H.R. 351, LNG Permitting Certainty and Transparency Act

H.R. 351

LNG Permitting Certainty and Transparency Act

Date
January 27, 2015 (114th Congress, 1st Session)

Staff Contact
David Smentek

Floor Situation

On Tuesday, January 27, 2015, the House will consider H.R. 351, the LNG Permitting Certainty and Transparency Act, under a rule.  H.R. 351 was introduced on January 14, 2015 by Rep. Bill Johnson (R-OH), and referred to the Committees on Energy and Commerce.

Bill Summary

H.R. 351 directs the Department of Energy (DOE), for proposals that must also obtain authorization from the Federal Energy Regulatory Commission (FERC) or the United States Maritime Administration to site, construct, expand, or operate liquefied natural gas (LNG) export facilities, to issue a final decision on the application within 30 days.[1]  Moreover, this legislation deems a NEPA review to be concluded: 1) 30 days after the publication of a Final Environmental Impact Statement (if required); 2) 30 days after a publication by the DOE of a Finding of No Significant Impact (if the project needs an Environmental Assessment); and 3) upon a determination by the lead agency that an application is eligible for a categorical exclusion pursuant to regulations under NEPA.[2]

In addition, H.R. 351 confers original and exclusive jurisdiction upon the U.S. Court of Appeals for the circuit in which the export facility will be located for any civil action related to the review of: 1) a DOE order regarding the application; or 2) DOE failure to issue a final decision on the application.  This legislation further requires Courts to order DOE to issue a final decision if it finds in a civil action that DOE has failed to issue one.  In order to better streamline these civil actions, H.R. 351 requires Courts to set any civil action brought under this Act on the docket for expedited consideration.

Finally, H.R. 351 amends the Natural Gas Act to require DOE to publicly disclosure specific export destinations of LNG exports as a condition of approval of authorization to export LNG.

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[1] The 30-day decision is required to fall after the later of: 1) the conclusion of the review to site, construct, expand, or operate and LNG facility required under the National Environmental Policy Act of 1969 (NEPA); or 2) the date of enactment of this Act.
[2] A “Categorical exclusion means a category of actions which do not individually or cumulatively have a significant effect on the human environment and which have been found to have no such effect in procedures adopted by a Federal agency in implementation of these regulations (§1507.3) and for which, therefore, neither an environmental assessment nor an environmental impact statement is required.”  See 40 CFR Section 1508.4.

Background

Technological innovations have unlocked vast domestic natural gas and oil reserves, dramatically reversing production that had been in decline for decades.[3]  The U.S. “emerged as the world’s largest producer of natural gas and oil in 2013” and production is expected to continue increasing in the years ahead.[4]  According to one expert, “this energy revolution already supports 1.7 million jobs and could support 3 million jobs by 2020.”[5]

U.S. natural gas production, in particular, has skyrocketed due to developments in horizontal drilling and hydraulic fracturing.  “[The Energy Information Administration’s] rising estimates of natural gas reserves strongly suggest that American output can exceed domestic needs into the future.  Specifically, it projects a 56 percent production increase by 2040, remaining well above projected domestic demand.”[6]  Studies show that increased LNG exports would benefit not only the overall economy, but also individual consumers.[7]  “A study by ICF estimated that LNG exports are expected to contribute 665,000 net job gains by 2035.”[8]  Beyond the economic benefits, increased LNG exports could bolster national security and help the U.S. more effectively achieve its foreign policy goals.  Pumping more LNG into the global market could “enhance national security by supplanting the influence of the troublesome participants currently dominating those markets, especially Iran and Russia.”[9]  In testimony before the House Energy and Commerce Committee, representatives from countries including the Czech Republic, Haiti, Hungary, India, Japan, Lithuania, Puerto Rico, Singapore, South Korea, and Thailand all expressed a strong interest in U.S. LNG.[10]

Despite the potential economic and geopolitical benefits, “many outmoded federal policies, based on the old assumptions of energy scarcity and rising imports, are still in force and stand in the way of the opportunities before us.”[11]  Since the first application to export LNG to a non-Free Trade Agreement (FTA) country was submitted almost four years ago, the DOE has issued a final decision on only five of the 38 applications —some for more than a year.[12]  Under the current approval process, “U.S. natural gas exports require federal approval pursuant to Section 3 of the Natural Gas Act (NGA) (15 U.S.C. §717b), with [DOE’s] Office of Fossil Energy and the Federal Energy Regulatory Commission (FERC) being the lead authorizing agencies.”[13]  Applications to export LNG to countries with which the U.S. has a FTA are granted with minimal delay.[14]  However, the approval process for exporting LNG to other countries is far more complicated.[15]  “The [NGA] establishes a rebuttable presumption that a proposed export of natural gas to a non-FTA country is in the public interest; however, the statute does not define ‘public interest’ nor identify the criteria that must be considered.  As a result, DOE identified a growing list of factors, including economic impacts, international impacts, and security of supply.  In addition, DOE relies on outdated, 1984 Policy Guidelines related to the import of natural gas (at the time, it was believed that the U.S. would need to import more LNG) to weigh these factors.  Overall, DOE’s standard of review is unpredictable, evolving, and has been slow to reflect the nation’s newfound natural gas abundance and the growing benefits of energy exports.”[16]

Increased LNG exports would have both economic and geopolitical benefits; yet DOE’s slow approval process could cause the U.S. to miss these tremendous prospects.  “America’s window of opportunity will not remain open for long.  In the face of continued delays, nations with near-term energy needs will be forced to look elsewhere for supplies, LNG facilities will have difficulty securing financing in an uncertain regulatory environment, and America will see greater competition from other LNG exporters.”[17]

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[3] House Committee Report 113-477.
[4] Id.
[5] Id.
[6] Id.
[7] Id. at 3.
[8] House Energy and Commerce Committee, H.R. 6, the Domestic Prosperity and Global Freedom Act (Apr. 30, 2014).
[9] House Committee Report 113-477 at 9.
[10] Id.
[11] Id. at 3.
[12] Department of Energy, Applications Received by DEO/FE to Export Domestically Produced LNG from the Lower-48 States (as of December 31, 2014).
[13] Michael Ratner, Paul W. Parfomak, Ian F. Fergusson, & Linda Luther, U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes(Sep. 17, 2013) at 5.
[14] House Committee Report 113-477 at 7.
[15] Id.
[16] Id.
[17] House Committee Report 113-477 at 3.

Cost

A CBO cost estimate is currently unavailable.

Additional Information

For questions or further information contact the GOP Conference at 5-5107.