A bill to promote coal-to-liquid fuel activities.

Summary: Coal-to-Liquid Fuel Promotion Energy Act of 2006 - Amends the Energy Policy Act of 2005 to include among the projects eligible for Department of Energy (DOE) loan guarantees large-scale coal-to-liquid facilities that use a feedstock, the majority of which is domestic coal resources, to produce at least 10,000 barrels a day of liquid transportation fuel.

Instructs the Secretary of Energy (Secretary) to establish a federal loan program for coal-to-liquid facilities.

Directs the Secretary to promulgate regulations to support the development of coal-to-liquid manufacturing facilities and associated infrastructure on DOE and other federal lands, including military bases and military installations closed or realigned under the defense base closure and realignment.

Authorizes the Secretary to construct storage facilities: (1) in the vicinity of pipeline infrastructure and at least one military base; but (2) outside the boundaries of any state on the coast of the Gulf of Mexico.

Authorizes the Secretary to acquire, place in storage, transport, or exchange coal-to-liquid products, not to exceed 20% of the total quantity of petroleum products in the Strategic Petroleum Reserve.

Authorizes appropriations for the Air Force Research Laboratory to continue support efforts to test, qualify, and procure synthetic fuels developed from coal for aviation jet use.

Amends federal law governing Armed Forces fuel procurement to authorize the Secretary of Defense to enter into agreements with private companies to develop and operate coal-to-liquid facilities on or near military installations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Coal-to-Liquid Fuel Promotion Energy 
Act of 2006''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Coal-to-liquid.--The term ``coal-to-liquid'' means--
                    (A) with respect to a process or technology, the 
                use of a feedstock, the majority of which is the coal 
                resources of the United States, using the class of 
                chemical reactions known as Fischer-Tropsch, to produce 
                synthetic fuel suitable for transportation; and
                    (B) with respect to a facility, the portion of a 
                facility related to supplying inputs to the Fischer-
                Tropsch process, Fischer-Tropsch finished fuel 
                production, or the capture, transportation, or 
                sequestration of byproducts of the use of coal at the 
                Fischer-Tropsch facility, including carbon emissions.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

SEC. 3. COAL-TO-LIQUID FUEL LOAN GUARANTEE PROGRAM.

    (a) Eligible Projects.--Section 1703(b) of the Energy Policy Act of 
2005 (42 U.S.C. 16513(b)) is amended by adding at the end the 
following:
            ``(11) Large-scale coal-to-liquid facilities (as defined in 
        section 2 of the Coal-to-Liquid Fuel Promotion Energy Act of 
        2006) that use a feedstock, the majority of which is the coal 
        resources of the United States, to produce not less than 10,000 
        barrels a day of liquid transportation fuel.''.
    (b) Authorization of Appropriations.--Section 1704 of the Energy 
Policy Act of 2005 (42 U.S.C. 16514) is amended by adding at the end 
the following:
    ``(c) Coal-to-Liquid Projects.--
            ``(1) In general.--There are authorized to be appropriated 
        such sums as are necessary to provide the cost of guarantees 
        for projects involving large-scale coal-to-liquid facilities 
        under section 1703(b)(11).
            ``(2) Limitations.--
                    ``(A) In general.--No loan guarantees shall be 
                provided under this title for projects described in 
                paragraph (1) after (as determined by the Secretary)--
                            ``(i) the tenth such loan guarantee is 
                        issued under this title; or
                            ``(ii) production capacity covered by such 
                        loan guarantees reaches 100,000 barrels per day 
                        of coal-to-liquid fuel.
                    ``(B) Individual projects.--
                            ``(i) In general.--A loan guarantee may be 
                        provided under this title for any large-scale 
                        coal-to-liquid facility described in paragraph 
                        (1) that produces no more than 20,000 barrels 
                        of coal-to-liquid fuel per day.
                            ``(ii) Non-federal funding requirement.--To 
                        be eligible for a loan guarantee under this 
                        title, a large-scale coal-to-liquid facility 
                        described in paragraph (1) that produces more 
                        than 20,000 barrels of coal-to-liquid fuel per 
                        day shall be required to provide non-Federal 
                        funding for the proportional cost of the loan 
                        guarantee for production that exceeds 20,000 
                        barrels of coal-to-liquid fuel per day.''.

SEC. 4. COAL-TO-LIQUID FACILITIES LOAN PROGRAM.

    (a) Definition of Eligible Recipient.--In this section, the term 
``eligible recipient'' means an individual, organization, or other 
entity that owns, operates, or plans to construct a coal-to-liquid 
facility that will produce at least 10,000 barrels per day of coal-to-
liquid fuel.
    (b) Establishment.--The Secretary shall establish a program under 
which the Secretary shall provide loans, in a total amount not to 
exceed $20,000,000, for use by eligible recipients to pay the Federal 
share of the cost of obtaining any services necessary for the planning, 
permitting, and construction of a coal-to-liquid facility.
    (c) Application.--To be eligible to receive a loan under subsection 
(b), an owner or operator of a coal-to-liquid facility shall submit to 
the Secretary an application at such time, in such manner, and 
containing such information as the Secretary may require.
    (d) Non-Federal Match.--To be eligible to receive a loan under this 
section, an eligible recipient shall use non-Federal funds to provide a 
dollar-for-dollar match of the amount of the loan.
    (e) Repayment of Loan.--
            (1) In general.--To be eligible to receive a loan under 
        this section, an eligible recipient shall agree to repay the 
        original amount of the loan to the Secretary not later than 5 
        years after the date of the receipt of the loan.
            (2) Source of funds.--Repayment of a loan under paragraph 
        (1) may be made from any financing or assistance received for 
        the construction of a coal-to-liquid facility described in 
        subsection (a), including a loan guarantee provided under 
        section 1703(b)(11) of the Energy Policy Act of 2005 (42 U.S.C. 
        16513(b)(11)).
    (f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $200,000,000, to remain 
available until expended.

SEC. 5. LOCATION OF COAL-TO-LIQUID MANUFACTURING FACILITIES.

    The Secretary, in coordination with the head of any affected 
agency, shall promulgate such regulations as the Secretary determines 
to be necessary to support the development on Federal land (including 
land of the Department of Energy, military bases, and military 
installations closed or realigned under the defense base closure and 
realignment) of coal-to-liquid manufacturing facilities and associated 
infrastructure, including the capture, transportation, or sequestration 
of carbon dioxide.

SEC. 6. STRATEGIC PETROLEUM RESERVE.

    (a) Development, Operation, and Maintenance of Reserve.--Section 
159 of the Energy Policy and Conservation Act (42 U.S.C. 6239) is 
amended--
            (1) by redesignating subsections (f), (g), (j), (k), and 
        (l) as subsections (a), (b), (e), (f), and (g), respectively; 
        and
            (2) by inserting after subsection (b) (as redesignated by 
        paragraph (1)) the following:
    ``(c) Study of Maintaining Coal-to-Liquid Products in Reserve.--Not 
later than 1 year after the date of enactment of the Coal-to-Liquid 
Fuel Promotion Energy Act of 2006, the Secretary and the Secretary of 
Defense shall--
            ``(1) conduct a study of the feasibility and suitability of 
        maintaining coal-to-liquid products in the Reserve; and
            ``(2) submit to the Committee on Energy and Natural 
        Resources and the Committee on Armed Services of the Senate and 
        the Committee on Energy and Commerce and the Committee on Armed 
        Services of the House of Representatives a report describing 
        the results of the study.
    ``(d) Construction of Storage Facilities.--As soon as practicable 
after the date of enactment of the Coal-to-Liquid Fuel Promotion Energy 
Act of 2006, the Secretary may construct 1 or more storage facilities--
            ``(1) in the vicinity of pipeline infrastructure and at 
        least 1 military base; but
            ``(2) outside the boundaries of any State on the coast of 
        the Gulf of Mexico.''.
    (b) Petroleum Products for Storage in Reserve.--Section 160 of the 
Energy Policy and Conservation Act (42 U.S.C. 6240) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by inserting a semicolon at 
                the end;
                    (B) in paragraph (2), by striking ``and'' at the 
                end;
                    (C) in paragraph (3), by striking the period at the 
                end and inserting ``; and''; and
                    (D) by adding at the end the following:
            ``(4) coal-to-liquid products (as defined in section 2 of 
        the Coal-to-Liquid Fuel Promotion Energy Act of 2006), as the 
        Secretary determines to be appropriate, in a quantity not to 
        exceed 20 percent of the total quantity of petroleum products 
        in the Reserve.'';
            (2) in subsection (b), by redesignating paragraphs (3) 
        through (5) as paragraphs (2) through (4), respectively; and
            (3) by redesignating subsections (f) and (h) as subsections 
        (d) and (e), respectively.
    (c) Conforming Amendments.--Section 167 of the Energy Policy and 
Conservation Act (42 U.S.C. 6247) is amended--
            (1) in subsection (b)--
                    (A) by redesignating paragraphs (2) and (3) as 
                paragraphs (1) and (2), respectively; and
                    (B) in paragraph (2) (as redesignated by 
                subparagraph (A)), by striking ``section 160(f)'' and 
                inserting ``section 160(e)''; and
            (2) in subsection (d), in the matter preceding paragraph 
        (1), by striking ``section 160(f)'' and inserting ``section 
        160(e)''.

SEC. 7. AUTHORIZATION TO CONDUCT RESEARCH, DEVELOPMENT, TESTING, AND 
              EVALUATION OF ASSURED DOMESTIC FUELS.

    Of the amount authorized to be appropriated for the Air Force for 
research, development, testing, and evaluation, $10,000,000 may be made 
available for the Air Force Research Laboratory to continue support 
efforts to test, qualify, and procure synthetic fuels developed from 
coal for aviation jet use.

SEC. 8. COAL-TO-LIQUID FACILITIES ON OR NEAR MILITARY INSTALLATIONS.

    Section 2398a of title 10, United States Code is amended--
            (1) in subsection (b)--
                    (A) by striking ``The Secretary'' and inserting the 
                following:
            ``(1) In general.--The Secretary''; and
                    (B) by adding at the end the following:
            ``(2) Coal-to-liquid production facilities.--
                    ``(A) In general.--The Secretary of Defense may 
                enter into contracts or other agreements with private 
                companies or other entities to develop and operate 
                coal-to-liquid facilities (as defined in section 2 of 
                the Coal-to-Liquid Fuel Promotion Energy Act of 2006) 
                on or near military installations.
                    ``(B) Considerations.--In entering into contracts 
                and other agreements under subparagraph (A), the 
                Secretary shall consider land availability, testing 
                opportunities, and proximity to raw materials.'';
            (2) in subsection (d)--
                    (A) by striking ``Subject to applicable provisions 
                of law, any'' and inserting ``Any''; and
                    (B) by striking ``1 or more years'' and inserting 
                ``up to 25 years''; and
            (3) by adding at the end the following:
    ``(f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.''.