H.R. 6, Domestic Prosperity and Global Freedom Act

H.R. 6

Domestic Prosperity and Global Freedom Act

Date
June 24, 2014 (113th Congress, 2nd Session)

Staff Contact
Emily Leviner

Floor Situation

On Tuesday, June 24, 2014, the House will begin consideration of H.R. 6, the Domestic Prosperity and Global Freedom Act, under a rule.  H.R. 6 was introduced on March 6, 2014 by Rep. Cory Gardner (R-CO) and was referred to the House Energy and Commerce Committee.  The bill was marked up on April 29 and 30, 2014 and was ordered reported, as amended, by a vote of 33-18.[1]

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[1] House Committee Report 113-477.

Bill Summary

H.R. 6, as reported by the Energy and Commerce Committee, requires the Department of Energy (DOE) to make a decision on applications to export liquid natural gas (LNG) under Section 3 of the Natural Gas Act (15 U.S.C. 717(b)) within 90 days of the later of either: (1) the end of the comment period; or (2) the bill’s enactment.  H.R 6 provides for expedited review if an applicant wishes to challenge DOE’s decision, or if DOE fails to make a decision in the given timeframe.  H.R. 6 gives jurisdiction to the U.S. Court of Appeals for the circuit where the export facility would be located. H.R. 6 requires that applicants, as a condition of approval, publicly disclose the specific destination of such LNG exports.

*Please note: The Manager’s Amendment offered by Rep. Cory Gardner strikes the subsection requiring a 90 day decision deadline and replaces it with a 30 day deadline, requiring DOE to issue a final decision on applications to export LNG following the conclusion of the NEPA environmental review of the LNG facilities.   For purposes of the 30 day decision deadline, the NEPA review would be considered concluded: (1) for a project requiring an Environmental Impact Statement, 30 days after publication of a Final Environmental Impact Statement; (2) for a project for which an Environmental Assessment has been prepared, 30 days after publication by DOE of a Finding of No Significant Impact; and (3) upon determination by the lead agency that an application is eligible for a Categorical Exclusion pursuant to NEPA.

Background

Technological innovations have unlocked vast domestic natural gas and oil reserves, dramatically reversing production that had been in decline for decades.[2]  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.[3]  According to one expert, “this energy revolution already supports 1.7 million jobs and could support 3 million jobs by 2020.”[4]

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.”[5]  Studies show that increased LNG exports would benefit not only the overall economy, but also individual consumers.[6]  “A study by ICF estimated that LNG exports are expected to contribute 665,000 net job gains by 2035.”[7]  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.”[8]  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.[9]

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.”[10]  Since the first application to export LNG to a non-Free Trade Agreement (FTA) country was submitted almost four years ago, only 7 applications have been approved while twenty-six are still pending—some for more than a year.[11]  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.”[12]  Applications to export LNG to countries with which the U.S. has a FTA are granted with minimal delay.[13]  However, the approval process for exporting LNG to other countries is far more complicated.[14]  “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.”[15]

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.”[15]  H.R. 6 establishes an expedited approval process for LNG exports, ensuring the U.S. does not miss the opportunity to meet its full energy potential.

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

Cost

According to CBO estimates, implementing H.R. 6 would not significantly impact the federal budget.  In addition, the bill would not affect direct spending or revenues.

Amendments

1)         MANAGER’S AMENDMENT: Reps. Gardner (R-CO), Gene Green (D-TX) Amendment #3 – Amendment strikes the subsection requiring a 90 day decision deadline and replace it with a 30 day decision deadline requiring DOE to issue a final decision on applications to export LNG following the conclusion of the NEPA environmental review of the LNG facilities.  For the purposes of the 30 day decision deadline, the NEPA review would be considered concluded: for a project requiring an Environmental Impact Statement, 30 days after publication of a Final Environmental Impact Statement; for a project for which an Environmental Assessment has been prepared, 30 days after publication by DOE of a Finding of No Significant Impact; and upon determination by the lead agency that an application is eligible for a Categorical Exclusion pursuant to NEPA.

2)         Reps. Holt (D-NJ), Quigley (D-IL) Amendment #11 – Amendment requires the Secretary of Energy, before approving any natural gas exports, to make a public interest determination in consideration of how exports will affect domestic natural gas prices, jobs and manufacturing, and other factors.

3)         Rep. DeFazio (D-OR) Amendment #7 – Amendment requires an applicant to disclose any intention to use eminent domain for any construction necessary for LNG exports.

4)         Reps. Turner (R-OH), Ryan (D-OH), Amendment #6 – Amendment expresses the sense of Congress that it is in the public interest of the United States to approve the export of U.S. natural gas under section 3 of the Natural Gas Act.

Additional Information

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