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Senate Passes Long-Awaited Omnibus Energy Policy Bill

In a rare display of bipartisanship, the U.S. Senate on Wednesday overwhelmingly passed an omnibus energy policy bill that avoided most controversial measures and won broad support from the energy community, including those representing the natural gas industry.

The Senate passed S 2012, also known as the Energy Policy Modernization Act of 2015, on an 85-12 vote. If the bill also passes the House and is signed by the president, it would be the first time since 2007 that changes are made to the nation's Energy Policy Act.

Natural gas supporters praised the inclusion of a streamlining process for approving liquefied natural gas (LNG) exports and a provision giving the Federal Energy Regulatory Commission (FERC) the authority to set and enforce deadlines for other government agencies to submit their input on proposed infrastructure projects.

Under the bill, with regard to the approval process for proposals to site, build, expand or operate LNG facilities -- specifically, those projects that require FERC or the Maritime Administration approval -- the secretary of the Department of Energy (DOE) would be required to issue a final decision on any application to authorize LNG exports within 45 days of completion of the required review under the National Environmental Policy Act (NEPA).

The bill also gives the U.S. Court of Appeals for the District of Columbia Circuit, or the circuit in which an LNG facility would be located, original and exclusive jurisdiction over any civil action brought by an LNG export applicant if the DOE secretary doesn't meet the deadline.

Other provisions would require public disclosure of LNG export destinations; require the Energy Information Administration (EIA) to collaborate with its counterparts in Canada and Mexico to improve collecting cross-border energy data, with periodic reports to Congress; require the DOE secretary to conduct a study of the state, regional and national impacts of LNG exports; and require the EIA administrator to issue an annual report quantifying the commercial storage capacity for oil and natural gas in the United States.

After the vote, Sen. Lisa Murkowski (R-AK), who chairs the Senate Energy and Natural Resources Committee, thanked the committee's ranking member, Sen. Maria Cantwell (D-WA).

"The way that we built this bill was not just the two of us, but [through] working with members on the committee, across the aisle, and working with other members of this body in a very open and transparent manner," Murkowski said from the Senate floor. "You can't work a bill successfully without working hand in glove with your counterparts on the other side [of the aisle]...

Lawmakers ultimately agreed to 32 amendments to the bill, all but three of them by voice vote. Included were Senate amendments by:

  • Barbara Boxer (D-CA), directing the DOE secretary to establish a task force to analyze and assess the Aliso Canyon natural gas leak (see Daily GPINov. 12, 2015);
  • Heidi Heitkamp (D-ND), affirming the federal government's commitment to carbon capture utilization and storage research, development and implementation, and to study the costs and benefits of contracting authority for price stabilization;
  • Shelley Moore Capito (R-WV), requiring a feasibility study for the creation of an ethane storage and distribution hub in the United States; and
  • Edward Markey (D-MA), requiring the U.S. Comptroller General to conduct a review and submit a report on the nation's energy production and the effects of crude oil exports.

"We are looking forward to sitting down with our counterparts on the House side and getting to work to make sure that the benefits that we have achieved today in the Senate are replicated with colleagues in the House, so that we can see passage of an energy bill by both bodies and signed into law by the president," Murkowski said.

The House passed HR 8, also known as the North American Energy Security and Infrastructure Act of 2015, last December, but the White House hinted it would veto that bill, in part because it contains a provision giving FERC the authority to set deadlines for other agencies that review projects proposed under the Natural Gas Act (see Daily GPIDec. 3, 2015).

S 2012 contains similar language codified in Section 3103, stating that all applicable federal authorizations required for a project or facility should be issued within 90 days of an application being considered complete by FERC. In the event of a missed deadline, the relevant federal agency would be required to notify Congress and describe a plan to ensure completion.

FERC would also track applications and post their status onto its website for access by the public. The prospect of the website's use in tracking applications for natural gas pipeline permits attracted the attention of the Interstate Natural Gas Association of America (INGAA).

"Both the House and Senate provisions on pipeline permitting matters are modest in nature, providing incremental transparency and accountability in the permitting and approval of natural gas pipelines," INGAA spokeswoman Cathy Landry said Wednesday. "They are also largely similar. As such, reconciling the two bills on this issue should be a fairly straightforward process.”

The bill includes extensive provisions for energy efficiency, addresses modernizing the electric power grid and includes directives for land and water conservation. It also includes a requirement that the DOE secretary develop an advanced energy security program to secure energy networks, a move that both FERC and the natural gas industry have called for (see Daily GPIJuly 27, 2015July 21, 2015).

Industry Groups Applaud Passage

The American Gas Association (AGA) on Wednesday praised the bill's passage, adding that it contained several provisions that would benefit the nation's natural gas customers.

"The bipartisan energy legislation passed by the Senate contains provisions that promote strategic use of our nation's natural resources," said AGA CEO Dave McCurdy. "Natural gas utilities have been supportive of this legislation through its many stages and worked with the energy efficiency community and other allies to strengthen the bill along the way."

According to the AGA, a provision written by Sens. John Hoeven (R-ND) and Joe Manchin (D-WV) would replace a controversial ban on fossil fuels for generating electricity in new or renovated federal buildings by 2030. That ban was included, but never implemented, in the Energy Independence and Security Act of 2007 (see Daily GPIDec. 20, 2007).

"We applaud Chairman Murkowski and Ranking Member Cantwell for their tireless efforts to guide this bill and appreciate the efforts of leaders such as Sens. Hoeven and Manchin that have championed improving how our nation uses energy for the past several years," McCurdy said.

Separately, Charlie Riedl, executive director of the Center for Liquefied Natural Gas (CLNG), said the vote "represents a watershed moment for the United States' LNG industry. The crucial point about this legislation, and indeed the bill that passed the House last year, is that it will provide the industry with confidence in the regulatory process.

"Project developers should know that they have a rock-solid timeframe to work with, and that certainty is crucial for these large, complex, capital-intensive investments in the U.S. economy. This legislation will help catalyze the fast-maturing domestic LNG industry."

Pilot Program for Oil and Gas Drilling

Another aspect of S 2012 includes establishing a pilot program for oil and gas drilling. The pilot would be located in one state and include at least 2,000 drilling spacing units in a location where 25% or less of the underlying mineral rights are owned by the federal government, and no surface land is owned/held in trust by the federal government.

The pilot would be created by the secretary of the Department of Interior (DOI), acting through the director of the DOI's Bureau of Land Management (BLM). Its purpose would be to identify ways to streamline the approval process for applications for permits to drill (APD).

In separate reports in 2013 and 2014, the Government Accountability Office and the DOI's Inspector General’s Office criticized the BLM over its handling of APDs (see Daily GPIJuly 2, 2014Sept. 25, 2013).

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