[Senate Report 115-254]
[From the U.S. Government Publishing Office]
Calendar No. 422
115th Congress } { Report
SENATE
2d Session } { 115-254
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CAPITALIZING ON AMERICAN STORAGE POTENTIAL ACT
_______
May 22, 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. 1337]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 1337) to amend the Energy Policy Act of
2005 to make certain strategic energy infrastructure projects
eligible for certain loan guarantees, and for other purposes,
having considered the same, reports favorably thereon with an
amendment, and recommends that the bill, as amended, do pass.
The amendment is as follows:
On page 2, strike line 22 and insert the following:
which the project is located.
``(g) National Security Review.--Before making a guarantee
for a project under this section, the Secretary shall certify
that the guarantee is in the national interest and will not
harm the national security of the United States, in accordance
with Department of Energy Order 142.5 (relating to the
Committee on Foreign Investment in the United States) (or a
successor order).''.
Purpose
The purpose of S. 1337 is to amend the Energy Policy Act of
2005 to make certain strategic energy infrastructure projects
eligible for certain loan guarantees, and for other purposes.
Background and Need
The Innovative Technology Loan Guarantee Program authorized
by title XVII of the Energy Policy Act of 2005 (43 U.S.C.
16511-16516). A number of energy technology projects are
eligible for the loan guarantee program, including advanced
fossil, advanced nuclear, renewable energy, and energy
efficiency projects. S. 1337 adds strategic energy
infrastructure projects to the list of eligible projects.
Legislative History
S. 1337 was introduced by Senators Manchin and Capito on
June 12, 2017. The Subcommittee on Energy held a hearing on S.
1337 on October 3, 2017.
Companion legislation, H.R. 3143, was introduced by Rep.
McKinley in the House of Representatives on June 29, 2017, and
referred to the Energy Commerce Committee, as well as the
Science, Space, and Technology Committee.
The Committee on Energy and Natural Resources met in open
business session on March 8, 2018, and ordered S. 1337
favorably reported, as amended.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on March 8, 2018, by a majority voice
vote of a quorum present, recommends that the Senate pass S.
1337, if amended as described herein.
Committee Amendment
During its consideration of S. 1337, the Committee adopted
an amendment offered by Senator Stabenow. The amendment
requires the Secretary to certify that a loan guarantee for a
project is in the national interest and will not harm the
national security, in accordance with Department of Energy
Order 142.5 (relating to foreign investment) before
guaranteeing a loan under the program.
Section-by-Section Analysis
Section 1. Short title
Section 1 contains the short title.
Section 2. Strategic energy infrastructure projects
Section 2 amends section 1703 of the Energy Policy Act of
2005 to include strategic energy infrastructure in the
categories of eligible projects in subsection (b)(2), as well
as in a new paragraph (11).
This section also adds a new subsection (f) to specify
certain criteria that these strategic energy infrastructure
projects must meet for consideration, including having a
regional scope; the ability to store and distribute more than
100,000 barrels per day of hydrocarbon feedstock with a minimum
gross heating value of 1,700 Btu per standard cubic foot; and
the potential to contribute significantly to the region's
economic resilience.
This section further adds a new subsection (g) to require
the Secretary to certify a loan guarantee issued under this
section is in the national interest and will not harm the
national security of the United States before guaranteeing a
loan under section 1703.
Cost and Budgetary Considerations
The Congressional Budget Office estimate of the costs of
this measure has been requested but was not received at the
time the report was filed. When the report is available, it
will be posted on cbo.gov.
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. 1337. 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. 1337, as ordered reported.
Congressionally Directed Spending
S. 1337, 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
October 3, 2017, hearing on S. 1337 follows:
Testimony of Deputy General Counsel Bernard McNamee, U.S. Department of
Energy before the U.S. Senate Committee on Energy and Natural Resources
Subcommittee on Energy
S. 1337, Capitalizing on American Storage Potential Act
This new energy landscape also presents opportunities. I
appreciate the chance to discuss the legislation on hydrocarbon
feedstock storage infrastructure in Appalachia. The Marcellus
Shale and Utica Shale sites are blessed with an abundance of
hydrocarbon feedstock, such as ethane, which can be used as a
building block for plastics.
The U.S. Energy Information Administration estimates that
natural gas production in the region has grown from just over 2
billion cubic feet per day (Bcfd) in 2010 to 23 Bcfd mid-2017.
In the same period, natural gas liquids production has grown
six fold (from 106,000 barrels per day to 621,000 barrels per
day). With an increase in energy production, there is often a
need for workforce development in the same region. The
Department of Energy's National Energy Technology Lab (NETL) is
supporting workforce development to support growth of ethane
production and storage in the region.
This Administration believes that the private sector has
the most important role to play in the development of late
stage energy projects. The Administration is committed to
reasserting the proper role of what has become a sprawling
Federal Government and reducing deficit spending. To that end,
the Administration supports an increased reliance on the
private sector to fund later-stage research and development of
energy technologies, and focuses Federal resources toward
early-stage research and development.
The Department looks forward to continuing our general
dialogue on ethane-related issues. Recently, the Secretary of
Energy had the opportunity to participate in a very productive
roundtable discussion with relevant stakeholders, and the
Department looks forward to engaging this subcommittee further.
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
the original bill, 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 ENERGY POLICY ACT OF 2005
Public Law 109-58
* * * * * * *
SEC. 1703. ELIGIBLE PROJECTS.
(a) In General.--The Secretary may make guarantees under
this section only for projects that--
(1) avoid, reduce, or sequester air pollutants or
anthropogenic emissions of greenhouse gases; and
(2) employ new or significantly improved technologies
as compared to commercial technologies in service in
the United States at the time the guarantee is issued.
(b) Categories.--Projects from the following categories
shall be eligible for a guarantee under this section:
(1) Renewable energy systems.
(2) Advanced fossil energy technology (including coal
gasification meeting the criteria [in subsection (d)]
described in subsection (d) and strategic energy
infrastructure meeting the criteria described in
subsection (f)).
(3) Hydrogen fuel cell technology for residential,
industrial, or transportation applications.
(4) Advanced nuclear energy facilities.
(5) Carbon capture and sequestration practices and
technologies, including agricultural and forestry
practices that store and sequester carbon.
(6) Efficient electrical generation, transmission,
and distribution technologies.
(7) Efficient end-use energy technologies.
(8) Production facilities for fuel efficient
vehicles, including hybrid and advanced diesel
vehicles.
(9) Pollution control equipment.
(10) Refineries, meaning facilities at which crude
oil is refined into gasoline.
(11) Strategic energy infrastructure meeting the
criteria described in subsection (f).
(c) Gasification Projects.--The Secretary may make
guarantees for the following gasification projects:
(1) Integrated gasification combined cycle
projects.--Integrated gasification combined cycle
plants meeting the emission levels under subsection
(d), including--
(A) projects for the generation of
electricity--
(i) for which, during the term of the
guarantee--
(I) coal, biomass, petroleum
coke, or a combination of coal,
biomass, and petroleum coke
will account for at least 65
percent of annual heat input;
and
(II) electricity will account
for at least 65 percent of net
useful annual energy output;
(ii) that have a design that is
determined by the Secretary to be
capable of accommodating the equipment
likely to be necessary to capture the
carbon dioxide that would otherwise be
emitted in flue gas from the plant;
(iii) that have an assured revenue
stream that covers project capital and
operating costs (including servicing
all debt obligations covered by the
guarantee) that is approved by the
Secretary and the relevant State public
utility commission; and
(iv) on which construction commences
not later than the date that is 3 years
after the date of the issuance of the
guarantee;
(B) a project to produce energy from coal (of
not more than 13,000 Btu/lb and mined in the
western United States) using appropriate
advanced integrated gasification combined cycle
technology that minimizes and offers the
potential to sequester carbon dioxide emissions
and that--
(i) may include repowering of
existing facilities;
(ii) may be built in stages;
(iii) shall have a combined output of
at least 100 megawatts;
(iv) shall be located in a western
State at an altitude greater than 4,000
feet; and
(v) shall demonstrate the ability to
use coal with an energy content of not
more than 9,000 Btu/lb;
(C) a project located in a taconite-producing
region of the United States that is entitled
under the law of the State in which the plant
is located to enter into a long-term contract
approved by a State public utility commission
to sell at least 450 megawatts of output to a
utility;
(D) facilities that--
(i) generate one or more hydrogen-
rich and carbon monoxide-rich product
streams from the gasification of coal
or coal waste; and
(ii) use those streams to facilitate
the production of ultra clean premium
fuels through the Fischer-Tropsch
process; and
(E) a project to produce energy and clean
fuels, using appropriate coal liquefaction
technology, from Western bituminous or
subbituminous coal, that--
(i) is owned by a State government;
and
(ii) may include tribal and private
coal resources.
(2) Industrial gasification projects.--Facilities
that gasify coal, biomass, or petroleum coke in any
combination to produce synthesis gas for use as a fuel
or feedstock and for which electricity accounts for
less than 65 percent of the useful energy output of the
facility.
(3) Petroleum coke gasification projects.--The
Secretary is encouraged to make loan guarantees under
this title available for petroleum coke gasification
projects.
(4) Liquefaction project.--Notwithstanding any other
provision of law, funds awarded under the clean coal
power initiative under subtitle A of title IV for coal-
to-oil liquefaction projects may be used to finance the
cost of loan guarantees for projects awarded such
funds.
(d) Emission Levels.--In addition to any other applicable
Federal or State emission limitation requirements, a project
shall attain at least--
(1) total sulfur dioxide emissions in flue gas from
the project that do not exceed 0.05 lb/MMBtu;
(2) a 90-percent removal rate (including any fuel
pretreatment) of mercury from the coal-derived gas, and
any other fuel, combusted by the project;
(3) total nitrogen oxide emissions in the flue gas
from the project that do not exceed 0.08 lb/MMBtu; and
(4) total particulate emissions in the flue gas from
the project that do not exceed 0.01 lb/MMBtu.
(e) Qualification of Facilities Receiving Tax Credits.--A
project that receives tax credits for clean coal technology
shall not be disqualified from receiving a guarantee under this
title.
(f) Strategic Energy Infrastructure Projects.--The
Secretary may make guarantees under this section for any
strategic energy infrastructure project that is a regional
project--
(1) that supports a more effective energy market
performance due to the scale of the project, such as a
project with the capacity to store and distribute
greater than 100,000 barrels per day of hydrocarbon
feedstock with a minimum gross heating value of 1,700
Btu per standard cubic foot; and
(2) with the potential to significantly contribute to
the economic resilience of the region in which the
project is located.
(g) National Security Review.--Before making a guarantee
for a project under this section, the Secretary shall certify
that the guarantee is in the national interest and will not
harm the national security of the United States, in accordance
with Department of Energy Order 142.5 (relating to the
Committee on Foreign Investment in the United States) (or a
successor order).
* * * * * * *