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[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

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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).

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