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[Senate Report 112-32]
[From the U.S. Government Publishing Office]

                                                        Calendar No. 99
112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-32

======================================================================

 
     DEPARTMENT OF ENERGY CARBON CAPTURE AND SEQUESTRATION PROGRAM 
                             AMENDMENTS ACT

                                _______
                                

                 July 11, 2011.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 699]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 699) to authorize the Secretary of Energy 
to carry out a program to demonstrate the commercial 
application of integrated systems for long-term geological 
storage of carbon dioxide, and for other purposes, having 
considered the same, reports favorably thereon with amendments 
and recommends that the bill, as amended, do pass.
    The amendments are as follows:
    1. On page 3, line 7, insert ``large-scale'' after ``10''.
    2. Beginning on page 4, line 24, through page 5, line 1, 
strike ``a certification by the appropriate regulatory 
authority that the project will comply with''.
    3. On page 6, line 3, insert ``the requirements of'' after 
``with''.
    4. On page 6, line 21, insert ``requirements'' after 
``following''.
    5. On page 15, lines 12 and 13, strike ``for each of fiscal 
years 2010 through 2020''.
    6. On page 15, after line 13, add the following:
    (c) Offset.--Section 708 of the Energy Independence and 
Security Act of 2007 (42 U.S.C. 17256) is repealed.
    7. At the end, add the following:

SEC.  . ANNUAL DEPARTMENT OF ENERGY ASSESSMENT.

    (a) In General.--
          (1) Department of energy report.--Not later than 1 
        year after the date of enactment of this Act and 
        annually thereafter until the Secretary of Energy 
        (referred to in this section as the ``Secretary'') 
        determines that technology preventing the emission of, 
        capturing, transporting, permanently storing or 
        sequestering, or putting to beneficial use carbon 
        dioxide is available to the commercial marketplace, the 
        Secretary shall conduct an assessment in accordance 
        with subsection (b) of the existing Federal programs 
        supporting such technology and submit to the 
        appropriate authorizing and appropriating committees of 
        Congress a report on the results of the assessment.
          (2) Government accountability office review.--Not 
        later than 1 year after the first report is provided to 
        the appropriate authorizing and appropriating 
        committees of Congress under paragraph (1) and 
        subsequently as needed until technology preventing the 
        emission of, capturing, transporting, permanently 
        storing or sequestering, and putting to beneficial use 
        carbon dioxide is available to the commercial 
        marketplace, the Comptroller General of the United 
        States shall conduct a review of the report described 
        in paragraph (1) in accordance with subsection (c).
    (b) Department of Energy Report Requirements.--The 
Secretary shall include in the report required under subsection 
(a)(1)--
          (1) a detailed description of the existing programs, 
        including each major program area, that conduct or 
        support research, development, demonstration, and 
        deployment of technology--
                  (A) to prevent the emission of carbon dioxide 
                or capture of carbon dioxide from sources, 
                including fossil fuel-based power plants;
                  (B) to transport carbon dioxide;
                  (C) to store or sequester captured carbon 
                dioxide permanently; or
                  (D) to put captured carbon dioxide to 
                beneficial use;
          (2) an assessment, based on Federal Government 
        laboratory research experience, available industry 
        research experience, and such other data and 
        information as the Secretary considers useful and 
        appropriate, to determine whether each major program 
        area and principal projects within the areas described 
        in paragraph (1) are designed to, and will, advance 
        fundamental knowledge or achieve significant technical 
        advancement and materially improve the technology base 
        to effectively address the prevention of carbon dioxide 
        emissions or capture of carbon dioxide or the 
        transport, permanent storage, or beneficial use of 
        captured carbon dioxide;
          (3) an assessment of the estimated time frame and 
        costs of the Secretary necessary to reasonably conclude 
        that technology will be available to the commercial 
        marketplace; and
          (4) an assessment of the barriers and solutions, 
        including policy recommendations, to financing large 
        carbon capture and storage demonstration projects with 
        a focus on overcoming the impacts of oil price 
        volatility on enhanced oil recovery contracts for 
        carbon dioxide.
    (c) Government Accountability Office Review Requirements.--
The Comptroller General of the United States shall include in 
the review required under subsection (a)(2)--
          (1) an analysis of the estimated time frames and 
        costs of the Secretary, as reported pursuant to 
        subsection (b)(3);
          (2) any recommendations that the Comptroller General 
        considers appropriate and useful to improve the 
        likelihood of achieving technological advancements to 
        mitigate carbon dioxide emissions or to expedite the 
        availability of carbon capture and sequestration 
        technology for the commercial marketplace;
          (3) an assessment of any legal or regulatory 
        impediment by any Federal agency or department that has 
        arisen in relation to the deployment of carbon capture 
        and storage technology, including any delays in the 
        permitting of the technology or the construction or 
        operation of any the facility; and
          (4) any other analyses the Comptroller General 
        considers necessary or appropriate.
    (d) Budget Request Report.--In the case of the budget 
request for fiscal year 2013, the President shall include in 
the budget request of the Secretary for the Fossil Energy 
Program a report that--
          (1) assesses the progress of the Secretary in 
        implementing the recommendations of the Comptroller 
        General of the United States and compares the estimated 
        costs of completing implementation of those 
        recommendations to the requested budget levels; and
          (2) an assessment of the progress made for the 
        preceding fiscal year toward achieving the goals of the 
        program for which funding is requested.

                         Purpose of the Measure

    The purpose of S. 699 is to authorize the Secretary of 
Energy to carry out a program to demonstrate the commercial 
application of integrated systems for long-term geological 
storage of carbon dioxide, by providing a Federal indemnity to 
early adopters of these systems, by providing training programs 
for State and Tribal organizations, and by assessing the 
commercial readiness of carbon capture and storage 
technologies.

                          Background and Need

    Carbon capture and storage (CCS), often called carbon 
sequestration, is poised to be a meaningful part of a portfolio 
of options for addressing global climate change. While 
scientific and technological challenges remain, CCS holds 
particular promise for reducing the large amounts of carbon 
dioxide emitted from the use of fossil fuels in electricity 
generation and other facilities. Widespread deployment of CCS 
faces a series of challenges including commercialization of 
capture technologies, geologic storage scale-up concerns, and 
uncertainty about the policy, infrastructure, and economic 
factors associated with large-scale deployment.
    While a number of small-scale CO2 injection 
tests have either taken place or are underway, large-scale 
(greater than 1,000,000 tons CO2 annually) 
injections are only now going through the selection and 
permitting process. More than 25 small injection tests are 
currently sponsored by the Department of Energy (DOE) Regional 
Carbon Sequestration Partnership program but increasingly, 
states and private companies are also undertaking these tests 
to assist in regional site characterization and to build 
expertise. The DOE Regional Carbon Sequestration Partnership 
program has recently entered a third phase that will involve 
seven larger projects, whose total projected volume of 
CO2 to be injected will average about 1,000,000 tons 
over the life of the project.
    The first statutory language to create a CCS research and 
development program was enacted as part of the Energy Policy 
Act of 2005. It provided the basic framework for the DOE 
program where the Regional Carbon Sequestration Partnership 
program resides. It was amended by the Energy Independence and 
Security Act of 2007 (EISA). The 2007 law expanded upon the 
existing 2005 program by creating a third phase of larger CCS 
demonstration scaled projects that include fully integrated 
capture, transportation, and sequestration components. 
Additionally, basic CCS research and development was 
authorized, including beneficial use and reuse of 
CO2 (e.g., CO2 use for growing algae for 
biofuels and sequestration in cement, baking soda, or other 
products).
    Since the passage of the EISA, the Department of the 
Interior has completed several of the EISA mandates within its 
jurisdiction by beginning a national carbon dioxide geological 
storage assessment that is being conducted by the US Geological 
Survey and by completing a study of the issues related to CCS 
project implementation on federal lands. In addition, DOE's CCS 
programs have received substantial funding that has helped to 
implement many of the programs outlined in the EISA, including 
advanced geologic site characterization, industrial carbon 
capture and sequestration work, a third round of Clean Coal 
Power Initiative solicitations, and workforce training and 
development.
    Many stakeholders believe that large-scale CCS 
demonstration projects will not move forward without liability 
protection, in addition to adequate project financing. At 
present, many industry stakeholders cite major concerns with 
the existing petroleum production regulations, as they may or 
may not apply to geological carbon sequestration, as well as a 
lack of a clear framework for closing down a CCS site. The 
provision of liability protections is one way to increase the 
willingness of project developers to participate in both 
privately and federally-funded CCS demonstration projects.
    As CCS projects grow in both scale and number, there will 
be an increasing need to train qualified regulators to oversee 
the permitting, operation, and closure of geologic 
sequestration sites as well. Therefore it is necessary to 
create a grant program to assist in the training of State and 
Tribal agency personnel who oversee the regulatory aspects of 
CCS.
    S. 699 is needed to support research, development and 
demonstration efforts being conducted by the Department of 
Energy and the private sector, and to ensure substantial 
progress in demonstrating full commercial deployment of CCS 
technologies.

                          Legislative History

    S. 699 was introduced by Senator Bingaman on March 31, 
2011. Senators Barrasso, Rockefeller, and Murkowski are 
original cosponsors, and Senators Tester, Udall, and Hoeven 
have been added as cosponsors. The Committee on Energy and 
Natural Resources held a hearing on the bill on Thursday, May 
12, 2011. The Committee considered the bill at its business 
meeting on Thursday, May 26, 2011. The Committee adopted seven 
amendments to the bill and ordered the bill, as amended, 
favorably reported.
    Similar legislation, S. 1013, was introduced by Senator 
Bingaman during the 111th Congress, and the Committee held a 
hearing on it on May 14, 2009. S. Hrg. 111-50.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on May 26, 2011, by voice vote of a 
quorum present, recommends that the Senate pass S. 699, if 
amended as described herein. Mr. Lee, Mr. Paul (by proxy), and 
Mr. Heller asked that they be recorded as voting no.

                          Committee Amendments

    The Committee adopted seven amendments during its 
consideration of S. 699. The first four clarify the text. The 
fifth reduces the authorization of appropriations from $10 
million annually for each of fiscal years 2010 through 2020 to 
a total of $10 million. The sixth repeals section 708 of the 
Energy Independence and Security Act of 2007, 42 U.S.C. 17256, 
which authorized appropriation of $10 million for university-
based research and development grants to study carbon capture 
and sequestration using various types of coal. The seventh 
amendment adds a new section 4 to the bill, which requires the 
Department of Energy to conduct an annual assessment of 
existing federal programs supporting CCS technologies; requires 
the Government Accountability Office to review the Department's 
annual reports, recommend improvements, and assess legal or 
regulatory impediments; and requires the President to assess 
the Department's progress in implementing the GAO 
recommendations and its progress in achieving the program's 
goals.

                      Section-by-Section Analysis

    Section 1 provides a short title.
    Section 2(a) adds a new section 963A to the Energy Policy 
Act of 2005 to provide for financial and technical assistance 
for up to 10 large-scale carbon dioxide geologic storage 
demonstration projects.
    New section 963A(a) defines key terms used in the section.
    Section 963A(b) directs the Secretary of Energy to carry 
out a program, in addition to the program already authorized 
under section 963 of the Energy Policy Act of 2005, to 
demonstrate the commercial application of long-term geologic 
storage of carbon dioxide from industrial sources.
    Section 963A(c) authorizes the Secretary to enter into 
cooperative agreements for up to 10 large-scale demonstration 
projects.
    Sections 963A(d) and (e) specify selection criteria, terms, 
and conditions for demonstration projects receiving assistance 
under section 963A, to ensure that certain requirements have 
been met and that the project will be conducted in a manner 
that minimizes the potential liability exposure of the Federal 
government under any indemnity provided pursuant to section 
963A(g). The Secretary of Energy will provide the certificate 
of closure since the Department of Energy will be providing 
indemnity for rigorously monitored, compliant sites.
    Section 963A(f) lays out the requirement for closure of 
demonstration project sites. Only after these requirements are 
met can title for the site, and responsibility for its long-
term stewardship, transfer to the Federal government. The 
criteria are science based, and must be met for a period of 10 
years, beginning after the carbon dioxide plume has come into 
near equilibrium conditions with the geological formation 
(mainly, the velocity of the plume as it moves in the 
subsurface begins to decelerate and/or formation pressures stop 
increasing, but instead hold steady or decrease, for example). 
Thus, for example, if it takes 25 years for such equilibration 
to take place, then the earliest the land could move into post-
closure would be 35 years after injection activities cease.
    Section 963A(g) authorizes the Secretary of Energy to 
indemnify large-scale demonstration projects from liability for 
personal, property, and environmental damages in excess of 
their insurance coverage or other financial protection that 
they may be required to maintain. Liability resulting from the 
project operator's intentional misconduct or gross negligence 
is expressly excluded. The Secretary is required to charge a 
fee for providing indemnification, in an amount that reflects 
the net present value of the payments that the Government may 
have to make, taking into account the likelihood of an incident 
requiring the Government to make indemnification payments. In 
addition, subsection (g) permits the Secretary to enter into 
indemnification agreements in advance of appropriations and 
authorizes the Attorney General to defend or settle claims 
against project operators if it is determined that the 
Government may have to make payments under the indemnity 
agreement. The Secretary is required to make a determination on 
project selection within one year of receiving each 
application. There is a limitation on the amount of 
indemnification for each demonstration project of 
$10,000,000,000 (adjusted every five years for inflation).
    Section 963A(h) allows projects under this section to be 
sited on Federal land, subject to relevant conditions by the 
Secretary of Agriculture or the Secretary of the Interior (with 
respect to lands under their jurisdiction).
    Section 963A(i) allows the Secretary of Energy to take 
title (or administrative transfer) of lands containing closed 
geological storage sites from the projects under this section, 
for long-term stewardship. It also includes mandatory spending 
to cover the costs associated with maintaining these sites for 
purposes of public health and safety protection, in perpetuity.
    Section 2(b) makes technical and conforming changes to 
section 963 of the Energy Policy Act of 2005 and sections 703 
and 704 of the Energy Independence and Security Act of 2007.
    Section 3 authorizes a grant program to provide State and 
tribal agencies involved in carbon storage projects to help 
train personnel in the regulatory and site managerial aspects 
of carbon storage.
    Section 4 authorizes an annual assessment of existing 
Federal programs supporting carbon capture and storage 
technologies. This assessment will consider the success of 
supporting programs in advancing technologies, identify any 
barriers for commercial deployment, and provide time and cost 
estimates required for commercial deployment of carbon capture 
and storage technologies. Each annual assessment must be 
reviewed annually by the GAO, who is tasked with providing 
recommendations to the President.

                   Cost and Budgetary Considerations

S. 699--Department of Energy Carbon Capture and Sequestration Program 
        Amendments of 2011

    Summary: S. 699 would authorize the creation of a new 
program at the Department of Energy (DOE) to demonstrate 
systems for storing carbon dioxide produced by industrial 
sources, including measures that would indemnify recipients for 
certain liabilities and allow DOE to take title to the sites 
for long-term stewardship. The bill also would create and 
repeal authorizations of appropriations for certain grants 
related to carbon sequestration projects.
    CBO estimates that implementing this bill would increase 
net discretionary spending by $68 million over the 2012-2016 
period, assuming appropriation of the necessary amounts. Pay-
as-you-go procedures apply because enacting the legislation 
would affect net direct spending. However, CBO estimates that 
such spending would be negligible over the 2012-2021 period. 
Enacting this bill would not affect revenues.
    S. 699 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 699 is shown in the following table. The 
costs of this legislation fall within budget function 270 
(energy).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                            ------------------------------------------------------------------------------------------------------------
                                              2012    2013    2014     2015     2016     2017     2018     2019     2020     2021   2012-2016  2012-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level..............      10      10      10       10       50       51       52       54       55       56        90        358
Estimated Outlays..........................       8      12      12        8       28       46       52       53       54       56        68        329
 
                                                               CHANGES IN DIRECT SPENDING
 
Estimated Budget Authority\a\..............       0       0       0   10,700   10,900   11,200   11,400   11,700   12,000   12,200    21,600     80,100
Estimated Outlays..........................       0       0       *        *        *        *        *        *        *        *         *         *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: *=net outlays between -$500,000 and $500,000.
\a\The budget authority for the indemnifications authorized by the bill would be recorded in the year that DOE enters into a cooperative agreement. The
  estimated budget authority shown in this table represents the maximum amount authorized by the bill for each project, including adjustments for
  inflation. The actual amount of such potential liabilities could be much smaller than the authorized levels.

    Basis of estimate: For this estimate, CBO assumes that S. 
699 will be enacted near the end of fiscal year 2011, that the 
necessary amounts for implementing the bill will be 
appropriated for each fiscal year, and that outlays will occur 
at the historical rates for similar activities.

Spending subject to appropriation

    CBO estimates that implementing S. 699 would increase net 
discretionary spending by $68 million over the 2012-2016 period 
and $329 million over the 2012-2021 period. That estimate 
includes the net effects of provisions that would increase 
spending for carbon sequestration projects, authorize grants to 
state and tribal governments involved in regulating such 
projects, and repeal an existing authorization for grants to 
universities to perform research related to carbon capture and 
storage.
    Increased Spending for Carbon Sequestration Projects. The 
cooperative agreements authorized by S. 699 would supplement 
other forms of federal assistance for carbon sequestration 
projects. For example, section 963 of the Energy Policy Act of 
2005 authorized appropriations for a research, development, and 
demonstration program on carbon sequestration through 2015. CBO 
anticipates that projects that have received funding under 
DOE's existing programs would be eligible for the types of 
assistance authorized by this bill, assuming they meet the 
eligibility criteria in the bill. Therefore, S. 699 would 
effectively extend the existing authorization of appropriations 
to support carbon sequestration projects beyond the scheduled 
expiration in 2015.
    By authorizing DOE to continue a carbon sequestration 
program beyond 2015, S. 699 would effectively authorize 
appropriations for those activities in 2016 and later years. 
Based on information from DOE about recent levels of funding 
for carbon sequestration projects and related administrative 
activities, CBO estimates that fully funding those activities 
in 2016 would require appropriations totaling $40 million. That 
estimate assumes that funding for carbon sequestration 
projects, including monitoring and other administrative costs, 
remains in line with funding provided in recent years.
    In addition, CBO expects that implementing S. 699 would 
expand DOE's administrative workload to manage existing carbon 
sequestration projects whose sponsors would choose to enter 
into cooperative agreements for indemnification under the bill. 
Based on the status of such projects, CBO anticipates that DOE 
would approve seven indemnification agreements by 2021, some of 
which would occur during the 2012-2016 period covered by this 
estimate. We also expect that those projects would qualify for 
additional technical and financial assistance under the bill. 
Thus, we estimate that fully funding S. 699 would require 
additional appropriations of about $10 million annually over 
the 2012-2016 period. That estimate is based on historical 
trends in spending for reviewing other technically complex 
applications and assumes that some of the sponsors of DOE's 
existing carbon sequestration projects would enter into 
cooperative agreements under S. 699 and receive modest 
increases in technical and financial assistance under the bill.
    In total, assuming appropriation of the necessary amounts, 
CBO estimates that implementing S. 699 would increase 
discretionary spending related to carbon sequestration by $68 
million over the 2012-2016 period. That estimate is based on 
historical spending patterns for existing activities.
    Grants to State, Local, and Tribal Governments. S. 699 
would authorize the appropriation of $10 million for grants to 
local governments to establish programs to train workers 
involved with regulating carbon sequestration projects and 
other related projects, such as transportation systems. Based 
on historical spending patterns for similar activities, CBO 
estimates that fully funding the proposed grant program would 
cost $10 million over the 2012-2016 period.
    Repeal Authorization for Grants to Universities. S. 699 
would repeal a provision of law that authorizes the 
appropriation of $10 million for grants to universities to 
carry out research related to carbon capture and storage. 
According to DOE, that program, which was originally authorized 
under the Energy Independence and Security Act of 2007, has 
received no funding to date. CBO estimates that the proposed 
repeal would reduce authorized spending by $10 million over the 
2012-2016 period, assuming appropriations are reduced 
consistent with S. 699.

Direct spending

    Injecting carbon dioxide into geologic formations is being 
studied as a way of removing greenhouse gas from the 
atmosphere. DOE, the Environmental Protection Agency (EPA), and 
other agencies are in the process of examining the use of such 
technologies on a commercial scale. S. 699 would authorize DOE 
to enter into as many as 10 cooperative agreements to provide 
financial and technical assistance to large-scale demonstration 
projects that would provide for the long-term geologic storage 
of carbon dioxide produced by industrial sources.
    Under the proposed cooperative agreements, DOE would be 
authorized to indemnify the recipients for damages resulting 
from the demonstration projects, subject to certain conditions. 
Project sponsors would be required to comply with certain 
performance standards and provide financial assurances at 
levels specified by EPA and other federal agencies. Except in 
cases of gross negligence, the government would indemnify the 
recipients for liabilities that exceed the value of those 
financial assurances, subject to a limit of $10 billion per 
project, or a total of $100 billion (plus adjustments for 
inflation). The bill also would require project developers to 
pay a fee equal to the estimated net present value of 
indemnification payments. Once DOE certifies that a project 
meets all of the closure requirements, the department also 
could take ownership of the site.
    Enacting the federal indemnification and stewardship 
provisions in S. 699 would affect direct spending. S. 699 would 
waive the Anti-Deficiency Act to allow DOE to sign 
indemnification agreements in advance of appropriation acts and 
would provide a permanent, indefinite appropriation for any 
costs incurred by DOE to indemnify sponsors and remediate sites 
that come under government ownership. The proceeds from 
indemnification fees would be deposited in the Treasury as 
miscellaneous receipts, which are a credit against direct 
spending.
    Indemnification Costs. Unintended releases of carbon 
dioxide from geologic storage systems could pose risks to human 
health, property, and natural resources, including drinking 
water. Because the demonstration projects would be designed to 
store carbon dioxide permanently, the liability for such events 
would span several decades. Project sponsors would be required 
by the bill and existing EPA regulations to demonstrate their 
ability to cover costs that may arise in developing, operating, 
and plugging wells as well as closing sites, responding to 
emergencies, and performing remedial actions. Thus, CBO 
estimates that the indemnification authority would be used 
primarily to cover costs resulting from events that may occur 
after a site has been closed, which probably would occur well 
after 2021.
    While most outlays for indemnification costs probably would 
occur after 2021, the government's obligation to make such 
payments would be incurred at the time the cooperative 
agreement is signed. As a result, CBO's estimate includes the 
amount of budget authority authorized by the bill for 
indemnification payments. The amounts ultimately paid under 
such agreements may be much smaller than the amounts authorized 
by S. 699, however. DOE and other analysts expect that the 
risks posed by the 10 projects would be relatively small 
because they would be located in geologic formations that are 
well understood, and, as demonstration projects, would be 
subject to extensive monitoring and oversight. The 2006 report 
of the International Panel on Climate Change, for example, said 
that well-engineered, well-managed projects might effectively 
sequester 99 percent of the carbon dioxide over periods of 100 
years or more.
    Income from Indemnification Fees. For this estimate, CBO 
assumes that DOE would require firms to pay indemnification 
fees over the operating life of the facility, based on the 
volume of carbon dioxide injected each year. Setting a price 
for such fees would be difficult because agencies and industry 
lack experience with large-scale geologic storage systems. 
EPA's regulations, for example, rely on pilot projects, 
modeling efforts, and experience with other underground 
injection activities such as enhanced oil and gas recovery. 
According to some analysts, the value of the financial risks 
through the operational and post-injection period may be 
equivalent to less than 20 cents per ton of carbon dioxide.\1\ 
CB0 estimates that DOE initially would set rates below that 
level because most of those estimated risks are associated with 
operational activities, not long-term storage. Similarly, firms 
might not seek federal indemnification if they considered the 
fee to be disproportionate to the projected risks.
---------------------------------------------------------------------------
    \1\Michael Donlan and Chiara Trabucchi, ``Valuation of Consequences 
Arising from CO2 Mitigation at Candidate CCS Sites in the 
U.S.'' Energy Procedia, 4(2011), p. 2228.
---------------------------------------------------------------------------
    Net Effect on Direct Spending. Based on DOE's 2010 plan for 
carbon storage and sequestration projects, CBO anticipates that 
DOE would finalize seven indemnification agreements by 2021, 
that most of those facilities would begin injections after 
2015, and that the initial injections would involve relatively 
low volumes of carbon dioxide. Under those volume, price, and 
cost assumptions, CBO estimates that implementing the 
indemnification provisions in S. 699 would have no significant 
net effect on outlays over the 2012-2021 period. The net 
budgetary impact of the indemnification regime in subsequent 
years would depend on the balance between the amounts spent and 
the amounts collected from fees: it could reduce net direct 
spending if income from the fees exceeds the nominal value of 
any payments but would increase net outlays if the costs exceed 
the amounts paid by recipients of this assistance.
    Finally, CBO estimates that enacting this bill would 
increase future direct spending for DOE's stewardship and 
regulatory activities. Such costs probably would be incurred 
well beyond the 2012-2021 period and would depend on the 
characteristics of the sites acquired by DOE. While routine 
monitoring and management expenses probably would average less 
than $5 million a year per site (in 2011 dollars), the cost of 
any remediation activities is unknown.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. Enacting S. 699 would affect net direct spending but 
CBO estimates that those effects would be negligible in each of 
the fiscal years 2012 through 2021.
    Intergovernmental and private-sector impact: S. 699 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would authorize grants to state and 
tribal agencies for training employees involved in carbon 
capture, transportation, and storage projects. Any costs those 
entities incur to meet grant requirements would result from 
complying with conditions of federal assistance.
    Estimate prepared by: Federal costs: Megan Carroll and 
Kathleen Gramp; Impact on state, local, and tribal governments: 
Ryan Miller; Impact on the private sector: Amy Petz.
    Estimate approved by: Theresa Gullo, 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 the Department of Energy Carbon Capture and 
Sequestration Program Amendments Act of 2011.
    The bill establishes a cooperative assistance program that 
establishes several statutory and regulatory standards as a 
condition of receiving Government assistance and 
indemnification.
    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. 699.

                   Congressionally Directed Spending

    The bill, as 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 
Committee's May 12, 2011, hearing on S. 757 follows:

 Statement of Scott Klara, Deputy Laboratory Director, National Energy 
              Technology Laboratory, Department of Energy

    Thank you Chairman Bingaman, Ranking Member Barrasso, and 
Members of the Committee; I appreciate the opportunity to 
discuss the Department of Energy's activities to promote the 
development of carbon capture and storage (CCS) technologies. 
My testimony will provide an overview of the Department of 
Energy's (DOE) research efforts in developing CCS technologies. 
The Administration is still reviewing S. 699 and S. 757 and 
does not have a position on either bill at this time.

          interagency task force on carbon capture and storage

    Before I discuss the Department's Clean Coal Research 
Program, I will briefly review the conclusions from the 
Interagency Task Force on CCS. In August 2010, the final report 
from the Task Force was issued summarizing the Administration's 
efforts to develop and deploy CCS technologies, and proposed a 
plan to overcome the barriers to the widespread, cost-effective 
deployment of CCS within ten years, with a goal of bringing 
five to ten commercial demonstration projects online by 2016. 
This report is the collective work of 14 executive departments 
and federal agencies, which were tasked with developing a 
comprehensive and coordinated Federal strategy to speed the 
commercial development and deployment of clean coal 
technologies. The task force concluded that while there are no 
insurmountable technological, legal, institutional, regulatory 
or other barriers that prevent CCS from playing a role in 
reducing GHG emissions, early CCS projects face economic 
challenges related to climate policy uncertainty, first-of-a-
kind technology risks, and the current high cost of CCS 
relative to other technologies.

                      clean coal research program

    DOE continues to play a leadership role in the development 
of clean coal technologies with a focus on CCS. The Clean Coal 
Research Program administered by DOE's Office of Fossil
    Energy and implemented by the National Energy Technology 
Laboratory is designed to enhance our energy security and 
reduce environmental concerns over the future use of coal by 
developing a portfolio of revolutionary clean coal 
technologies. The Program is well positioned to help overcome 
the technical challenges associated with the development of 
clean coal technologies.
    The Clean Coal Program, in partnership with the private 
sector, is focused on maximizing efficiency and environmental 
performance, while minimizing the costs of these new 
technologies. In recent years, the Program has been 
restructured to focus on clean coal technologies with CCS. The 
Program pursues the following two major strategies:
          (1) capturing and storing greenhouse gases; and
          (2) improving the efficiency of fossil energy 
        systems.

    The first strategy aims to eliminate concerns over 
emissions of greenhouse gases from fossil fueled energy 
systems. The second strategy seeks to improve the fuel-to-
energy efficiencies of these systems, thus reducing pollutant 
emissions, water usage, and carbon emissions on a per unit of 
energy basis. Collectively, these two strategies comprise the 
Clean Coal Program's approach to ensure that current and future 
fossil energy plants will have options to meet all emerging 
requirements for a safe and secure energy future.

                core research and development activities

    The Clean Coal Program is addressing the key technical 
challenges that confront the development and deployment of 
clean coal technologies through research on cost-effective 
capture technologies; monitoring, verification, and accounting 
technologies to ensure permanent storage; permitting issues; 
and development of advanced energy systems. The Program is also 
actively engaged in interagency efforts to address liability 
issues, public outreach, and infrastructure needs. As an 
example, today's commercially available CCS technologies would 
add around 80 percent to the cost of electricity for a new 
pulverized coal plant, and around 35 percent to the cost of 
electricity for a new integrated gasification combined cycle 
plant. The Program is aggressively pursuing developments to 
reduce these costs to less than a 35 percent increase in the 
cost of electricity for pulverized coal energy plants and less 
than a 10 percent increase in the cost of electricity for new 
gasification-based energy plants.
    Research is focused on developing technology options that 
dramatically lower the cost of capturing carbon dioxide 
(CO2) from fossil fueled energy plants. This 
research can be categorized into three technical pathways: 
post-combustion, pre-combustion, and oxycombustion. Post-
combustion refers to capturing CO2 from the stack 
gas after a fuel has been combusted in air. Pre-combustion 
refers to a process where a hydrocarbon fuel is gasified to 
form a mixture of hydrogen and carbon dioxide, and 
CO2 is captured from the synthesis gas before it is 
combusted. Oxy-combustion is an approach where a hydrocarbon 
fuel is combusted in pure or nearly pure oxygen rather than 
air, which produces a mixture of CO2 and water that 
can easily be separated to produce pure CO2. 
Collectively, research in each of these technical pathways is 
exploring a wide range of approaches such as membranes; oxy-
combustion concepts; solid sorbents; CO2 hydrates; 
and advanced gas/liquid scrubbing technologies. These efforts 
cover not only improvements to state-of-the-art technologies 
but also development of several revolutionary concepts, such as 
metal organic frameworks, ionic liquids, and enzyme based 
systems. Coupling these developments with other advances in 
efficiency improvements and cost reduction from developments in 
gasification, turbines, and fuel cells, will help provide a 
technology base for commercial deployment of fossil energy 
systems integrated with CCS.
    The Department is the primary supporter of the National 
Carbon Capture Center (NCCC), which is a joint partnership 
between DOE and industry. The NCCC is a one of a kind, world 
class facility which offers an opportunity to validate capture 
technologies on actual gas from a coal fired power plant or 
gasification facility. Because of the ability to operate under 
a wide range of process conditions, research at the NCCC can 
effectively evaluate technologies at various levels of maturity 
for many different applications.

               regional carbon sequestration partnerships

    The Regional Carbon Sequestration Partnerships were created 
by the DOE in 2003 through a competitive solicitation. The 
Partnerships were designed to address a range of issues 
associated with geologic storage of CO2. The Clean 
Coal Program has been performing CCS field tests focused on 
injection, monitoring, verification, accounting and other 
aspects of geologic storage for many years, and the seven 
Regional Carbon Sequestration Partnerships are critical to this 
effort. These Partnerships are comprised of state agencies, 
universities, and private companies. They represent more than 
400 unique organizations in 43 States, and four Canadian 
Provinces. Geographic differences in fossil fuel use and 
potential storage sites across the United States dictate the 
use of regional approaches in addressing CCS, so each 
Partnership is focused on a specific region of the United 
States and Canada that hold similar characteristics relating to 
CCS opportunities.
    Together, the Partnerships form a network of capability, 
knowledge, and infrastructure that will help enable geologic 
storage technology to play a role in the clean energy economy. 
They represent regions encompassing 97 percent of coal-fired 
CO2 emissions, 97 percent of industrial 
CO2 emissions, 96 percent of the total land mass, 
and essentially all the geologic storage sites that can 
potentially be available for geologic carbon storage. Regional 
Partnerships are drilling wells and injecting small quantities 
of CO2 to validate the potential of key storage 
locations throughout the country. To date, the Regional 
Partnerships have injected over 1 million tons of 
CO2 at 18 small scale injection projects throughout 
the United States and Canada. These tests have helped to 
validate storage at a small scale and understand the fate of 
CO2 in different depositional systems containing 
saline water, oil, and natural gas. Several large scale 
projects are also underway that will inject several million 
tons of CO2 over the life of the projects. One of 
these projects has safely and securely injected over 2 million 
metric tons of CO2. Several more large-scale field 
tests will begin later this year.
    Over the course of these initiatives, DOE and the 
Partnerships are addressing key infrastructure issues related 
to permitting, pore space ownership, site access, liability, 
public outreach, and education. We are also jointly developing 
Best Practice Manuals on topics such as site characterization, 
site construction, operations, monitoring, mitigation, closure, 
and long-term stewardship. These manuals will serve as 
guidelines for a future geologic sequestration industry in 
their regions, and help transfer the lessons learned from DOE's 
Program to all regional stakeholders.
    Finally, DOE and the Partnerships continue to work closely 
with the Environmental Protection Agency (EPA) and other 
federal and state agencies in developing CCS regulatory 
strategies, which will provide additional certainty for future 
CCS deployments.

                   demonstrations at commercial-scale

    The success of the Clean Coal Program will ultimately be 
judged by the extent to which emerging technologies get 
deployed in domestic and international marketplaces. Both 
technical and financial challenges associated with the 
deployment of new ``high risk'' coal technologies must be 
overcome in order to be capable of achieving success in the 
marketplace. Commercial scale demonstrations help the industry 
understand and overcome start-up issues, address component 
integration issues, and gain the early learning commercial 
experience necessary to reduce risk and secure private 
financing and investment for future plants.
    The Department is implementing large-scale projects through 
the Regional Partnerships, the Clean Coal Power Initiative 
(CCPI), and FutureGen. Phase III of the Partnerships is focused 
on large-scale field tests of geologic carbon sequestration on 
the order of 1 million metric tons of CO2 per year, 
and are addressing the liability, regulatory, permitting, and 
infrastructure needs of these projects. As described previously 
in this statement, the Partnerships have brought an enormous 
amount of capability and experience together to work on the 
challenges of these large projects.
    The CCPI is a cost-shared partnership between the 
government and industry to develop and demonstrate advanced 
coal-based power generation technologies at the commercial 
scale. CCPI demonstrations address the reliability and 
affordability of the Nation's electricity supply from coal-
based generation. By enabling advanced technologies to overcome 
technical risks involved with scale-up and bringing them to the 
point of commercial readiness, CCPI accelerates the development 
of both advanced coal generation technologies and the 
integration of CCS with both new and existing generation 
technologies. The CCPI also facilitates the movement of 
technologies into the market place that are emerging from the 
core research and development activities. The CCPI program 
received an additional $800 million from the 2009 American 
Recovery and Reinvestment Act (Recovery Act) which, in 
combination with base funding, was used to fund four active 
CCPI projects, two pre-combustion and two post-combustion 
projects.
    In addition, a CCPI round II project has been modified to 
demonstrate CCS at a new integrated gasification combined cycle 
power plant. We are working closely with the project developers 
to comply with NEPA, air and water regulatory requirements, and 
complete initial Front End Engineering & Design (FEED) studies 
for the facilities. All five of these projects are on track to 
be operational between 2013 and 2015.
    The FutureGen Project intends to conduct novel large-scale 
testing to accelerate the deployment of a set of advanced oxy-
combustion power production technologies integrated with CCS. 
This project will be the first advanced repowering oxy-
combustion project to store CO2 in a deep saline 
geologic formation. On August 5, 2010, Secretary of Energy 
Steven Chu announced an award of $1 billion in Recovery Act 
funding to the FutureGen Alliance, Ameren Energy Resources, 
Babcock & Wilcox, and Air Liquide Process and Construction, 
Inc., to build FutureGen 2.0, a clean coal repowering program 
and carbon dioxide storage network. On February 28, 2011, the 
FutureGen Alliance selected Morgan County, Illinois, as the 
preferred location for the FutureGen 2.0 CO2 storage 
site, visitor center, research, and training facilities.
    In addition to the CCPI and FutureGen 2.0 projects, the 
Recovery Act has also helped fund more than 80 additional 
projects which includes three large scale Industrial CCS 
demonstrations, ten geologic site characterizations, forty-
three university research training projects, seven CCS research 
training centers, six Industrial CCS projects focused 
CO2 reuse, and 14 projects focused on accelerated 
component development in the core research program.

                               conclusion

    CCS and related clean coal technologies can play a critical 
role in mitigating CO2 emissions under many 
potential future carbon stabilization scenarios. Nevertheless, 
challenges remain to achieving cost-effective commercial 
deployment of CCS. The Department's research programs are a 
vital step to advancing the readiness of clean coal 
technologies for future commercial deployment. I thank this 
Committee and its members for allowing me the opportunity to 
provide an overview of DOE's research efforts in developing CCS 
technologies and I look forward to your questions. The 
Administration is still reviewing S. 699 and S. 757 and does 
not have a position on either bill at this time.

                        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 bill, as ordered 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):

                       ENERGY POLICY ACT OF 2005

Public Law 109-58, as Amended

           *       *       *       *       *       *       *

TITLE IX--RESEARCH AND DEVELOPMENT

           *       *       *       *       *       *       *

Subtitle F--Fossil Energy

           *       *       *       *       *       *       *

SEC. 963. CARBON CAPTURE AND SEQUESTRATION RESEARCH, DEVELOPMENT, AND 
                    DEMONSTRATION PROGRAM.

    (a) Definitions.--In this section:
          (1) Industrial source.--The term ``industrial 
        source'' means any source of carbon dioxide that is not 
        naturally occurring.
          (2) Large-scale.--The term ``large-scale'' means the 
        injection of over 1,000,000 tons of carbon dioxide from 
        industrial sources over the lifetime of the project.
    [(a)] (b) [In general] Program.--The Secretary shall carry 
out a 10-year carbon capture and sequestration research, 
development, and demonstration program to develop carbon 
dioxide capture and sequestration technologies related to 
industrial sources of carbon dioxide for use--
          (1) in new coal utilization facilities; and
          (2) on the fleet of coal-based units in existence on 
        August 8, 2005.
    [(b)] (c) Objectives.--The objectives of the program under 
[subsection (a)] (subsection (b)) shall be--
          (1) to develop carbon dioxide capture technologies, 
        including adsorption and absorption techniques and 
        chemical processes, to remove the carbon dioxide from 
        gas streams containing carbon dioxide potentially 
        amenable to sequestration;
          (2) to develop technologies that would directly 
        produce concentrated streams of carbon dioxide 
        potentially amenable to sequestration;
          (3) to increase the efficiency of the overall system 
        to reduce the quantity of carbon dioxide emissions 
        released from the system per megawatt generated;
          (4) in accordance with the carbon dioxide capture 
        program, to promote a robust carbon sequestration 
        program and continue the work of the Department, in 
        conjunction with the private sector, through regional 
        carbon sequestration partnerships; and
          (5) to expedite and carry out large-scale testing of 
        carbon sequestration systems in a range of geologic 
        formations that will provide information on the cost 
        and feasibility of deployment of sequestration 
        technologies.
    [(c)] (d) Programmatic Activities.--
          (1) Fundamental science and engineering research and 
        development and demonstration supporting carbon capture 
        and sequestration technologies and carbon use 
        activities--
                  (A) In general.--The Secretary shall carry 
                out fundamental science and engineering 
                research (including laboratory-scale 
                experiments, numeric modeling, and simulations) 
                to develop and document the performance of new 
                approaches to capture and sequester, or use 
                carbon dioxide to lead to an overall reduction 
                of carbon dioxide emissions.
                  (B) Program integration.--The Secretary shall 
                ensure that fundamental research carried out 
                under this paragraph is appropriately applied 
                to energy technology development activities, 
                the field testing of carbon sequestration, and 
                carbon use activities, including--
                          (i) development of new or advanced 
                        technologies for the capture and 
                        sequestration of carbon dioxide;
                          (ii) development of new or advanced 
                        technologies that reduce the cost and 
                        increase the efficacy of advanced 
                        compression of carbon dioxide required 
                        for the sequestration of carbon 
                        dioxide;
                          (iii) modeling and simulation of 
                        geologic sequestration field 
                        demonstrations;
                          (iv) quantitative assessment of risks 
                        relating to specific field sites for 
                        testing of sequestration technologies;
                          (v) research and development of new 
                        and advanced technologies for carbon 
                        use, including recycling and reuse of 
                        carbon dioxide; and
                          (vi) research and development of new 
                        and advanced technologies for the 
                        separation of oxygen from air.
          (2) Field validation testing activities.--
                  (A) In general.--The Secretary shall promote, 
                to the maximum extent practicable, regional 
                carbon sequestration partnerships to conduct 
                geologic sequestration tests involving carbon 
                dioxide injection and monitoring, mitigation, 
                and verification operations in a variety of 
                candidate geologic settings, including--
                          (i) operating oil and gas fields;
                          (ii) depleted oil and gas fields;
                          (iii) unmineable coal seams;
                          (iv) deep saline formations;
                          (v) deep geologic systems that may be 
                        used as engineered reservoirs to 
                        extract economical quantities of heat 
                        from geothermal resources of low 
                        permeability or porosity; and
                          (vi) deep geologic systems containing 
                        basalt formations.
                  (B) Objectives.--The objectives of tests 
                conducted under this paragraph shall be--
                          (i) to develop and validate 
                        geophysical tools, analysis, and 
                        modeling to monitor, predict, and 
                        verify carbon dioxide containment;
                          (ii) to validate modeling of geologic 
                        formations;
                          (iii) to refine sequestration 
                        capacity estimated for particular 
                        geologic formations;
                          (iv) to determine the fate of carbon 
                        dioxide concurrent with and following 
                        injection into geologic formations;
                          (v) to develop and implement best 
                        practices for operations relating to, 
                        and monitoring of, carbon dioxide 
                        injection and sequestration in geologic 
                        formations;
                          (vi) to assess and ensure the safety 
                        of operations related to geologic 
                        sequestration of carbon dioxide;
                          (vii) to allow the Secretary to 
                        promulgate policies, procedures, 
                        requirements, and guidance to ensure 
                        that the objectives of this 
                        subparagraph are met in large-scale 
                        testing and deployment activities for 
                        carbon capture and sequestration that 
                        are funded by the Department of Energy; 
                        and
                          (viii) to provide information to 
                        States, the Environmental Protection 
                        Agency, and other appropriate entities 
                        to support development of a regulatory 
                        framework for commercial-scale 
                        sequestration operations that ensure 
                        the protection of human health and the 
                        environment.
          (3) Large-scale carbon dioxide sequestration 
        testing.--
                  (A) In general.--The Secretary shall conduct 
                not less than 7 initial large-scale 
                sequestration tests, not including the 
                FutureGen project, for geologic containment of 
                carbon dioxide to collect and validate 
                information on the cost and feasibility of 
                commercial deployment of technologies for 
                geologic containment of carbon dioxide. These 7 
                tests may include any Regional Partnership 
                projects awarded as of December 19, 2007.
                  (B) Diversity of formations to be studied.--
                In selecting formations for study under this 
                paragraph, the Secretary shall consider a 
                variety of geologic formations across the 
                United States, and require characterization and 
                modeling of candidate formations, as determined 
                by the Secretary.
                  (C) Source of carbon dioxide for large-scale 
                sequestration tests.--In the process of any 
                acquisition of carbon dioxide for sequestration 
                tests under subparagraph (A), the Secretary 
                shall give preference to sources of carbon 
                dioxide from industrial sources. To the extent 
                feasible, the Secretary shall prefer tests that 
                would facilitate the creation of an integrated 
                system of capture, transportation and 
                sequestration of carbon dioxide. The preference 
                provided for under this subparagraph shall not 
                delay the implementation of the large-scale 
                sequestration tests under this paragraph.
                  [(D) Definition.--For purposes of this 
                paragraph, the term ``large-scale'' means the 
                injection of more than 1,000,000 tons of carbon 
                dioxide from industrial sources annually or a 
                scale that demonstrates the ability to inject 
                and sequester several million metric tons of 
                industrial source carbon dioxide for a large 
                number of years.]
          (4) Preference in project selection for meritorious 
        proposals.--In making competitive awards under this 
        subsection, subject to the requirements of section 
        16353 of this title, the Secretary shall--
                  (A) give preference to proposals from 
                partnerships among industrial, academic, and 
                government entities; and
                  (B) require recipients to provide assurances 
                that all laborers and mechanics employed by 
                contractors and subcontractors in the 
                construction, repair, or alteration of new or 
                existing facilities performed in order to carry 
                out a demonstration or commercial application 
                activity authorized under this subsection shall 
                be paid wages at rates not less than those 
                prevailing on similar construction in the 
                locality, as determined by the Secretary of 
                Labor in accordance with subchapter IV of 
                chapter 31 of title 40, and the Secretary of 
                Labor shall, with respect to the labor 
                standards in this paragraph, have the authority 
                and functions set forth in Reorganization Plan 
                Numbered 14 of 1950 (15 Fed. Reg. 3176; 5 
                U.S.C. Appendix) and section 3145 of title 40.
          (5) Cost sharing.--Activities under this subsection 
        shall be considered research and development activities 
        that are subject to the cost sharing requirements of 
        section 16352(b) of this title.
          (6) Program review and report.--During fiscal year 
        2011, the Secretary shall--
                  (A) conduct a review of programmatic 
                activities carried out under this subsection; 
                and
                  (B) make recommendations with respect to 
                continuation of the activities.
    [(d)] (e) Authorization of Appropriations.--There are 
authorized to be appropriated to carry out this section--
          (1) $240,000,000 for fiscal year 2008;
          (2) $240,000,000 for fiscal year 2009;
          (3) $240,000,000 for fiscal year 2010;
          (4) $240,000,000 for fiscal year 2011; and
          (5) $240,000,000 for fiscal year 2012.

SEC. 963A. LARGE-SCALE CARBON STORAGE PROGRAM.

    (a) Definitions.--In this section:
          (1) Industrial source.--The term ``industrial 
        source'' means any source of carbon dioxide that is not 
        naturally occurring.
          (2) Large-scale.--The term ``large-scale'' means the 
        injection of over 1,000,000 tons of carbon dioxide each 
        year from industrial sources into a geological 
        formation.
          (3) Secretary concerned.--The term ``Secretary 
        concerned'' means--
                  (A) the Secretary of Agriculture (acting 
                through the Chief of the Forest Service), with 
                respect to National Forest System land; and
                  (B) the Secretary of the Interior, with 
                respect to land managed by the Bureau of Land 
                Management (including land held for the benefit 
                of an Indian tribe).
    (b) Program.--In addition to the research, development, and 
demonstration program authorized by section 963, the Secretary 
shall carry out a program to demonstrate the commercial 
application of integrated systems for the capture, injection, 
monitoring, and long-term geological storage of carbon dioxide 
from industrial sources.
    (c) Authorized Assistance.--In carrying out the program, 
the Secretary may enter into cooperative agreements to provide 
financial and technical assistance to up to 10 large-scale 
demonstration projects.
    (d) Project Selection.--The Secretary shall competitively 
select recipients of cooperative agreements under this section 
from among applicants that--
          (1) provide the Secretary with sufficient geological 
        site information (including hydrogeological and 
        geophysical information) to establish that the proposed 
        geological storage unit is capable of long-term storage 
        of the injected carbon dioxide, including--
                  (A) the location, extent, and storage 
                capacity of the geological storage unit at the 
                site into which the carbon dioxide will be 
                injected;
                  (B) the principal potential modes of 
                geomechanical failure in the geological storage 
                unit;
                  (C) the ability of the geological storage 
                unit to retain injected carbon dioxide; and
                  (D) the measurement, monitoring, and 
                verification requirements necessary to ensure 
                adequate information on the operation of the 
                geological storage unit during and after the 
                injection of carbon dioxide;
          (2) possess the land or interests in land necessary 
        for--
                  (A) the injection and storage of the carbon 
                dioxide at the proposed geological storage 
                unit; and
                  (B) the closure, monitoring, and long-term 
                stewardship of the geological storage unit;
          (3) possess or have a reasonable expectation of 
        obtaining all necessary permits and authorizations 
        under applicable Federal and State laws (including 
        regulations); and
          (4) agree to comply with each requirement of 
        subsection (e).
    (e) Terms and Conditions.--The Secretary shall condition 
receipt of financial assistance pursuant to a cooperative 
agreement under this section on the recipient agreeing to--
          (1) comply with all applicable Federal and State laws 
        (including regulations), including a certification by 
        the appropriate regulatory authority that the project 
        will comply with Federal and State requirements to 
        protect drinking water supplies;
          (2) in the case of industrial sources subject to the 
        Clean Air Act (42 U.S.C. 7401 et seq.), inject only 
        carbon dioxide captured from industrial sources in 
        compliance with that Act;
          (3) comply with all applicable construction and 
        operating requirements for deep injection wells;
          (4) measure, monitor, and test to verify that carbon 
        dioxide injected into the injection zone is not--
                  (A) escaping from or migrating beyond the 
                confinement zone; or
                  (B) endangering an underground source of 
                drinking water;
          (5) comply with applicable well-plugging, post-
        injection site care, and site closure requirements, 
        including--
                  (A)(i) maintaining financial assurances 
                during the post-injection closure and 
                monitoring phase until a certificate of closure 
                is issued by the Secretary; and
                  (ii) promptly undertaking remediation 
                activities for any leak from the geological 
                storage unit that would endanger public health 
                or safety or natural resources; and
                  (B) complying with the requirements of 
                subsection (f);
          (6) comply with applicable long-term care 
        requirements;
          (7) maintain financial protection in a form and in an 
        amount acceptable to--
                  (A) the Secretary;
                  (B) the Secretary with jurisdiction over the 
                land; and
                  (C) the Administrator of the Environmental 
                Protection Agency; and
          (8) provide the assurances described in section 
        963(c)(4)(B).
    (f) Post Injection Closure and Monitoring Elements.--In 
assessing whether a project complies with site closure 
requirements under subsection (e)(5), the Secretary, in 
consultation with the Administrator of the Environmental 
Protection Agency, shall determine whether the recipient of 
financial assistance has demonstrated continuous compliance 
with each of the following requirements over a period of not 
less than 10 consecutive years after the plume of carbon 
dioxide has stabilized within the geologic formation that 
comprises the geologic storage unit following the cessation of 
injection activities:
          (1) The estimated location and extent of the project 
        footprint (including the detectable plume of carbon 
        dioxide and the area of elevated pressure resulting 
        from the project) has not substantially changed and is 
        contained within the geologic storage unit.
          (2) The injection zone formation pressure has ceased 
        to increase following cessation of carbon dioxide 
        injection into the geologic storage unit.
          (3) There is no leakage of either carbon dioxide or 
        displaced formation fluid from the geologic storage 
        unit that is endangering public health and safety, 
        including underground sources of drinking water and 
        natural resources.
          (4) The injected or displaced formation fluids are 
        not expected to migrate in the future in a manner that 
        encounters a potential leakage pathway.
          (5) The injection wells at the site completed into or 
        through the injection zone or confining zone are 
        plugged and abandoned in accordance with the applicable 
        requirements of Federal or State law governing the 
        wells.
    (g) Indemnification Agreements.--
          (1) Definition of liability.--In this subsection, the 
        term `liability' means any legal liability for--
                  (A) bodily injury, sickness, disease, or 
                death;
                  (B) loss of or damage to property, or loss of 
                use of property; or
                  (C) injury to or destruction or loss of 
                natural resources, including fish, wildlife, 
                and drinking water supplies.
          (2) Agreements.--Not later than 1 year after the date 
        of the receipt by the Secretary of a completed 
        application for a demonstration project, the Secretary 
        may agree to indemnify and hold harmless the recipient 
        of a cooperative agreement under this section from 
        liability arising out of or resulting from a 
        demonstration project in excess of the amount of 
        liability covered by financial protection maintained by 
        the recipient under subsection (e)(7).
          (3) Exception for gross negligence and intentional 
        misconduct.--Notwithstanding paragraph (1), the 
        Secretary may not indemnify the recipient of a 
        cooperative agreement under this section from liability 
        arising out of conduct of a recipient that is grossly 
        negligent or that constitutes intentional misconduct.
          (4) Collection of fees.--
                  (A) In general.--The Secretary shall collect 
                a fee from any person with whom an agreement 
                for indemnification is executed under this 
                subsection in an amount that is equal to the 
                net present value of payments made by the 
                United States to cover liability under the 
                indemnification agreement.
                  (B) Amount.--The Secretary shall establish, 
                by regulation, criteria for determining the 
                amount of the fee, taking into account--
                          (i) the likelihood of an incident 
                        resulting in liability to the United 
                        States under the indemnification 
                        agreement; and
                          (ii) other factors pertaining to the 
                        hazard of the indemnified project.
                  (C) Use of fees.--Fees collected under this 
                paragraph shall be deposited in the Treasury 
                and credited to miscellaneous receipts.
          (5) Contracts in advance of appropriations.--
                  (A) In general.--Subject to subparagraph (B), 
                the Secretary may enter into agreements of 
                indemnification under this subsection in 
                advance of appropriations and incur obligations 
                without regard to section 1341 of title 31, 
                United States Code (commonly known as the 
                ``Anti-Deficiency Act''), or section 11 of 
                title 41, United States Code (commonly known as 
                the ``Adequacy of Appropriations Act'').
                  (B) Limitation.--The amount of 
                indemnification under this subsection shall not 
                exceed $10,000,000,000 (adjusted not less than 
                once during each 5-year period following the 
                date of enactment of this section, in 
                accordance with the aggregate percentage change 
                in the Consumer Price Index since the previous 
                adjustment under this subparagraph), in the 
                aggregate, for all persons indemnified in 
                connection with an agreement and for each 
                project, including such legal costs as are 
                approved by the Secretary.
          (6) Conditions of agreements of indemnification.--
                  (A) In general.--An agreement of 
                indemnification under this subsection may 
                contain such terms as the Secretary considers 
                appropriate to carry out the purposes of this 
                section.
                  (B) Administration.--The agreement shall 
                provide that, if the Secretary makes a 
                determination the United States will probably 
                be required to make indemnity payments under 
                the agreement, the Attorney General--
                          (i) shall collaborate with the 
                        recipient of an award under this 
                        subsection; and
                          (ii) may--
                                  (I) approve the payment of 
                                any claim under the agreement 
                                of indemnification;
                                  (II) appear on behalf of the 
                                recipient;
                                  (III) take charge of an 
                                action; and
                                  (IV) settle or defend an 
                                action.
                  (C) Settlement of claims.--
                          (i) In general.--The Attorney General 
                        shall have final authority on behalf of 
                        the United States to settle or approve 
                        the settlement of any claim under this 
                        subsection on a fair and reasonable 
                        basis with due regard for the purposes 
                        of this subsection.
                          (ii) Expenses.--The settlement shall 
                        not include expenses in connection with 
                        the claim incurred by the recipient.
    (h) Federal Land.--
          (1) In general.--The Secretary concerned may 
        authorize the siting of a project on Federal land under 
        the jurisdiction of the Secretary concerned in a manner 
        consistent with applicable laws and land management 
        plans and subject to such terms and conditions as the 
        Secretary concerned determines to be necessary.
          (2) Framework for geological carbon sequestration on 
        public land.--In determining whether to authorize a 
        project on Federal land, the Secretary concerned shall 
        take into account the framework for geological carbon 
        sequestration on public land prepared in accordance 
        with section 714 of the Energy Independence and 
        Security Act of 2007 (Public Law 110-140; 121 Stat. 
        1715).
    (i) Acceptance of Title and Long-Term Monitoring.--
          (1) In general.--As a condition of a cooperative 
        agreement under this section, the Secretary may accept 
        title to, or transfer of administrative jurisdiction 
        from another Federal agency over, any land or interest 
        in land necessary for the monitoring, remediation, or 
        long-term stewardship of a project site.
          (2) Long-term monitoring activities.--After accepting 
        title to, or transfer of, a site closed in accordance 
        with this section, the Secretary shall monitor the site 
        and conduct any remediation activities to ensure the 
        geological integrity of the site and prevent any 
        endangerment of public health or safety.
          (3) Funding.--There is appropriated to the Secretary, 
        out of funds of the Treasury not otherwise 
        appropriated, such sums as are necessary to carry out 
        paragraph (2).''.

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              ENERGY INDEPENDENCE AND SECURITY ACT OF 2007

Public Law 110-140

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              TITLE VII--CARBON CAPTURE AND SEQUESTRATION

Subtitle A--Carbon Capture and Sequestration Research, Development, and 
                             Demonstration

SEC. 701. SHORT TITLE.

    This subtitle may be cited as the ``Department of Energy 
Carbon Capture and Sequestration Research, Development, and 
Demonstration Act of 2007''.

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SEC. 703. CARBON CAPTURE.

    (a) Program Establishment.--

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          (3) Preferences for award.--To ensure reduced carbon 
        dioxide emissions, the Secretary shall take necessary 
        actions to provide for the integration of the program 
        under this paragraph with the large-scale carbon 
        dioxide sequestration tests described in [[section 
        963(c)(3) of the Energy Policy Act of 2005 (42 U.S.C. 
        16293(c)(3))] (section 963(d)(3) of the Energy Policy 
        Act of 2005 (42 U.S.C. 16293(d)(3))), as added by 
        section 702 of this subtitle. These actions should not 
        delay implementation of these tests. The Secretary 
        shall give priority consideration to projects with the 
        following characteristics:
                  (A) Capacity.--Projects that will capture a 
                high percentage of the carbon dioxide in the 
                treated stream and large volumes of carbon 
                dioxide as determined by the Secretary.
                  (B) Sequestration.--Projects that capture 
                carbon dioxide from industrial sources that are 
                near suitable geological reservoirs and could 
                continue sequestration including--
                          (i) a field testing validation 
                        activity under section 963 of the 
                        Energy Policy Act of 2005 (42 U.S.C. 
                        16293), as amended by this Act; or
                          (ii) other geologic sequestration 
                        projects approved by the Secretary.

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SEC. 704. REVIEW OF LARGE-SCALE PROGRAMS.

    The Secretary shall enter into an arrangement with National 
Academy of Sciences for an independent review and oversight, 
beginning in 2011, of the programs under [section 963(c)(3) of 
the Energy Policy Act of 2005 (42 U.S.C. 16293(c)(3))] (section 
963(d)(3) of the Energy Policy Act of 2005 (42 U.S.C. 
16293(d)(3))), as added by section 702 of this subtitle, and 
under section 703 of this subtitle to ensure that the benefits 
of such programs are maximized. Not later than January 1, 2012, 
the Secretary shall transmit to the Congress a report on the 
results of such review and oversight.

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