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115th Congress   }                                             {   Report
                         HOUSE OF REPRESENTATIVES
 2d Session      }                                             {  115-842

======================================================================



 
           ENSURING SMALL SCALE LNG CERTAINTY AND ACCESS ACT

                                _______
                                

 July 18, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4606]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4606) to provide that applications under the 
Natural Gas Act for the importation or exportation of small 
volumes of natural gas shall be granted without modification or 
delay, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Committee Action.................................................     4
Committee Votes..................................................     5
Oversight Findings and Recommendations...........................     7
New Budget Authority, Entitlement Authority, and Tax Expenditures     7
Congressional Budget Office Estimate.............................     7
Federal Mandates Statement.......................................     8
Statement of General Performance Goals and Objectives............     8
Duplication of Federal Programs..................................     8
Committee Cost Estimate..........................................     9
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     9
Disclosure of Directed Rule Makings..............................     9
Advisory Committee Statement.....................................     9
Applicability to Legislative Branch..............................     9
Section-by-Section Analysis of the Legislation...................     9
Changes in Existing Law Made by the Bill, as Reported............     9
Dissenting Views.................................................    13

    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 ``Ensuring Small Scale LNG Certainty and 
Access Act''.

SEC. 2. SMALL SCALE EXPORTATION OR IMPORTATION OF NATURAL GAS.

  Section 3(c) of the Natural Gas Act (15 U.S.C. 717b(c)) is amended--
          (1) by striking ``For purposes'' and inserting ``(1) For 
        purposes''; and
          (2) by adding at the end the following:
  ``(2) For purposes of subsection (a), and in addition to any 
importation or exportation of natural gas described in paragraph (1), 
importation or exportation of natural gas shall be deemed to be 
consistent with the public interest, and an application for such 
importation or exportation shall be granted without modification or 
delay, if--
          ``(A) the application for such importation or exportation 
        proposes to import or export a volume of natural gas that does 
        not exceed 0.14 billion cubic feet per day; and
          ``(B) the Commission's approval of such application does not 
        require an environmental impact statement or an environmental 
        assessment under the National Environmental Policy Act of 
        1969.''.

                          Purpose and Summary

    H.R. 4606, Ensuring Small Scale LNG Certainty and Access 
Act was introduced by Rep. Bill Johnson on December 12, 2017. 
H.R. 4606 expedites the approval process for applications to 
import and export small quantities of natural gas that qualify 
for a categorical exclusion under the National Environmental 
Policy Act (NEPA).

                  Background and Need for Legislation

    American innovation and advancements in drilling 
technologies have allowed the United States to become the 
world's leading producer of oil and gas, putting the nation on 
track to become a net energy exporter by 2026.\1\ Natural gas 
production is at an all-time high, and reserves are so large 
that they are predicted to meet domestic demand for almost a 
century.\2\ For 60 years, the U.S. has been a natural gas 
importer; however, with rising domestic production and 
relatively low prices, U.S. natural gas exports, including 
liquefied natural gas (LNG) exports, now exceed imports.\3\ 
While the U.S. has been exporting natural gas through pipelines 
for decades, the first large scale exports of LNG on ships 
began in 2016 from the Sabine Pass export facility in 
Louisiana, followed by the Cove Point facility in Maryland in 
2018.\4\ Four additional LNG export facilities are currently 
under construction, with an expected total capacity of 9.6 
billion cubic feet per day (Bcf/d) by the end of 2019. 
According to data compiled by the Department of Energy (DOE), 
the majority of LNG exports to date were delivered to customers 
in Latin America and Asia.\5\
---------------------------------------------------------------------------
    \1\See EIA, Annual Energy Outlook 2017.
    \2\U.S. dry natural gas production averaged 73.6 Bcf/d in 2017. See 
EIA, Short-Term Energy Outlook, July 12, 2018. EIA estimates that as of 
January 1, 2015, there were about 2,462 trillion cubic feet (Tcf) of 
technically recoverable resources of dry natural gas in the United 
States. At the rate of U.S. dry natural gas consumption in 2016 of 
about 27.5 Tcf per year, the United States has enough natural gas to 
last about 90 years. See EIA, Frequently Asked Questions.
    \3\In August 2017, total U.S. natural gas liquefaction capacity in 
the Lower 48 states increased to 2.8 billion cubic feet per day (Bcf/d) 
following the completion of the fourth liquefaction unit at the Sabine 
Pass LNG terminal in Louisiana. With increasing liquefaction capacity 
and utilization, U.S. LNG exports averaged 1.9 Bcf/d, and capacity 
utilization averaged 80% this year, based on data through November. 
See: EIA, Today in Energy, August 9, 2017 and December 7, 2017.
    \4\See EIA, U.S. Natural Gas Pipeline Exports and Liquefied U.S. 
Natural Gas Exports.
    \5\See DOE, LNG Reports. Available at: https://energy.gov/fe/
listings/lng-reports.
---------------------------------------------------------------------------
    The Department of Energy exercises jurisdiction over the 
import and export of natural gas, with authorities derived from 
section 3 of the Natural Gas Act (NGA) and section 301(b) of 
the DOE Organization Act. Section 3(a) of the NGA sets forth 
the standard of review of most LNG export applications:

          [N]o person shall export any natural gas from the 
        United States to a foreign country or import any 
        natural gas from a foreign country without first having 
        secured an order of the [Secretary of Energy] 
        authorizing it to do so. The [Secretary] shall issue 
        such order upon application, unless after opportunity 
        for hearing, [he] finds that the proposed exportation 
        or importation will not be consistent with the public 
        interest. The [Secretary] may by [the Secretary's] 
        order grant such application, in whole or part, with 
        such modification and upon such terms and conditions as 
        the [Secretary] may find necessary or appropriate.\6\
---------------------------------------------------------------------------
    \6\See Section 3 of the Natural Gas Act (15 U.S.C. Sec. 717b).

    Thus, section 3(a) creates a rebuttable presumption that a 
proposed export of natural gas is in the public interest. 
Section 3(c) creates a different standard of review for 
applications to export natural gas, including LNG, to countries 
with which the U.S. has in effect a free trade agreement (FTA) 
requiring the national treatment for trade in natural gas. 
Section 3(c) requires such applications to be deemed consistent 
with the public interest, and requires such applications to be 
granted without modification or delay.
    DOE's review of applications to export LNG to non-FTA 
countries is conducted through a public process. While section 
3(a) establishes a broad public interest standard and 
presumption favoring export authorizations, the statute does 
not define ``public interest'' or identify criteria that must 
be considered. In prior decisions, DOE has identified a range 
of factors that it evaluates when reviewing applications for 
export authorizations, including economic impacts, 
international impacts, security of natural gas supply, and 
environmental impacts, among others. In 2012 and again in 2015, 
DOE released studies to assess the macroeconomic impacts of LNG 
exports to inform the decisions on export applications.\7\ 
These studies generally conclude that LNG exports would provide 
positive net economic benefits to the U.S.
---------------------------------------------------------------------------
    \7\See DOE, LNG Export Studies. Available at: https://energy.gov/
fe/downloads/lng-export-studies.
---------------------------------------------------------------------------
    On September 1, 2017, DOE issued a notice of proposed 
rulemaking to revise its regulations to provide for faster 
approval of small-scale exports of natural gas, including LNG. 
The U.S. small-scale LNG export market involves exports of 
small volumes of natural gas, primarily to countries in the 
Caribbean, Central America, and South America. The proposed 
rule provides that DOE, upon receipt of any complete 
application to export natural gas (including LNG) to non-free 
trade agreement countries, will grant the application provided 
that the application meets two criteria: the application 
proposes to export no more than 0.14 Bcf/day and the proposed 
export qualifies for a categorical exclusion under DOE's NEPA 
regulations. For applications meeting these criteria, the 
exports are considered ``small-scale natural gas exports'' and 
are deemed to be in the public interest under the NGA. Exports 
of natural gas to free trade agreement countries are already 
deemed to be in the public interest under the Act.
    H.R. 4606 amends the NGA to provide DOE with authority to 
deem small-scale natural gas imports and exports consistent 
with the public interest and grant approval without 
modification or delay, provided that the application proposes 
to export no more than 0.14 Bcf/d, and the proposed exports 
does not require an environmental impact statement or an 
environmental assessment under NEPA. It is the Committee's 
expectation that a proposed small-scale export must qualify for 
a categorical exclusion under NEPA in order to be considered 
for expedited treatment. DOE has, by regulation, determined 
that categorical exclusions do not individually or cumulatively 
have a significant effect on the environment.
    As the Committee's legislative hearing record demonstrates, 
H.R. 4606 would provide greater regulatory certainty and a 
clear timetable for moving forward with capital intensive 
projects that create American jobs. In testimony before the 
Committee, DOE Assistant Secretary Steven Winberg stated that 
H.R. 4606 would ``have qualifying applications granted without 
modification or delay, saving several months of review time at 
a minimum.'' Charlie Riedl, Executive Director of the Center 
for Liquefied Natural Gas, testified in support of the 
legislation on behalf of LNG producers, terminal operators, and 
developers. Mr. Riedl stated that ``[a]dvancing this 
legislation will provide greater certainty in the permitting 
process for LNG facilities, thereby accelerating America's rise 
as a world-class exporter of natural gas, creating U.S. jobs, 
growing our economy, significantly strengthening global energy 
security all while reducing emissions and pollution.''
    The Committee finds that applications to import and export 
small quantities of natural gas that also qualify for a 
categorical exclusion under NEPA are consistent with the public 
interest and should be granted without modification or delay. 
H.R. 4606 amends section (3c) of the NGA to achieve this 
objective, while preserving existing environmental laws and 
regulations. H.R. 4606 specifies that only applications for a 
volume of gas that does not exceed 0.14 Bcf/day qualify for 
expedited treatment. To put this relatively small quantity in 
context, the Energy Information Administration (EIA) reports 
that U.S. dry natural gas production averaged 73.6 Bcf/day in 
2017, and EIA forecasts dry natural gas production will average 
80.5 Bcf/d in 2018, establishing a new record.\8\
---------------------------------------------------------------------------
    \8\See EIA, Short-Term Energy Outlook. Released May 8, 2018.
---------------------------------------------------------------------------

                            Committee Action

    On January 19, 2018, the Subcommittee on Energy held a 
hearing on H.R. 4606 entitled ``Legislation Addressing LNG 
Exports and PURPA Modernization.'' The Subcommittee received 
testimony from:
           Steven Winberg, Assistant Secretary for 
        Fossil Energy, Department of Energy;
           James Danly, General Counsel, Federal Energy 
        Regulatory Commission;
           Charlie Riedl, Executive Director, Center 
        for Liquefied Natural Gas;
           Timothy Sparks, Vice President of Electric 
        Grid Integration, CMS Energy;
           Karl Rabago Executive Director, Pace Energy 
        and Climate Center;
           Travis Kavulla, Vice Chairman, Montana 
        Public Service Commission; and,
           Paul Cicio, President, Industrial Energy 
        Consumers of America.
    On April 18, 2018, the Subcommittee on Energy met in open 
markup session and forwarded H.R. 4606, without amendment, to 
the full Committee by a record vote of 19 yeas and 14 nays. On 
May 9, 2018, the full Committee on Energy and Commerce met in 
open markup session and ordered H.R. 4606, as amended, 
favorably reported to the House by a record vote of 35 yeas and 
15 nays.

                            Committee Votes

    Clause 3(b) of rule XIII requires the Committee to list the 
recorded votes on the motion to report legislation and 
amendments thereto. The following reflects the record votes 
taken during the Committee consideration:


                 Oversight Findings and Recommendations

    Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII, the Committee held a hearing and made findings that 
are reflected in this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII, the Committee 
finds that H.R. 4006 would result in no new or increased budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                  Congressional Budget Office Estimate

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

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 23, 2018.
Hon. Greg Walden,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4606, the Ensuring 
Small Scale LNG Certainty and Access Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jeff LaFave.
            Sincerely,
                                             Mark P. Hadley
                                        (For Keith Hall, Director).
    Enclosure.

H.R. 4606--Ensuring Small Scale LNG Certainty and Access Act

    H.R. 4606 would require the Department of Energy (DOE) to 
approve any application to export or import less than 0.14 
billion cubic feet (bcf) of natural gas per day to or from any 
country with which the United States does not have an 
applicable free trade agreement (FTA). CBO expects that 
expediting those applications would reduce the time to approve 
them by several months, which could affect both the number of 
applications and the volume of gas exported and imported.
    Changes in the price of gas, in the level of production of 
gas on federal lands, or a combination of the two could change 
the payments associated with production 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), CBO estimates that any increase in the production of 
gas on federal lands would be small.
    Using information provided by DOE, CBO also estimates that 
expediting applications to import small quantities of gas would 
have negligible effects on the price and quantity of gas 
produced in the United States, primarily because the quantity 
of gas imported from non-FTA countries has been very small in 
recent years. Over the 2013-2017 period, imports from those 
countries average 0.27 bcf per day (about 0.3 percent of the 
amount of gas produced domestically over that period). In 
addition, CBO expects that any effects from increased imports 
would probably be offset by the effects of increased exports. 
In 2017, imports from non-FTA countries totaled less than one-
seventh of the amount of exports to those countries, and CBO 
expects that the United States will continue to be a net 
exporter to non-FTA countries over the next 10 years.
    Because enacting H.R. 4606 could affect direct spending, 
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 H.R. 4606 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 4606 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    On April 12, 2018, CBO transmitted a cost estimate for S. 
1981, the Small Scale LNG Access Act of 2017, as ordered 
reported by the Senate Committee on Energy and Natural 
Resources on March 8, 2018. The two bills contain similar 
provisions, and CBO's estimates of their budgetary effects are 
the same.
    The CBO staff contact for this estimate is Jeff LaFave. The 
estimate was reviewed by H. Samuel Papenfuss, 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.

         Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to 
expedite the approval process for applications to import and 
export small quantities of natural gas that qualify for a 
categorical exclusion under NEPA.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 4006 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

                        Committee Cost Estimate

    Pursuant to clause 3(d)(1) of rule XIII, 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.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 5239 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                  Disclosure of Directed Rule Makings

    Pursuant to section 3(i) of H. Res. 5, the Committee finds 
that H.R. 4006 contains no directed rule makings.

                      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 that the Act may be cited as the 
``Ensuring Small Scale LNG Certainty and Access Act.''

Section 2. Small scale exportation or importation of natural gas

    Section 2 amends section 3(c) of the NGA to provide that 
applications for importation or exportation of natural gas 
shall be deemed to be consistent with the public interest and 
an application shall be granted without modification or delay, 
if the following two criteria are met: the application proposes 
to import or export a volume of natural gas that does not 
exceed 0.14 Bcf/day and the proposal qualifies for a 
categorical exclusion under NEPA regulations.

         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, and 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) After six months from the date on which this act 
takes effect no person shall export any natural gas from the 
United States to a foreign country or import any natural gas 
from 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 exportation or 
importation will not be consistent with the public interest. 
The Commission may by its order grant such application, in 
whole or in part, with such modification 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 order 
in the premises as it may find necessary or appropriate.
  (b) With respect to natural gas which is imported into the 
United States from a nation with which there is in effect a 
free trade agreement requiring national treatment for trade in 
natural gas, and with respect to liquefied natural gas--
          (1) the importation of such natural gas shall be 
        treated as a ``first sale'' within the meaning of 
        section 2(21) of the Natural Gas Policy Act of 1978; 
        and
          (2) the Commission shall not, on the basis of 
        national origin, treat any such imported natural gas on 
        an unjust, unreasonable, unduly discriminatory, or 
        preferential basis.
  (c) [For purposes] (1) 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) For purposes of subsection (a), and in addition to any 
importation or exportation of natural gas described in 
paragraph (1), importation or exportation of natural gas shall 
be deemed to be consistent with the public interest, and an 
application for such importation or exportation shall be 
granted without modification or delay, if--
          (A) the application for such importation or 
        exportation proposes to import or export a volume of 
        natural gas that does not exceed 0.14 billion cubic 
        feet per day; and
          (B) the Commission's approval of such application 
        does not require an environmental impact statement or 
        an environmental assessment under the National 
        Environmental Policy Act of 1969.
  (d) Except as specifically provided in this Act, nothing in 
this Act affects the rights of States under--
          (1) the Coastal Zone Management Act of 1972 (16 
        U.S.C. 1451 et seq.);
          (2) the Clean Air Act (42 U.S.C. 7401 et seq.); or
          (3) the Federal Water Pollution Control Act (33 
        U.S.C. 1251 et seq.).
  (e)(1) The Commission shall have the exclusive authority to 
approve or deny an application for the siting, construction, 
expansion, or operation of an LNG terminal. Except as 
specifically provided in this Act, nothing in this Act is 
intended to affect otherwise applicable law related to any 
Federal agency's authorities or responsibilities related to LNG 
terminals.
  (2) Upon the filing of any application to site, construct, 
expand, or operate an LNG terminal, the Commission shall--
          (A) set the matter for hearing;
          (B) give reasonable notice of the hearing to all 
        interested persons, including the State commission of 
        the State in which the LNG terminal is located and, if 
        not the same, the Governor-appointed State agency 
        described in section 3A;
          (C) decide the matter in accordance with this 
        subsection; and
          (D) issue or deny the appropriate order accordingly.
  (3)(A) Except as provided in subparagraph (B), the Commission 
may approve an application described in paragraph (2), in whole 
or part, with such modifications and upon such terms and 
conditions as the Commission find necessary or appropriate.
  (B) Before January 1, 2015, the Commission shall not--
          (i) deny an application solely on the basis that the 
        applicant proposes to use the LNG terminal exclusively 
        or partially for gas that the applicant or an affiliate 
        of the applicant will supply to the facility; or
          (ii) condition an order on--
                  (I) a requirement that the LNG terminal offer 
                service to customers other than the applicant, 
                or any affiliate of the applicant, securing the 
                order;
                  (II) any regulation of the rates, charges, 
                terms, or conditions of service of the LNG 
                terminal; or
                  (III) a requirement to file with the 
                Commission schedules or contracts related to 
                the rates, charges, terms, or conditions of 
                service of the LNG terminal.
  (C) Subparagraph (B) shall cease to have effect on January 1, 
2030.
  (4) An order issued for an LNG terminal that also offers 
service to customers on an open access basis shall not result 
in subsidization of expansion capacity by existing customers, 
degradation of service to existing customers, or undue 
discrimination against existing customers as to their terms or 
conditions of service at the facility, as all of those terms 
are defined by the Commission.
  (f)(1) In this subsection, the term ``military 
installation''--
          (A) means a base, camp, post, range, station, yard, 
        center, or homeport facility for any ship or other 
        activity under the jurisdiction of the Department of 
        Defense, including any leased facility, that is located 
        within a State, the District of Columbia, or any 
        territory of the United States; and
          (B) does not include any facility used primarily for 
        civil works, rivers and harbors projects, or flood 
        control projects, as determined by the Secretary of 
        Defense.
  (2) The Commission shall enter into a memorandum of 
understanding with the Secretary of Defense for the purpose of 
ensuring that the Commission coordinate and consult with the 
Secretary of Defense on the siting, construction, expansion, or 
operation of liquefied natural gas facilities that may affect 
an active military installation.
  (3) The Commission shall obtain the concurrence of the 
Secretary of Defense before authorizing the siting, 
construction, expansion, or operation of liquefied natural gas 
facilities affecting the training or activities of an active 
military installation.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    Since 2011, companies have filed more than 50 applications 
with the Department of Energy (DOE) to export liquefied natural 
gas (LNG). To date, DOE has granted final authorizations for 
LNG exports to non-Free Trade Agreement (FTA) countries on 29 
applications.\1\ The approved applications authorize the export 
of 21.35 billion cubic feet per day (Bcf/d) of natural gas to 
non-FTA countries,\2\ and the pending applications collectively 
seek to export an additional 32.68 Bcf/d of LNG.
---------------------------------------------------------------------------
    \1\Department of Energy, Long Term Applications Received by DOE/FE 
to Export Domestically Produced LNG from Lower-48 States (Jun. 26, 
2018) (www.energy.gov/sites/prod/files/2018/06/f53/
Summary%20of%20LNG%20Export%20Applications_0.pdf).
    \2\DOE includes authorizations for export of compressed natural gas 
in this estimate.
---------------------------------------------------------------------------
    In 2017, DOE proposed a rule to expedite approval of 
``small-scale natural gas exports.''\3\ The rule would deem 
small-scale exports to non-FTA countries to be in the public 
interest, so long as applications propose to export LNG at a 
volume of not more than 0.14 Bcf/d and DOE's approval of the 
application would not require an environmental review under the 
National Environmental Policy Act (NEPA).\4\ DOE will grant 
applications meeting the criteria on an expedited basis, 
without the need for notice or comment. DOE asserts ``this 
proposed rule, and the 45-day comment period for this proposed 
rule, would constitute the notice and opportunity for hearing 
on all prospective small-scale natural gas export 
applications.''\5\ The small-scale LNG rule was expected to be 
finalized in May.\6\
---------------------------------------------------------------------------
    \3\Department of Energy, Small-Scale Natural Gas Exports, 82 Fed. 
Reg. 41570 (Sept. 1, 2017) (proposed rule).
    \4\DOE may determine that an application qualifies for a 
categorical exclusion from the preparation or adoption of an 
environmental impact statement or environmental assessment under NEPA. 
DOE's list of categorical exclusions can be found at 10 CFR part 
1021.410, appendices A and B.
    \5\See Department of Energy, Small-Scale Natural Gas Exports, 82 
Fed. Reg. 41570 at 41573 (Sept. 1, 2017).
    \6\Office of Management and Budget, Office of Information and 
Regulatory Affairs, View Rule--Small-Scale Natural Gas Exports (Section 
610 Review) (www.reginfo.gov/public/do/
eAgendaViewRule?publd=201804&RIN;=1901-AB43) (accessed Jul. 12, 2018).
---------------------------------------------------------------------------

                         ANALYSIS OF H.R. 4606

    H.R. 4606 amends NGA section 3(c) to deem applications for 
``importation or exportation of a volume of natural gas that 
does not exceed 0.14 billion cubic feet per day'' to be in the 
public interest. A project must also qualify for a NEPA 
categorical exclusion to take advantage of the bill's 
provisions.
    This bill is ostensibly intended to codify DOE's small-
scale LNG rule; however, proponents have not justified the need 
for swift Congressional action on a proposed rule that is in 
the process of being finalized. There are drawbacks to 
codifying a proposed rule with such a prescriptive volume 
requirement. For example, should the circumstance arise where 
exporting 0.14 Bcf/d of LNG is no longer in the public 
interest, then Congress would have to enact a new law to make 
any changes. And, based on DOE's requests for public input on 
the appropriate volume limit for a small-scale application, 
there is more than a remote likelihood that the volume limit of 
0.14 Bcf/d could change in DOE's final rule.
    The policy goals and priorities of the proposed small-scale 
LNG rule are also concerning. It declares that all small-scale 
exports are always in the public interest, and removes 
longstanding consumer protections. It also prevents the public 
from having an opportunity to know about or provide input on 
export proposals and violates the public hearing requirements 
of the NGA. Most importantly, there continues to be no 
justification for any of these changes to the existing approval 
process.\7\
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    \7\Sierra Club, Comments on the Department of Energy's proposed 
``Small-Scale Natural Gas Exports'' (Oct. 16, 2017) 
(www.regulations.gov/document?D=DOE-HQ-2017-0018-0077); Industrial 
Energy Consumers of America, Comments on the Department of Energy's 
proposed ``Small-Scale Natural Gas Exports'' (Oct. 16, 2017) 
(www.regulations.gov/document?D=DOE-HQ-2017-0018-0065).
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    Significantly, the proposal fails to prevent applicants 
from using this new process to evade the public interest 
determinations required for large-scale exports. Because there 
is no limit on the number of small-scale applications an entity 
can have, an applicant could skirt requirements for larger 
exports by segmenting a proposal into smaller pieces.
    An unrestricted export policy could lead to even higher 
levels of LNG exports, which could have significant impacts on 
domestic natural gas prices and adversely affect American 
consumers and manufacturers. Unfettered exports would 
exacerbate climate change by incenting widespread fossil fuel 
extraction and displacing carbon-free sources of power.\8\ High 
methane leak rates and increased demand would likely offset any 
climate benefits associated with natural gas use.\9\ To 
undertake such a policy at a time when the methane pollution 
level from U.S. oil and gas operations ``could warm the planet 
as much as coal in the short term'' is completely reckless.\10\
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    \8\Christine Shearer et al, Enviromnental Research Letters, The 
effect of natural gas supply on US renewable energy and C02 emissions 
(Sept. 24, 2014) (iopscience.iop.org/article/10.1088/1748-9326/9/9/
094008).
    \9\Alexander Q. Gilbert and Benjamin K. Sovacool, Energy, US 
liquefied natural gas (LNG) exports: Boom or bust for the global 
climate? (Dec. 15, 2017) (doi.org/10.1016/j.energy.2017.11.098).
    \10\Ramon Alvarez, et al., Science, Assessment of methane emissions 
from the U.S. oil and gas supply chain (Jun. 21, 201) 
(science.sciencemag.org/content/early/2018/06/20/science.aar7204); The 
Natural Gas Industry Has a Leak Problem, New York Times (Jun. 21, 2018) 
(www.nytimes.com/2018/06/21/climate/methane-leaks.html?smid=tw-
nytclimate&smtyp;=cur).
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                               CONCLUSION

    Ultimately, H.R. 4606 is a bill in search of a problem. It 
would prematurely and unnecessarily enshrine a Trump 
Administration pro-fossil fuel proposed rule into law. 
Approving another bill to expand natural gas exports would 
incent widespread fossil fuel extraction and higher domestic 
natural gas prices, with serious climate, public health, and 
economic consequences for American consumers and manufacturers.
    For the reasons stated above, we dissent from the views 
contained in the Committee's report.
                                   Frank Pallone, Jr.,
                                           Ranking Member.
                                   Bobby Rush,
                                           Ranking Member,
                                           Subcommittee on Energy.