89–010 

Calendar No. 177 

116TH CONGRESS REPORT " ! SENATE 1st Session 116–75 

APPALACHIAN ENERGY FOR NATIONAL SECURITY ACT 

AUGUST 16, 2019.—Ordered to be printed 

Filed, under authority of the order of the Senate of August 1, 2019 

Ms. MURKOWSKI, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany S. 1064] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (S. 1064) to require the Secretary of Energy to conduct a study on the national security implications of building ethane and other natural-gas-liquids-related petrochemical infrastructure in the United States, 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 5, line 12, insert ‘‘and’’ after ‘‘national’’. 

PURPOSE

The purpose of S. 1064 is to require the Secretary of Energy (Secretary) to conduct a study on the national security implications of 

building ethane and other natural-gas-liquids-related petrochemical 

infrastructure in the United States. 

BACKGROUND AND NEED

In November 2018, the Department of Energy (DOE) examined 

the feasibility of establishing an ethane storage and distribution 

hub in the United States, and issued a report entitled ‘‘Ethane 

Storage and Distribution Hub in the United States.’’ The report 

noted that domestic natural gas production is expected to more 

than double from 2017 to 2050. The main driver of total growth in 

domestic natural gas production is the continued development of 


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the Marcellus and Utica shale plays in the eastern United States. 

If the Appalachian Basin were an independent country, it would be 

the third largest producer of natural gas in the world. 

The report highlighted the potential for the new hub to be built 

in Appalachia, as well as the economic and strategic benefits of 

such a hub. For example, the report noted that 95 percent of current ethylene production capacity in the United States is clustered 

along the Gulf Coast in Louisiana and Texas. This geographic concentration of assets and operations may pose a strategic risk to the 

economy of the United States as extreme weather has significantly 

impaired domestic production in the past. 

LEGISLATIVE HISTORY

S. 1064 was introduced by Senator Manchin on April 8, 2019. 

The Subcommittee on Energy held a legislative hearing on S. 1064 

on July 9, 2019. 

The Committee on Energy and Natural Resources met in open 

business session on July 16, 2019, and ordered S. 1064 favorably 

reported, as amended. 

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in 

open business session on July 16, 2019, by a majority voice vote of 

a quorum present, recommends that the Senate pass S. 1064, if 

amended as described herein. 

COMMITTEE AMENDMENT

During its consideration of S. 1064, the Committee adopted an 

amendment to make a technical correction. 

SECTION-BY-SECTION ANALYSIS

Section. 1. Short title 

Section 1 sets forth the short title of the bill. 

Sec. 2. Findings 

Section 2 sets forth Congressional findings based on the 2018 

DOE study regarding the economic implications and feasibility of 

a potential hub. 

Sec. 3. Study and reports on building ethane and other natural-gasliquids-related petrochemical infrastructure 

Subsection (a) directs the Secretary to conduct a study within 

one year of enactment, in consultation with the Secretaries of Defense and Treasury, and the heads of other relevant Federal departments and agencies, regarding the potential national and economic security impacts of building ethane and other natural-gasliquids-related petrochemical infrastructure in the vicinity of the 

Marcellus, Utica, and Rogersville shale plays. This subsection requires the study to identify the potential benefits of the proposed 

infrastructure to national and economic security, as well as the potential risks to national and economic security posed by foreign 

ownership and control of United States domestic petrochemical resources. It also requires an examination of the types of additional 

infrastructure needed to fully optimize the potential national secuVerDate Sep 11 2014 03:05 Aug 20, 2019 Jkt 089010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR075.XXX SR075

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rity benefits of the hub; whether geopolitical diversity of export 

destinations would undermine or bolster national security; the necessity of evaluating public interest with respect to exports for national security; and the potential benefits of locating the proposed 

hub in the area near the Marcellus, Utica, and Rogersville shale 

plays. 

Subsection (b) provides that the relevant Congressional committees may request and receive periodic status reports on the development of the required study. This subsection also requires the 

Secretary to submit the completed study to the relevant Congressional committees and publish the report on the DOE website. 

COST AND BUDGETARY CONSIDERATIONS

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

S. 1064 would require the Department of Energy (DOE) to conduct a study on the national and economic security implications of 

building petrochemical facilities for ethane and other natural gas 

liquids in the geographic area covered by parts of Ohio, West Virginia, Pennsylvania, and New York. DOE would be required to coordinate with several different agencies to evaluate the benefits 

and potential risks to economic and national security. 

Using information from DOE, CBO estimates that conducting 

this study would cost $1 million; such spending would be subject 

to the availability of appropriated funds. 

The CBO staff contact for this estimate is Madeleine Fox. The estimate was reviewed 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. 1064. The bill is not a regulatory measure in the sense of imposing Government-established standards or significant economic responsibilities on private individuals and businesses. 


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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. 1064, as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

S. 1064, 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 July 

9, 2019, hearing on S. 1064 follows: 

TESTIMONY OF THE HONORABLE BRUCE J. WALKER, ASSISTANT SECRETARY, OFFICE OF ELECTRICITY, U.S. DEPARTMENT OF ENERGY

INTRODUCTION

Chairman Cassidy, Ranking Member Heinrich, and 

Members of the Subcommittee, it is an honor and a privilege to serve at the Department of Energy (DOE or the Department), as Assistant Secretary for the Office of Electricity. DOE is charged with, among other important responsibilities, providing our Nation with premier energy 

research and development (R&D) activities. The work 

being conducted by DOE is setting the course for various 

advancements in the energy field and beyond. Issues like 

energy storage, improving energy efficiency, creating 

breakthroughs in how we extract and utilize our Nation’s 

fossil fuels, and Artificial Intelligence are just some of the 

important areas of DOE research. These are also the topics 

being covered at today’s hearing. 

Thank you for the opportunity to testify today on behalf 

of the Department regarding these various pieces of legislation. The Administration continues to review all eleven 

of these bills. Below are some highlights and perspectives 

regarding the legislation being discussed today. 

S. 1064—Appalachian Energy for National Security Act 

The United States is now the top producer of oil and 

natural gas in the world, with an additional benefit in the 

form of increased natural gas liquids (NGL), including ethane. Ethane is particularly useful as a feedstock for petrochemical manufacturing. 

The Appalachian region has experienced near-exponential growth in natural gas production, and that production is expected to increase for decades to come. According 

to the Energy Information Administration, through April 

of this year, natural gas production in the Appalachian 

Basin has represented 35 percent of total U.S. natural gas 

production, and that number is expected to increase. In addition, NGL processing and fractionating capacity in AppaVerDate Sep 11 2014 03:05 Aug 20, 2019 Jkt 089010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6969 E:\HR\OC\SR075.XXX SR075

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lachia has grown quickly to match this increase in natural 

gas production. 

S. 1064 requires a report to Congress on the ‘‘national 

and economic security’’ impacts of petrochemical infrastructure near the Marcellus, Utica, and Rogersville shale 

plays. Under the bill, DOE has the lead for preparation of 

the report, in consultation with the Departments of Defense and Treasury (and other agencies and stakeholders). 

DOE appreciates Congress’ attention to the vast energy 

resources in Appalachia. This legislation builds upon current efforts by the Administration. In December of 2018, 

DOE issued a report to Congress entitled Ethane Storage 

and Distribution Hub in the United States. The report 

highlights the potential in Appalachia for the development 

of a new ethane hub based on the resource from the 

Marcellus and Utica shales, and the accompanying security and reliability benefits derived from geographic diversity in the nation’s petrochemicals manufacturing base. 

This past April, the President issued Executive Order 

13868 (‘‘Promoting Energy Infrastructure and Economic 

Growth’’), part of which requires DOE to issue a report on 

economic development in Appalachia in the petrochemical 

industry. The Department is currently working on this report, and will share the results with Congress and other 

interested parties. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, the Committee notes that no changes in existing law are made by the bill as ordered reported. 

Æ 


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