79–010 

Calendar No. 422 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–254 

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 nuVerDate Sep 11 2014 06:52 May 23, 2018 Jkt 079010 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\SR254.XXX SR254
2 

clear, 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 

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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 reliVerDate Sep 11 2014 06:52 May 23, 2018 Jkt 079010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6969 E:\HR\OC\SR254.XXX SR254
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ance 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 øin 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). 

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(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 FischerTropsch 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 

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(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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