H.R. 4606 – A Bill Aiming to Increase U.S. Exports of Natural Gas to the Caribbean and Latin America Clears the House of Representatives and is Now Headed to the Senate
On Thursday, September 6, 2018, the United States House of Representatives passed H.R. 4606 – Ensuring Small Scale LNG Certainty and Access Act (the “Bill”) by a vote of 260-146 largely along party lines with 37 Democrats joining 223 Republicans. The Bill amends Section 3(c) of the Natural Gas Act (15 U.S.C. 717b(c)) (the “NGA”) to provide that the importation or exportation of natural gas shall be deemed in the public interest and an application for such importation and exportation shall be granted by the Department of Energy (the “DOE”) without modification or delay, if:
(1) the volume of natural gas to be imported or exported does not exceed 0.14 billion cubic feet per day (Bcf/D); and
(2) the approval of such application by the DOE would not require an environmental assessment (an “EA”) or environmental impact statement (an “EIS”) under the National Environmental Policy Act of 1969 (the “NEPA”) (i.e., a categorical exclusion applies).
Currently, only those applications for the importation or exportation of natural gas (including liquefied natural gas) from or to countries with which the United States has a free trade agreement are deemed by the NGA to be in the public interest and thus subject to approval without delay or modification.
The intent of the Bill is to codify existing DOE regulations expediting the application and approval process for “small-scale” exports (i.e., up to and including 51.75 billion cubic feet per year, the equivalent of 0.14 Bcf/D) of natural gas to countries with which the United States does not have a free trade agreement (provided approval does not require an EA or an EIS under the NEPA). Additionally, the Bill seeks to “provide greater regulatory certainty and a clear time-table for moving forward with capital intensive projects that create American jobs.”1 Moreover, in a speech on the House floor, the Bill’s sponsor, Republican Representative Bill Johnson of Ohio, listed among the Bill’s goals to help United States’ natural gas producers realize their economic potential and grow as a reliable trading partner with Latin American and Caribbean countries that cannot absorb large volumes of natural gas, as well as off-set the region’s dependence on Venezuelan energy products.
The matter will now be taken up by the United States Senate in the form of companion bill S.1981 – Small Scale LNG Access Act of 2017 (“S.1981”), but a date for consideration has not been set. A notable difference exists between H.R.4606 and S.1981: S.1981 does not include the condition regarding environmental assessments, which will likely lead to Democratic opposition in the Senate and means that the chambers will either have to address the discrepancy in conference or one chamber will need to take up and pass the other chamber’s bill as written. At this point, it is difficult to tell whether the legislation will become law this year. However, it is a sign that the United States recognizes the unique market conditions and opportunities available to small-scale natural gas exporters in the Latin American and Caribbean regions.