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                                                        Calendar No. 175
                                                       
116th Congress   }                                            {    Report
                                  SENATE
 1st Session     }                                            {    116-73

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



 
                   SMALL SCALE LNG ACCESS ACT OF 2019

                                _______
                                

                August 16, 2019.--Ordered to be printed

  Filed, under authority of the order of the Senate of August 1, 2019

                                _______
                                

        Ms. Murkowski, from the Committee on Energy and Natural 
                   Resources, submitted the following

                              R E P O R T

                         [To accompany S. 816]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 816), to amend the Natural Gas Act to 
expedite approval of exports of small volumes of natural gas, 
and for other purposes, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                Purpose

    The purpose of S. 816 is to amend the Natural Gas Act (NGA, 
Public Law 75-688) to expedite approval of exports of small 
volumes of natural gas.

                          Background and Need

    The Department of Energy (DOE) exercises regulatory 
authority to review and approve applications for the export of 
natural gas under the section 3 of the NGA. Section 3(a) of the 
NGA provides, among other things, that no person shall export 
natural gas from the United States to a foreign country without 
first having secured an order authorizing it to do so. It also 
requires that the Secretary of Energy (Secretary) issue the 
order authorizing the export unless the Secretary finds the 
export will not be consistent with the public interest.
    Section 3(c) of the NGA currently provides a statutory 
determination that exports of natural gas to any nation with 
which there is in effect a free trade agreement requiring 
national treatment for trade in natural gas are in the public 
interest, eliminating any need for the Secretary to make that 
determination on a case-by-case basis. In addition, section 
3(c) requires the Secretary to issue an order for the export of 
natural gas to nations with which there is a free trade 
agreement in effect ``without modification or delay.''
    S. 816 extends the section 3(c) statutory public interest 
determination and the requirement that an export order be 
granted without modification or delay to exports of small 
volumes of natural gas--51.75 billion cubic feet per year, or 
less--to any nation not subject to trade sanctions. S. 816 is 
intended to enable U.S. exports to compete more effectively in 
emerging markets for liquefied natural gas (LNG).
    A 2018 DOE final rule (10 C.F.R. 590.102 and 590.208) 
established that exports of 51.75 billion cubic feet per year 
or less of natural gas to any nation are in the public 
interest, and that completed applications for exports meeting 
this criteria and eligible for a National Environmental Policy 
Act (Public Law 91-190) categorical exclusion will be granted. 
S. 816 is similar to that rule as it would require the 
Secretary to issue an order for small volume exports (51.75 
billion cubic feet per year, or less) to any nation not subject 
to trade sanctions ``without modification or delay,'' without 
regard to whether the export is eligible for a categorical 
exclusion.
    The growth in domestic natural gas production, including 
from shale, has reduced natural gas prices for domestic 
consumers and provided an opportunity for LNG exports. The 
United States currently has three major LNG export terminals 
operating, eight under construction, and six more that are 
fully permitted. The International Energy Agency projects that 
the United States will have the capacity to become the world's 
largest exporter of LNG by 2024, ahead of both Australia and 
Qatar. Although some are concerned that exporting too much 
domestic natural gas may increase costs for domestic consumers, 
to date additional demand for natural gas exports appears to 
have been met by a commensurate increase in supply and 
potential reserves.
    LNG exports from the United States can provide a diversity 
of supply, for example, in Central and Eastern Europe (where 
Russia is often the sole supplier), the Caribbean countries, 
Central and South America, and in Asia. Cargoes of LNG from the 
first operating export terminal, Sabine Pass, for example, have 
been delivered to two dozen nations in Latin America, Europe, 
Asia and the Middle East.

                          Legislative History

    S. 816 was introduced by Senators Cassidy, Kennedy, and 
Rubio on March 14, 2019. Senators Inhofe, Jones, and Scott were 
added as cosponsors.
    A companion measure, H.R. 1836, was introduced in the House 
of Representatives by Representative Yoho, on March 18, 2019, 
and referred to the Committee on Energy and Commerce.
    In the 115th Congress, Senators Cassidy and Rubio 
introduced similar legislation, S. 1981, on October 18, 2017. 
The Subcommittee on Energy held a hearing on S. 1981, on 
December 5, 2017 (S. Hrg. 115-493). The Committee on Energy and 
Natural Resources reported the bill favorably on May 10, 2018 
(S. Rept. 115-248).
    The Committee on Energy and Natural Resources met in open 
business session on July 16, 2019, and ordered S. 816 favorably 
reported.

            Committee Recommendation and Tabulation of Votes

    The Senate Committee on Energy and Natural Resources, in 
open business session on July 16, 2019, on a roll call vote of 
11 to 9, recommends that the Senate pass S. 816.
    The roll call vote on reporting the measure was 11 yeas, 9 
nays as follows:

------------------------------------------------------------------------
                   YEAS                                 NAYS
------------------------------------------------------------------------
Ms. Murkowski.............................  Mr. Manchin
Mr. Barrasso..............................  Mr. Wyden*
Mr. Risch.................................  Ms. Cantwell
Mr. Lee...................................  Mr. Sanders*
Mr. Daines................................  Ms. Stabenow
Mr. Cassidy...............................  Mr. Heinrich
Mr. Gardner...............................  Ms. Hirono*
Ms. Hyde-Smith*...........................  Mr. King
Ms. McSally...............................  Ms. Cortez Masto
Mr. Alexander.............................
Mr. Hoeven................................
------------------------------------------------------------------------
*Indicates vote by proxy.

                      Section-by-Section Analysis


Section 1. Short title

    Section 1 contains the short title.

Sec. 2. Expedited approval of export of certain volumes of natural gas

    Section 2 amends section 3(c) of the NGA (15 U.S.C. 
717b(c)) which currently deems licenses to import or export 
natural gas to a nation with which there is a free trade 
agreement in effect to be consistent with the public interest 
and requires the Secretary to grant them without modification 
or delay.
    Section 2 reorganizes and supplements section 3(c) of the 
NGA by adding a new paragraph (1) with three subparagraphs, 
(A), (B), and (C) and a new paragraph (2). Subparagraphs (A) 
and (C) maintain the existing statutory public interest 
determination and direction that the Secretary shall grant 
certain applications for importation and exportation without 
modification or delay. Subparagraph (B) adds that any 
application for exportation of natural gas in a volume that is 
equal to or less than 51.75 billion cubic feet per year shall 
be deemed to be consistent with the public interest and shall 
be granted without modification or delay, without regard to the 
status of trade agreements between the importing country and 
the United States.
    New paragraph (2) provides that the processes for small-
scale exports under new subparagraph (1)(B) and exports to 
countries with free-trade agreements under subparagraph (1)(C) 
do not apply to any nation subject to sanctions imposed by the 
United States.

                   Cost and Budgetary Considerations

    The following estimate of the costs of this measure have 
been provided by the Congressional Budget Office.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Under current regulations, the Department of Energy (DOE) 
issues expedited approvals for applications to export no more 
than 51.75 billion cubic feet of natural gas in a year to any 
nonsanctioned country with which the United States does not 
have a free trade agreement (FTA), provided that the exports do 
not come from facilities that require review under the National 
Environmental Policy Act (NEPA). S. 816 would codify existing 
regulations and would waive DOE's NEPA criterion for all 
applications to export small volumes of natural gas to non-FTA 
countries.
    CBO expects that implementing S. 816 would further expedite 
the approval of applications relative to current law. According 
to DOE, small-volume exports represent less than one percent of 
the total amount of approved natural gas exports to non-FTA 
countries to date. On that basis, and considering the number of 
such applications submitted in recent years, CBO estimates that 
any increase in the number of applications and the volume of 
gas exported would be small.
    Payments from mineral leasing on federal lands are recorded 
in the budget as offsetting receipts, or reductions in direct 
spending. Changes in the price of gas or in the production of 
gas on federal lands, or a combination of the two, could affect 
those payments. CBO expects that any additional demand for gas 
exports under the bill would be met by a commensurate increase 
in supply, resulting 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 80 percent of gas exports over the 2013-2017 period. 
Because those states, including Michigan, Texas, and New York, 
contain only small amounts of federal land (between 0.5 percent 
and 10 percent of the total land area in each state), we 
estimate that any increase in the production of gas on federal 
lands would be small, and that the net increase in receipts 
would be insignificant over the 2019-2029 period.
    The CBO staff contact for this estimate is Janani 
Shankaran. The estimate was reviewed by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 816.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 816, as ordered reported.

                   Congressionally Directed Spending

    S. 816, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        Executive Communications

    The testimony provided by the Department of Energy at the 
December 5, 2017, hearing on S. 1981, a similar bill to S. 861, 
follows:

  Testimony of Under Secretary Mark Menezes, U.S. Department of Energy

S. 1981--Small Scale LNG Access Act of 2017
    Currently, all exports of natural gas, regardless of 
quantity, are subject to review and approval by the Department 
through its regulatory authority under the Natural Gas Act 
(NGA). Applications are made under NGA Section 3(a) for exports 
of natural gas to free trade agreement countries. This bill 
amends Section 3(c) to expedite approval of exports of small 
volumes of natural gas. The effect of this bill would be to 
have qualifying applications granted automatically, saving 
several months of review time at a minimum.
    This bill appears to be similar to the volume criteria DOE 
laid out in a recent DOE Notice of Proposed Rulemaking (NOPR) 
concerning small-scale natural gas exports published on 
September 1, 2017. The NOPR sought to revise DOE's regulations 
in 10 CFR 590 concerning its role in administering the NGA. 
DOE's NOPR proposed that natural gas export applications to 
non-free trade agreement countries that proposed to export up 
to and including .14 billion cubic feet per day (or 51.75 
billion cubic feet per year) would be deemed to be consistent 
with the public interest. The Department looks forward to 
working with the Committee to determine the technical aspects 
of the bill.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the changes in existing law made 
by the original 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):

                          THE NATURAL GAS ACT


Act of June 21, 1938, as amended

           *       *       *       *       *       *       *


        EXPORTATION OR IMPORTATION OF NATURAL GAS; LNG TERMINALS


SEC. 3.

           *       *       *       *       *       *       *


    [(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.]
    (c) Expedited Application and Approval Process.--
          (1) In general.--For purposes of subsection (a), the 
        following shall be deemed to be consistent with the 
        public interest, and applications for such importation 
        or exportation shall be granted without modification or 
        delay:
                  (A) The importation of the natural gas 
                referred to in subsection (b).
                  (B) The exportation of natural gas in a 
                volume up to and including 51,750,000,000 cubic 
                feet per year.
                  (C) 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.
          (2) Exclusion.--Subparagraphs (B) and (C) of 
        paragraph (1) shall not apply to any nation subject to 
        sanctions imposed by the United States.

           *       *       *       *       *       *       *