79–010 

Calendar No. 412 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–248 

SMALL SCALE LNG ACCESS ACT OF 2017 

MAY 10, 2018.—Ordered to be printed 

Ms. MURKOWSKI, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany S. 1981] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (S. 1981) 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. 1981 is to amend the Natural Gas Act (NGA) 

to expedite approval of exports of small volumes of natural gas, and 

for other purposes. 

BACKGROUND AND NEED

The Department of Energy exercises regulatory authority under 

the section 3 of the NGA to review and approve applications for the 

export of natural gas. Section 3(a) of the NGA provides, inter alia, 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 issue the 

order authorizing the export unless he 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 of Energy to make that determination 

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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.’’ 

Legislation is needed to extend the 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 to any nation not subject to trade sanctions. The bill is intended to enable U.S. exports to compete more effectively to serve 

emerging markets for liquefied natural gas (LNG). 

The growth in 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 two 

major LNG export terminals operating, five under construction, 

and four more that are fully permitted. The International Energy 

Agency projects that by 2022, the United States will have the capacity to become the world’s second largest exporter of LNG, just 

behind Australia, and ahead of 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. 

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. In addition, Poland’s state-owned gas company recently signed a five-year deal to buy LNG from Sabine Pass. 

LEGISLATIVE HISTORY

S. 1981 was introduced by Senators Cassidy and Rubio on October 18, 2017, and referred to the Senate Energy and Natural Resources Committee. The Subcommittee on Energy held a hearing 

on S. 1981 on December 5, 2017. 

A companion measure, H.R. 4370, was introduced in the House 

of Representatives by Representative Yoho, on November 9, 2017, 

and referred to the House Committee on Energy and Commerce. 

The Committee on Energy and Natural Resources met in open 

business session on March 8, 2018, and ordered S. 1981 favorably 

reported. 

COMMITTEE RECOMMENDATION

The Committee on Energy and Natural Resources, in open business session on March 8, 2017, by a majority vote of a quorum 

present, recommends that the Senate pass S. 1981. 

The roll call vote on reporting the measure was 13 yeas, 10 nays, 

as follows: 

YEAS NAYS 

Ms. Murkowski Ms. Cantwell 

Mr. Barrasso Mr. Wyden * 

Mr. Risch * Mr. Sanders * 

Mr. Lee Ms. Sanders 

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Mr. Flake Mr. Heinrich * 

Mr. Daines Ms. Hirono * 

Mr. Gardner Mr. King 

Mr. Alexander * Ms. Duckworth 

Mr. Hoeven Ms. Cortez Masto 

Mr. Cassidy Ms. Smith * 

Mr. Portman * 

Mrs. Capito 

Mr. Manchin 

* Indicates vote by proxy 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

Section 1 contains the short title. 

Section 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 of 

Energy to grant them without modification or delay. 

Section 2 redesignates section 3(c) of the NGA as paragraph (1) 

and adds two new paragraphs. New paragraph (2) provides that 

any application for the exportation of natural gas in a volume that 

is equal to or less than 51.1 billion cubic feet per year of natural 

gas, shall be deemed to be consistent with the public interest and 

shall be granted without modification or delay, without regard to 

whether there is a free trade agreement in effect with the nation 

to which the natural gas will be exported. 

New paragraph (3) provides a statutory determination that the 

export will be consistent with the public interest and requires that 

an application be granted without modification or delay in paragraph (1) (as redesignated) and new paragraph (2) shall not apply 

to exports to any nation that is subject to sanctions that are imposed by the United States. 

COST AND BUDGETARY CONSIDERATION

The following estimate of the costs of this measure has been provided by the Congressional Budget Office: 

S. 1981 would require the Department of Energy (DOE) to approve any application to export less than 51.1 billion cubic feet of 

natural gas in a year to any non-sanctioned country with which the 

United States does not have an applicable free trade agreement 

(FTA). That volume represents roughly 1 percent of total approved 

natural gas exports to non-FTA countries to date. From 2012 

through 2017, DOE received eight applications to export natural 

gas to non-FTA countries in amounts at or below the bill’s threshold. CBO expects that expediting the applications would reduce the 

time to approve them by several months, which could increase both 

the number of applications and the volume of gas exported. However, based on information provided by individuals working in the 

gas industry, CBO estimates those effects would be small. 

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Changes in the price of gas, in the production of gas on federal 

lands, or a combination of the two could change the payments associated with the production of gas 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), we estimate that any increase in the production of gas on 

federal lands would be small. 

Because enacting S. 1981 could decrease direct spending from 

payments associated with the production of gas on federal lands 

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 S. 1981 would not increase net direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2029. 

The CBO staff contact for this estimate is Jeff LaFave. The estimate was approved 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. 1981. 

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. 1981 as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

S. 1981, 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 follows: 

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TESTIMONY OF UNDER SECRETARY MARK MENEZES, U.S. 

DEPARTMENT OF ENERGY, BEFORE THE U.S. SENATE

COMMITTEE ON ENERGY AND NATURAL RESOURCES, SUB- COMMITTEE ON 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 non-free trade agreement 

countries or NGA Section 3(c) 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 

0.14 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, changes in existing law made by S. 1981, 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. 

(a) * * * 

ø(c) For purposes of¿ (c) EXPEDITED APPLICATION AND APPROVAL

PROCESS.— (1) FREE TRADE AGREEMENTS IN EFFECT.—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 

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importation or exportation shall be granted without modification or delay. 

(2) SMALL-SCALE NATURAL GAS EXPORTS.—For purposes of 

subsection (a), any application for the exportation of natural 

gas in a volume that is equal to or less than 51,100,000,000 

cubic feet per year of natural gas shall be— 

(A) deemed to be consistent with the public interest; and 

(B) granted without modification or delay. 

(3) EXCLUSIONS.—Paragraphs (1) and (2) shall not apply to 

any nation subject to sanctions imposed by the United States. 

* * * * * * * 

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