301 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Megan Carroll. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 3301 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 3301 
specifically directs no rule makings within the meaning of 5 
U.S.C. 551 to be completed.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 provides the short title for the legislation, the 
``North American Energy Infrastructure Act.''

Section 2. Finding

    Section 2 includes a congressional finding that the U.S. 
should establish a more uniform, transparent, and modern 
process for the construction and operation of oil or gas 
pipelines and electric transmission facilities for the import 
or export of oil, gas, or electricity to or from Canada and 
Mexico, in pursuit of a more secure and efficient North 
American energy market.

Section 3. Authorization of certain energy infrastructure projects at 
        the national boundary of the United States

    Section 3(a) creates a new approval process for oil 
pipelines and electric transmission facilities that cross the 
national boundary of the U.S. between Canada or Mexico. 
Specifically, no person may construct, connect, operate, or 
maintain a cross-border segment of an oil pipeline or electric 
transmission facility for the import or export of oil or the 
transmission of electricity to or from Canada or Mexico without 
obtaining a ``certificate of crossing.''
    Section 3(b)(1) provides that, within 120 days after final 
action under the National Environmental Policy Act, the 
relevant agency is required to issue a certificate of crossing 
for the cross-border segment unless the relevant agency finds 
that the construction of the cross-border segment is not in the 
public interest of the U.S.
    Section 3(b)(2) establishes that the Secretary of State 
will be responsible for the issuance of a certificate of 
crossing for oil pipelines and the Department of Energy for 
electric transmission facilities.
    Section 3(b)(3) provides that for electric transmission 
facilities, approval is contingent upon compliance with 
applicable Electric Reliability Organization, Regional 
Transmission Organization, and Independent System Operator 
policies and standards.
    Section 3(c) provides that no other approvals are necessary 
under any current Executives Orders. This approval process does 
not apply to any oil or gas pipelines or electric transmission 
facilities that (1) are operating across the national boundary 
at the date of enactment; (2) have previously received a 
Presidential Permit; (3) have previously been approved under 
this process; or (4) have an application pending on the date of 
enactment until the application is denied or until July 1, 
2016. No future approvals are needed under this process for 
modifications or changes of ownership. The restriction in 
section 3(c)(4) shall apply equally to a pending Presidential 
Permit application that is withdrawn and then subsequently re-
submitted for the same project (or a substantially similar 
project) for purposes of being covered under the Act.
    Section 3(d) provides that all other Federal statutes, 
including environmental laws and permits, sections 3 and 7 of 
the Natural Gas Act, and section 103(a) of the Energy Policy 
and Conservation Act, are not affected.

Section 4. Importation or exportation of natural gas to Canada and 
        Mexico

    Section 4 repeals the requirement under section 3(c) of the 
NGA that approval is needed from DOE for the export or import 
of natural gas to or from the U.S., Canada, or Mexico across 
the boundary of the U.S.

Section 5. Transmission of electric energy to Canada and Mexico

    Section 5 repeals the requirement under section 202(e) of 
the Federal Power Act requiring an export authorization from 
DOE to transmit electric energy from the U.S. to a foreign 
country.

Section 6. No Presidential Permit required

    Section 6 provides that no Presidential Permit (or similar 
permit) required under various Executive Orders shall be 
necessary for the construction, connection, operation, or 
maintenance of an oil or natural gas pipeline or electric 
transmission facility.

Section 7. Modifications to existing projects

    Section 7 provides that neither a certificate of crossing 
under section 3 nor a Presidential Permit described in section 
6 are required for a ``modification'' to the construction, 
connection, operation, or maintenance of an oil or natural gas 
pipeline or electric transmission facility.

Section 8. Effective date; rulemaking deadlines

    Section 6 establishes a July 1, 2015 effective date for 
sections 3 through 7. For the respective agencies responsible 
for carrying out the provisions in section 3, notices of 
proposed rulemaking are to be published in the Federal Register 
no later than 180 days after the date of enactment, and final 
rules are to be published in the Federal Register no later than 
1 year after the date of enactment.

Section 9. Definitions

    Section 9 sets forth definitions for the following terms: 
cross-border segment, modification, natural gas, oil, Electric 
Reliability Organization, and Independent System Operator, and 
Regional Transmission Organization.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, 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):

NATURAL GAS ACT

           *       *       *       *       *       *       *


        exportation or importation of natural gas; lng terminals

  Sec. 3. (a) * * *

           *       *       *       *       *       *       *

  (c) 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. No order is 
required under subsection (a) to authorize the export or import 
of any natural gas to or from Canada or Mexico.

           *       *       *       *       *       *       *

                              ----------                              


FEDERAL POWER ACT

           *       *       *       *       *       *       *


PART II--REGULATION OF ELECTRIC UTILITY COMPANIES ENGAGED IN INTERSTATE 
COMMERCE

           *       *       *       *       *       *       *


     interconnection and coordination of facilities; emergencies; 
                   transmission to foreign countries

  Sec. 202. (a) * * *

           *       *       *       *       *       *       *

  [(e) After six months from the date on which this Part takes 
effect, no person shall transmit any electric energy from the 
United States to a foreign country without first having secured 
an order of the Commission authorizing it to do so. The 
Commission shall issue such order upon application unless, 
after opportunity for hearing, it finds that the proposed 
transmission would impair the sufficiency of electric supply 
within the United States or would impede or tend to impede the 
coordination in the public interest of facilities subject to 
the jurisdiction of the Commission. The Commission may by its 
order grant such application in whole or in part, with such 
modifications and upon such terms and conditions as the 
Commission may find necessary or appropriate, and may from time 
to time, after opportunity for hearing and for good cause 
shown, make such supplemental orders in the premises as it may 
find necessary or appropriate.]
  (f) The ownership or operation of facilities for the 
transmission or sale at wholesale of electric energy which is 
(a) generated within a State and transmitted from that State 
across an international boundary and not thereafter transmitted 
into any other State, or (b) generated in a foreign country and 
transmitted across an international boundary into a State and 
not thereafter transmitted into any other State, shall not make 
a person a public utility subject to regulation as such under 
other provisions of this part. The State within which any such 
facilities are located may regulate any such transaction 
[insofar as such State regulation does not conflict with the 
exercise of the Commission's powers under or relating to 
subsection 202(e)].

           *       *       *       *       *       *       *

                              ----------                              


PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

           *       *       *       *       *       *       *


TITLE VI--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


SEC. 602. SEASONAL DIVERSITY ELECTRICITY EXCHANGE.

  (a) * * *
  (b) Permit.--Notwithstanding any transfer of functions under 
the first sentence of section 301(b) of the Department of 
Energy Organization Act, no permit referred to in subsection 
(a)(1)(B) may be issued unless [the Commission has conducted 
hearings and made the findings required under section 202(e) of 
the Federal Power Act and under the applicable execution order 
respecting the construction, operation, maintenance, or 
connection at the borders of the United States of facilities 
for the transmission of electric energy between the United 
States and a foreign country. Any finding of the Commission 
under an applicable executive order referred to in this 
subsection shall be treated for purposes of judicial review as 
an order issued under section 202(e) of the Federal Power Act.] 
the Secretary has conducted hearings and finds that the 
proposed transmission facilities would not impair the 
sufficiency of electric supply within the United States or 
would not impede or tend to impede the coordination in the 
public interest of facilities subject to the jurisdiction of 
the Secretary.

           *       *       *       *       *       *       *


               MINORITY, ADDITIONAL, OR DISSENTING VIEWS

    H.R. 3301 would substantially weaken the process for 
federal approval of oil and natural gas pipelines and electric 
transmission lines that cross the U.S. border with Canada or 
Mexico. The new process established by the bill effectively 
exempts such projects from environmental and safety review 
under the National Environmental Policy Act (NEPA) by narrowing 
NEPA applicability to just the sliver of the project actually 
crossing the border. The process created by the bill also tips 
the scale in favor of approving controversial projects by 
establishing a rebuttable presumption of approval. H.R. 3301 
would allow a project that is found not to be in the public 
interest under the current permitting process to reapply under 
the new weaker process, thereby reviving the Keystone XL tar 
sands pipeline if the Administration disapproves the pending 
application. The bill would exempt all modifications to 
existing cross-border pipelines, including major expansions of 
pipelines, from any requirement for federal review or approval. 
In addition, the bill allows for unlimited exports of liquefied 
natural gas (LNG) to any destination in the world as long as 
the LNG first goes through Canada or Mexico.
    The effect of these changes would be allow large and long-
lived cross-border energy projects to be approved with no 
understanding or consideration of their environmental impacts 
or to be exempted from any permitting requirement at all. The 
public, including communities and landowners directly affected 
by the projects, would have little or no information and no 
opportunity to object or request mitigating action, except to 
the extent provided under limited state laws in some states.

    II. CURRENT PERMITTING PROCESS FOR TRANSBOUNDARY ENERGY PROJECTS

    Proposed oil pipelines, natural gas pipelines, and electric 
transmission lines that cross the U.S. boundary with Mexico or 
Canada are required to obtain presidential permits pursuant to 
executive orders.\1\ Additional statutory requirements apply to 
trans-boundary natural gas pipelines and electric transmission 
lines, as well as to exports of natural gas and electricity 
commodities.
---------------------------------------------------------------------------
    \1\The executive branch authority to issue presidential permits for 
cross-border energy project derives from the President's constitutional 
authority to conduct foreign affairs. See Congressional Research 
Service, Presidential Permits for Border Crossing Energy Facilities 
(Oct. 29, 2013) (R43261).
---------------------------------------------------------------------------
A. Oil Pipelines
    In order to construct and operate an oil pipeline that 
crosses the U.S. boundary with Canada or Mexico, an applicant 
must obtain a presidential permit. The President has delegated 
the authority to permit cross-border oil pipeline projects to 
the State Department pursuant to Executive Orders 11423 and 
13337, which require an affirmative finding that a project is 
in the national interest.\2\ Prior to making the national 
interest determination, NEPA requires the State Department to 
prepare, with notice and public comment, an environmental 
impact statement that assesses impacts on the environment that 
would result from a project and evaluates alternatives that 
would avoid or minimize adverse environmental effects.\3\ 
Executive Order 13337 recognizes that these complex decisions 
involve matters within the expertise of multiple federal 
agencies, and it provides specified federal agencies 90 days to 
comment on the application.\4\
---------------------------------------------------------------------------
    \2\Exec. Order No. 11423, 33 Fed. Reg. 11741 (Aug. 16, 1968); Exec. 
Order No. 13337, 69 Fed. Reg. 25299 (Apr. 30, 2004).
    \3\National Environmental Policy Act of 1969, Pub. L. No. 94-83; 
U.S. Department of State, Draft Environmental Impact Statement for the 
Keystone XL Oil Pipeline Project, at 1-1 (Apr. 16, 2010) (online at 
keystonepipeline-xl.state.gov/documents/organization/182325.pdf).
    \4\Exec. Order No. 13337, Sec. 1(c), 69 Fed. Reg. 25299 (Apr. 30, 
2004).
---------------------------------------------------------------------------
B. Natural gas pipelines and exports
    In order to construct and operate a natural gas pipeline 
that crosses the U.S. boundary with Canada or Mexico, an 
applicant must obtain a presidential permit from the Federal 
Energy Regulatory Commission (FERC). Under Executive Order 
10485, FERC is authorized to issue a presidential permit if it 
finds the project ``to be consistent with the public interest'' 
and receives favorable recommendations from the Secretary of 
State and Secretary of Defense.\5\ FERC may set conditions on a 
permit to protect the public interest.
---------------------------------------------------------------------------
    \5\Exec. Order No. 10485, 18 Fed. Reg. 5397 (Sept. 3, 1953).
---------------------------------------------------------------------------
    A cross-border natural gas pipeline must also obtain FERC 
approval under section 3 of the Natural Gas Act. FERC is 
required to grant an application unless it finds that the 
proposed export will not be consistent with the public 
interest. Under FERC's regulations, an applicant applies for 
the Natural Gas Act approval and the presidential permit 
simultaneously in a single application package. One 
environmental review is performed for the entire submission.
    An entity seeking to export natural gas as a commodity 
through a pipeline or as liquefied natural gas must obtain 
approval from the Department of Energy (DOE). Under section 3 
of the Natural Gas Act, DOE is required to grant an application 
to export natural gas to a country without a free trade 
agreement with the United States unless it finds that the 
proposed export will not be consistent with the public 
interest. For export to countries with a free trade agreement 
(including Canada and Mexico), the Natural Gas Act requires DOE 
to deem such applications consistent with the public interest 
and grant them without modification or delay.
C. Electric transmission lines and electricity exports
    A presidential permit is required in order to construct and 
operate an electric transmission line that crosses the U.S. 
boundary with Canada or Mexico. Under Executive Order 10485, 
DOE is authorized to issue a presidential permit if it finds 
the project ``to be consistent with the public interest'' and 
receives favorable recommendations from the Secretary of State 
and Secretary of Defense.\6\ DOE makes the public interest 
determination ``by evaluating the electric reliability impacts, 
the potential environmental impacts, and any other factors that 
DOE may also consider relevant to the public interest.''\7\ An 
environmental analysis is required to comply with NEPA. DOE may 
set conditions on a permit to protect the public interest.
---------------------------------------------------------------------------
    \6\Id.
    \7\U.S. Department of Energy, Interpretative Guidance on the 
Requirements of 10 C.F.R. Sec. 205.322 (Jun. 2, 2011).
---------------------------------------------------------------------------
    Under section 202(e) of the Federal Power Act, the 
transmission of electricity from the U.S. to another country 
requires approval from DOE. DOE is required to approve an 
application unless it finds that the proposed transmission of 
electricity would ``impair the sufficiency of electric supply 
within the United States or would impede or tend to impede the 
coordination in the public interest of [electric] 
facilities.''\8\ DOE may set conditions on the approval.
---------------------------------------------------------------------------
    \8\Federal Power Act Sec. 202(e); 16 U.S.C. 824 a(e).
---------------------------------------------------------------------------

             III. SECTION-BY-SECTION ANALYSIS OF H.R. 3301

    Several sections in H.R. 3301 raise significant concerns. 
During full Committee markup, Chairman Fred Upton (R-MI) and 
Rep. Gene Green (D-TX) offered an amendment that substantially 
changed the language of the introduced bill but failed to 
address many of the concerns that had been raised by the 
minority. The committee accepted the amendment by a voice vote.
A. Section 3
    Section 3 of the bill, as amended, establishes a new 
permitting process for applicants seeking to construct, 
connect, operate, or maintain a cross-border segment of an oil 
pipeline or electric transmission facility for the purpose of 
importing or exporting oil or electricity from Canada or 
Mexico. This replaces the existing requirement that an entire 
trans-boundary project, not just a segment, obtain a 
presidential permit.
    Under the new process, the responsible federal agency--the 
Department of Energy for electric transmission lines and the 
Department of State for oil pipelines--must issue a 
``certificate of crossing'' for the cross-border segment of an 
oil pipeline or electric transmission facility within 120 days 
of final action under NEPA, unless the agency finds that the 
segment ``is not in the public interest of the United States.'' 
Unlike the existing process, this provision establishes a 
rebuttable presumption of approval, tipping the scale in favor 
of the project. Instead of requiring an agency to affirmatively 
find that a project is in the public interest, it shifts the 
burden of proof to opponents of the project to show that it is 
not in the public interest.
    A ``cross-border segment'' is defined as the portion of the 
project ``that is located at the national boundary.'' This 
language limits the requirement for federal approval to just a 
sliver of a much larger project--only that portion that 
physically crosses the border--and makes it more difficult for 
an agency to deny the application as contrary to the public 
interest.
    Section 3 temporarily excludes from the new permitting 
process any project with permit approval pending on the date of 
enactment. The exclusion ends when a pending project is denied, 
or, for any still-pending project, on July 1, 2016. Pending 
projects would become subject to the new permitting process 
when the exclusion ends, and any project that is denied a 
presidential permit before July 1, 2016, would be able to 
reapply under the new process.
    This has significant implications for the Keystone XL tar 
sands pipeline and other projects with pending applications for 
presidential permits. If a decision to issue a presidential 
permit for Keystone XL has not been made by July 1, 2016, the 
pipeline would then proceed under the new process, and it 
likely would be approved by November 1, 2016. If President 
Obama finds that the Keystone XL pipeline is not in the public 
interest and denies the presidential permit, then under this 
bill, TransCanada could reapply under the new weaker process.
    At the full Committee markup of H.R. 3301, Ranking Member 
Henry Waxman offered an amendment to keep projects with pending 
permit applications under the existing process. In introducing 
the amendment, Ranking Member Waxman noted that the bill's 
supporters assert that H.R. 3301 is not intended to fast-track 
approval of the Keystone XL pipeline. He explained that his 
amendment would ensure that the bill's text reflects those 
assurances. The amendment was defeated by a vote of 16-27.
    Section 3 also effectively exempts cross-border projects 
from meaningful environmental review under NEPA by dramatically 
narrowing the focus of that review. Under the bill, the 
approval process, and hence the NEPA review, applies only to 
``a cross-border segment'' of a much larger project. These 
trans-boundary pipelines and transmission lines are multi-
billion dollar infrastructure investments that can stretch 
hundreds of miles and last for decades. Before making decisions 
about whether to approve such projects, federal agencies should 
be required to carefully consider their potential impacts on 
the environment and on communities along their routes. Cross-
border projects pass through private property and sensitive 
lands and over important aquifers. They transport hazardous 
substances that, if spilled or ignited, can cause serious 
damage. They also have implications for climate change. Tar 
sands pipeline projects, such as Keystone XL, would facilitate 
more rapid expansion of the tar sands, the dirtiest source of 
crude available with respect to carbon pollution. Yet, despite 
NEPA, almost none of these impacts would be documented or 
considered under H.R. 3301's narrow definition of the project 
to be approved.
    During full Committee markup of H.R. 3301, Rep. John 
Dingell (D-MI) offered an amendment to ensure that the complete 
length of cross-border projects would be subject to full 
environmental review under NEPA. The amendment was defeated by 
a vote of 21-29.
B. Section 4
    Section 4 of the bill amends section 3 of the Natural Gas 
Act to eliminate the requirement to obtain DOE authorization 
for the export or import of natural gas to or from Canada or 
Mexico.
    This significantly alters the current approval process for 
LNG exports. Under current law, if a company seeks to export 
natural gas, it must first obtain approval from the Department 
of Energy. For countries without a free trade agreement with 
the United States, DOE examines whether the proposed export is 
in the public interest. For countries with a free trade 
agreement with the United States, including Canada and Mexico, 
DOE is required to deem export applications consistent with the 
public interest and grant them without delay. DOE testified 
that these applications are relatively simple filings, with DOE 
quickly responding within two to four weeks of a request.\9\ 
These approvals can include conditions, such as prohibitions 
against simply using Canada or Mexico as a pass-through before 
shipping the gas to another country.
---------------------------------------------------------------------------
    \9\House Committee on Energy and Commerce, Subcommittee on Energy 
and Power, Testimony of Michael Knotek, Deputy Under Secretary for 
Science and Energy, U.S. Department of Energy, Hearing on H.R. 3301, 
the ``North American Energy Infrastructure Act,'' 113th Cong. (Oct. 29, 
2013).
---------------------------------------------------------------------------
    The bill amends current law to completely exempt a company 
exporting natural gas to Canada or Mexico from any approval at 
all. This unnecessary change could have significant 
consequences. Under the bill, DOE would no longer be able to 
include any conditions on the approvals. As a result, this bill 
allows unrestricted exports of LNG to Canada or Mexico, and 
from there it could then be re-exported to any other country. 
These unlimited LNG exports through Canada and Mexico would no 
longer be subject to any DOE approval, review, or conditions. 
There would be no public interest determination or analysis of 
impacts on domestic natural gas prices or American consumers 
and manufacturers.
    During full Committee markup of H.R. 3301, Rep. Jerry 
McNerney (D-CA) offered an amendment to strike section 4 of the 
bill. The amendment was defeated by a voice vote.

C. Section 5

    Section 5 of the bill repeals section 202(e) of the Federal 
Power Act, which requires approval from DOE for the 
transmission of electricity from the U.S. to another country. 
According to the Federal Energy Regulatory Commission, the 
repeal of section 202(e) could have serious unintended 
consequences. The career Director of FERC's Office of Energy 
Projects testified that ``repeal could have an unintended 
potentially adverse effect on the Commission's ability to 
ensure non-discriminatory open access transmission service over 
the U.S. electric transmission grid.''\10\ Owners of 
transmission lines between the U.S. and Canada or Mexico ``thus 
could discriminate in providing service, or even deny service 
outright.'' Mr. Wright explained: ``Foreign generators could be 
denied access to United States markets, or required to pay 
discriminatory changes to access those markets, and U.S. 
generators could be denied access to foreign markets, or be 
required to pay discriminatory charges to access those 
markets.'' Thus, the bill could significantly disrupt 
electricity and transmission markets by undermining the basic 
rules governing those markets.
---------------------------------------------------------------------------
    \10\House Committee on Energy and Commerce, Subcommittee on Energy 
and Power, Testimony of Jeff C. Wright, Director, Office of Energy 
Projects, Federal Energy Regulatory Commission, Hearing on H.R. 3301, 
the ``North American Energy Infrastructure Act,'' 113th Cong. (Oct. 29, 
2013).
---------------------------------------------------------------------------

D. Section 6

    Section 6 of the bill eliminates the current requirement to 
obtain a presidential permit for the construction, connection, 
operation, or maintenance of an oil or natural gas pipeline or 
electric transmission facility, or any cross-border segment 
thereof. Instead, those wishing to construct, connect, operate, 
or maintain a cross-border segment of an oil pipeline or 
electric transmission facility must obtain approval under the 
new process described in section 3.
    Applicants for cross-boundary natural gas pipelines do not 
have to obtain approval under the new process but still must 
obtain approval from FERC under sections 3 and 7 of the Natural 
Gas Act. As a result, eliminating the presidential permit 
requirement for trans-boundary natural gas pipelines would not 
accelerate the permitting of such projects. Under existing law, 
the FERC approval process proceeds simultaneously with the 
presidential permitting process, which generally takes less 
time than the statutory approval. At the October 29, 2013, 
Energy and Power Subcommittee hearing on H.R. 3301, the career 
Director of FERC's Office of Energy Projects testified that the 
bill ``would not speed up the process'' for natural gas 
pipelines.\11\
---------------------------------------------------------------------------
    \11\Id.
---------------------------------------------------------------------------

E. Section 7

    Section 7 of the bill provides that applicants do not have 
to obtain a certificate of crossing under section 3 or a 
presidential permit for pipeline or transmission line 
``modifications.'' Section 9 of the bill defines 
``modifications'' to include ``reversal of flow direction, 
change in ownership, volume expansion, downstream or upstream 
interconnection, or adjustment to maintain flow (such as a 
reduction or increase in the number of pump or compressor 
stations.'' This exemption applies to modifications of any 
cross-border energy facility that is operating as of the date 
of enactment or that has received a presidential permit under 
the existing process or a certificate of crossing under the new 
process.
    As a result, controversial modifications to existing cross-
border pipelines or transmission lines would not require 
federal approval and would not be subject to any environmental 
review under NEPA.
    Many modifications, as defined by this bill, could have 
environmental impacts just as significant as those resulting 
from an entirely new project. For example, Enbridge has 
submitted an application to the State Department to amend its 
presidential permit to allow the expansion of the Alberta 
Clipper tar sands pipeline from 450,000 barrels per day (bpd) 
to 880,000 bpd.\12\ The pipeline runs from Hardisty, Alberta to 
a border crossing in North Dakota, and continues for 327 miles 
through North Dakota and Minnesota to Superior, Wisconsin. The 
Alberta Clipper expansion project is highly controversial due 
to concerns about increased dependence on tar sands crude and 
local impacts, including spills. This expansion also would 
significantly increase the carbon pollution associated with the 
pipeline.
---------------------------------------------------------------------------
    \12\Enbridge Energy, Application of Enbridge Energy, Limited 
Partnership for an amendment to the August 3, 2009 Presidential Permit 
for Line 67 to increase the operational capacity of pipeline facilities 
at the international boundary between Canada and the United States 
(Dec. 21, 2012) (online at www.state.gov/documents/organization/
202645.pdf ).
---------------------------------------------------------------------------
    Pipeline reversals also carry substantial environmental 
risks that should be evaluated before approval. For example, 
the 600,000 bpd Portland-Montreal pipeline currently carries 
light sweet crude from Maine to Montreal, but it is widely 
expected that the pipeline will soon apply for authorization 
for a reversal.\13\ Reversal of this pipeline would complete a 
project to bring tar sands crude from Canada through New 
Hampshire and Vermont to Portland, Maine, where it would be 
loaded onto tankers for further transport. The Portland-
Montreal pipeline reversal is highly controversial due to 
concerns about increased dependence on tar sands crude and 
local impacts, including the impact of a spill on local 
economies that are dependent on tourism linked to outdoor 
recreation. The Governors of New Hampshire and Vermont have 
written to the State Department to request a thorough 
environmental review, and 42 towns and municipalities have 
passed resolutions opposing the project.\14\
---------------------------------------------------------------------------
    \13\See, e.g., Pipeline plan to send crude from Montreal to Maine 
raises ire in New England, Financial Post (May 22, 2013); Natural 
Resources Defense Council, Going in Reverse: The Tar Sands Oil Threat 
to Central Canada and New England (Jul. 3, 2013) (online at 
www.nrdc.org/energy/going-in-reverse.asp).
    \14\State of New Hampshire, Governor Hassan Calls on Federal 
Government to Protect NH from Potentially Dangerous Tar Sands Oil 
Pipeline (Apr. 22, 2013) (online at www.governor.nh.gov/media/news/
2013/pr-2013-04-22-tar-sands.htm); State of Vermont, Gov. Shumlin Calls 
for New Federal Review of Proposed Tar Sands Pipeline Route (Jun. 20, 
2013) (online at governor.vermont.gov/blog-gov-shumlin-urges-sec-john-
kerry-pipeline-review); National Wildlife Federation, Vermont Towns 
Protect Wildlife and Vote No' on Tar Sands (Mar. 6, 2014) (online at 
blog.nwf.org/2014/03/vermont-towns-protect-wildlife-and-vote-no-on-tar-
sands/).
---------------------------------------------------------------------------
    During full Committee markup of H.R. 3301, Rep. Peter Welch 
(D-VT) offered an amendment to limit the permit exemption for 
modifications to only ``minor modifications,'' such as a change 
in ownership. Rep. Welch withdrew the amendment after Chairman 
Upton committed to working with Rep. Welch to try to address 
his concerns.
    For the reasons stated above, we dissent from the views 
contained in the Committee's report.
                                   Henry A. Waxman.
                                   Bobby L. Rush.